When it comes to banking, we can easily transfer funds and make payments between institutions. The same goes for air travel with reservations connected to ticketing, payments, and loyalty programs. Why? These systems have standards and interfaces that permit information and data to flow; not so with healthcare.

From wellness and preventive care benefits to better chronic care management, the value of medical devices is becoming more important to patients and the continuum of care. Device companies are changing their business models to become more customer-centric and play a more tightly integrated role in the healthcare ecosystem. Because of these changes, consumers have better access to care, R&D is spurring greater collaboration across the industry, and drug and device safety is improving.

Competition is changing, too. Device manufacturers are developing business models in response to hospitals and retailers such as CVS entering the market. More pharmaceutical companies are selling drugs, devices, therapies, and services supplied by different partners, and they’re serving smaller patient segments rather than relying on major new drug discoveries to drive revenue over many years.

And the connected care market is growing as the world gets “flatter” and more integrated. According to a recent Parks Associates report, the U.S. market for wireless home-based healthcare applications and services will become a $4 billion industry by 2013, growing at more than 80% a year.

More devices are equipped with sensors and other technologies to share data and address new market opportunities, making them more intelligent than ever. Advanced analytics and supercomputers can turn years of data into intelligence that can find better treatments or track a global pandemic.

Yet, while our testing capabilities, hospitals, emergency response technologies and systems, pharmaceuticals, etc. are world-class, they lack connectivity, and we’re paying the price. Physicians in medical practices average three weeks a year on insurance-related administrative tasks. Less than one in 10 American hospitals has implemented any kind of electronic patient record system. And more than 20% of lab tests are repeated unnecessarily because patients’ medical records are not available at the point of care.

Not only is this expensive, it introduces multiple opportunities for error and inconsistencies. Not only is that bad for patients, from a systems-management standpoint, it makes it impossible to gauge the status of the system or its components. If the healthcare system were a patient, and we were its doctors, we would be unable to read its vital signs.

However, we are seeing success stories. The 1,000+ hospitals and clinics of the Department of Veterans Affairs, with one of the most advanced electronic record systems in the U.S., have been ranked bestin- class by independent groups across a range of measures—from chronic care, to the treatment of heart disease, to the percentage of members who receive flu shots. While studies show that 3% to 8% of the nation’s prescriptions are filled erroneously, the VA’s accuracy rate is greater than 99.997%. And yet, through it all, the VA spends an annual average of $5,000 per patient, vs. the national average of $6,300.

Across the U.S., electronic health records can serve as the basis of a true healthcare system. This is not unlike what happened with UPC codes, which changed the retail industry by ushering in better inventory management, simplifying returns and rebates, and streamlining global supply chains. Likewise, digital records can serve as a lingua franca for health and medical information. Aside from EHRs, we also need connectivity and the ability to inject intelligence and analytics into the system it connects.

A smarter healthcare system, optimized around the patient, can increase efficiency, reduce errors, achieve better quality outcomes, and save lives.

It can embed best practices and medical knowledge—as well as real-time patient monitoring of devices—into clinical and business workflows, for error-free delivery of care.

A smarter healthcare system can apply analytics to look across the medical histories of many patients and unlock new insight into the treatment of a disease. It could speed discovery of new drugs and therapies as well as track infectious diseases to predict high-risk populations, enabling governments to intervene early and keep people well.

It can also lead to breakthrough discoveries of genomics and to more personalized medicine. IBM Research recently developed the capability to create a nanoscale device that can act as a kind of “bar code reader” for an individual strand of DNA. (See December, page 8.) The goal for this type of technology is to make personalized genetic makeup readily available to each individual for less than $1,000. That is especially significant since the first sequencing done by the Human Genome Project cost $3 billion.