As healthcare faces increasing demands for better outcomes and cost-effective solutions, adopting "Everything-as-a-Service" (XaaS) models has begun transforming how healthcare providers and technology companies approach their offerings. This shift reflects a significant move from traditional, product-based models to more integrated, service-oriented solutions that prioritize continuous value delivery to healthcare organizations.

In this blog, we’ll explore critical insights on the transformative potential of XaaS in healthcare and examine how technology providers can transition successfully to this model.

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The Shift From Product-Centric to Value-Centric Models

Traditionally, many technology companies operated under a supplier model focused on selling standalone products, often with minimal after-sales service. This approach offered scalability and profitability, but as customer needs have shifted, so has the demand for more value-driven solutions. Healthcare providers now expect technology that supports ongoing value realization rather than one-time technical differentiation.

From Products to Services

As companies shift from feature-focused products to solutions delivering long-term value, they increasingly explore managed services. By adopting supplier models, companies become more involved in operating and maintaining the technology, often providing end-to-end services that align with customer outcomes.

Customer-Centric Approach

Modern healthcare customers demand solutions that integrate seamlessly into their operations and enhance outcomes—particularly in patient care. This change requires technology providers to understand and focus on customer goals rather than simply offering features.

Related: Fireside Chat: Transforming Healthcare Through XaaS

How XaaS Drives Continuous Value Through Service Innovation and Connected Data

XaaS is not about outsourcing or leasing products. Instead, it involves building incremental value through service innovation that addresses specific customer challenges. It's about turning a customer's problem into an opportunity for ongoing service and value creation, emphasizing partnerships and improvements rather than just selling hardware or software.

• Connected equipment and data: The transition often begins with connecting previously disconnected equipment, enabling real-time data collection, and monitoring. For example, in healthcare, this might mean connecting medical devices that can "phone home" with data, enabling proactive maintenance and enhanced patient safety.
• Building incremental value: Unlike traditional business models that rely on initial product sales, XaaS enables continuous value generation. This may mean access to updated technology and regular insights into system performance and utilization for healthcare providers.

Case Study: Philips Healthcare’s Journey

Philips Healthcare is a compelling example of a company navigating the complex shift to XaaS in healthcare. Faced with market pressure and the challenge of sustaining traditional revenue streams, Philips sought to redefine its business model by focusing on customer needs and providing monitoring as a service.

• Building the business case: To validate their approach, Philips conducted extensive market research, consulted with customers, and assessed the feasibility of delivering monitoring as a service. This research indicated a strong customer interest in a pay-per-use model, promising predictable operational expenses and continuous value.
• The long-term journey: Moving from product-based sales to XaaS was not an overnight transformation. The shift spanned nearly a decade, as Philips carefully navigated multiple phases—from developing a pilot to full-scale deployment. This extended timeline reflects the complexity of transforming financial models, customer expectations, and internal processes.

Overcoming Challenges in Transitioning to XaaS

The journey to XaaS comes with its own set of challenges, especially for hardware companies that may be rooted in product-focused business models. Philips and other companies undergoing this transition have identified several critical areas to address for a successful shift.

Customer buy-in and education

Transitioning to a service model requires a fundamental change in customer expectations. For many healthcare providers accustomed to one-time purchases, moving to a subscription or consumption-based model requires understanding continuous service's long-term benefits and value. As a healthcare technology provider, it's your responsibility to educate your customers about the benefits of XaaS, empowering them to make informed decisions and ensure a smooth transition.

Internal alignment across teams

Shifting to XaaS requires collaboration between service teams, product development, and finance. Integrating service capabilities with product offerings ensures that technology is designed with connectivity and serviceability in mind, while finance teams need to adapt to new revenue recognition and cost allocation models.

Related: X-as-a-Service: Everything You Need to Know to Start the Journey

The Role of Connectivity and Data

Connectivity is a critical enabler of XaaS. To provide proactive services and deliver real-time value, companies must have data indicating equipment health, performance trends, and potential issues before they occur.

Philips’ monitoring-as-a-service approach emphasizes the importance of collecting and analyzing sensor data to detect changes in performance early.

Beyond alarm systems

To truly realize the benefits of XaaS, companies must move beyond basic alarms and monitoring. Advanced connectivity includes sensor data that provides insights into system health, enabling predictive maintenance rather than reactive service responses.

The power of predictive maintenance

Companies can reduce healthcare providers' downtime by understanding equipment performance and anticipating potential issues. This proactive approach saves customers from costly interruptions, allowing them to focus more resources on patient care.

Related: Tactical Approaches to As-a-Service: A Conversation with IBM

Key Takeaways for Healthcare Technology Providers

As more healthcare companies look to adopt XaaS models, they can learn from Philips and other early adopters who have successfully implemented this approach. Here are a few essential takeaways:

• Involve all key stakeholders early: Moving to XaaS impacts multiple departments within a company, from product development to customer support. Involving all relevant teams from the outset ensures goal alignment and smooths the transition process.
• Address customer concerns upfront: Healthcare providers often have security and compliance concerns related to data connectivity. Ensuring these issues are addressed transparently in the initial stages helps build trust and facilitates smoother implementation.
• Build a long-term vision: Transitioning to XaaS is not a quick win. It requires a long-term commitment to transforming internal processes, financial models, and customer relationships. By maintaining a clear, sustained vision, healthcare technology providers can stay the course and achieve successful outcomes, feeling strategic and forward-thinking in their approach.

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The Future of Healthcare Through XaaS

As healthcare technology providers increasingly adopt XaaS models, they open new possibilities for delivering continuous value and strengthening customer relationships. While the transition from traditional models is complex and requires significant investment, the potential rewards are profound. For healthcare providers, this shift promises cost savings and enhanced outcomes through proactive support and data-driven insights, sparking optimism and motivation for the future.

The journey may be long for organizations looking to make the shift, but as the experiences of companies like Philips show, it is ultimately a worthwhile endeavor. With the correct planning, cross-functional alignment, and customer education, XaaS can transform the healthcare industry—aligning provider goals with customer outcomes in a way that benefits all stakeholders.