Part 1 | Capital Sales: MedTech’s Business Model and Growth Problem

Why Health Systems Aren’t ‘Sold’ on MedTech Innovation

MedTech continues to ship smarter, more capable technology, yet adoption keeps stalling inside health systems that actually want innovation. The problem isn’t clinical value. It’s that most innovation is still packaged in business models that collide with constrained capital, flat reimbursement, and rational CFO decision-making. This series examines why that mismatch persists and what has to change if innovation is going to move beyond the demo.

MedTech doesn’t have an innovation problem.
It has a business model innovation problem. It is stuck in the inertia of CapEx mentalities and transactional sales.

We keep seeing feature-laden devices, AI-enabled upgrades, and increasingly sophisticated capabilities, then act surprised when health systems hesitate. Clinicians may see promise, but buying decisions are not made in the reading room or the cath lab. They are made in finance offices, capital committees, and budget reviews.

Most MedTech innovation is still sold through large upfront capital purchases into organizations operating on three- to five-year contract cycles, with limited capital flexibility and reimbursement structures that rarely reward incremental improvement. If the legacy equipment works and reimbursement does not change, the “upgrade” is simply additional cost.

Even AI SaMD often falls into the same trap. Instead of changing the economic equation, it is frequently buried into the bundled CapEx price. Sales teams and leadership talk about creativity and differentiation, but ultimately fall back on the same crutch: capital sales.

In that context, the client's decision not to buy is not conservative.
It is rational.

Capital dollars inside health systems are being pulled toward what keeps the enterprise functioning: IT modernization, cybersecurity, EHR optimization, facilities, and workforce stabilization. Against those demands, feature-rich equipment with no clear economic upside struggles to compete, regardless of how impressive the technology may be.

The result is predictable. Shiny new systems become financial liabilities instead of levers. Sales cycles extend. Market adoption slows. Utilization lags. Evidence generation stalls. Innovation stops at the hospital door.

The market signals are already clear. When more than half of an installed base is 10–15 years old and customers are not investing in new, feature-laden replacements, the right question is not “why aren’t they innovating?” It is “why doesn’t this innovation clear the CFO’s bar?”

Sit across from the client's CFO and the simple, but powerful questions come fast:

• What is the reimbursement and margin if we continue using our existing, functional assets?
• What incremental reimbursement or margin does this new system, AI, or upgrade actually unlock?
• Is there credible evidence it improves staffing efficiency or resource utilization versus today?
• Does it move durable metrics like quality, safety, length of stay, or outcomes?

The answers are often uncomfortable.

Reimbursement is largely unchanged, with little CPT, HCPCS, or FFS upside.
Existing equipment remains functional.
Excitement about features and future use cases is replaced with hard evidence.
And then, silence.

This cycle repeats while budgets tighten and confidence in long-term device and AI roadmaps remains too shaky to justify major capital risk. The result is familiar: feature-laden solutions sitting idle, pilots that never scale, and inventions that fall short of their promised impact.

To healthsystems, these new feature-rich devices and AI SaMD become cost centers rather than revenue drivers. AI and devices get installed “to test,” but adoption stalls and utilization never materializes. Sales cycles stretch. Innovation once again stalls at the health system front door.

This is not resistance to change.
It is disciplined financial decision-making.

It is also a failure to fully understand the customer’s business model, revenue cycle, and cash-flow reality.

For too long, MedTech has treated "Installed Base" as a commercial proxy for success. In today’s environment, that metric is at best an incomplete "Leading Metric" and at worst misleading regarding commercial success. What matters is whether technology is adopted, used, and sustained in a way that delivers value and aligns with how care is actually paid for.

Installed base tells you what was sold.
Adoption and utilization tell you whether innovation survived reality.

In the next part of this series, I’ll examine where health system capital is actually going and why “better technology” alone is no longer enough to win it back.