Part 2 | Capital Sales: MedTech’s Business Model and Growth Problem

A "Click" Deeper into the CapEx Model Mismatch in MedTech 

Health systems are often framed as slow adopters of innovation. That narrative misses the more important question: where capital dollars are actually going.

Post-2020, capital inside health systems has become defensive. Leaders are prioritizing what keeps the enterprise operational before they fund what makes individual pieces of equipment marginally better. IT modernization, cybersecurity, EHR optimization, infrastructure, and workforce stabilization now compete directly with traditional MedTech purchases for scarce capital.

In that environment, “better technology” is not enough.

At the same time, most imaging, cardiac, and procedural upgrades arrive with no meaningful change in CPT, HCPCS, or FFS reimbursement. The clinical capability may improve, but the economic signal does not. If reimbursement does not move, margin does not move. If margin does not move, capital does not follow.

This creates a structural disadvantage for innovation sold as CapEx. Even when a new system offers incremental efficiency or intelligence, the financial case often depends on future promises rather than present economics. Finance leaders are asked to underwrite risk without a clear path to return.

The mismatch deepens when vendors expect large upfront payments while providers collect revenue on 30- to 90-day accounts receivable cycles. Cash timing is misaligned before value is proven. Evidence that upgrades materially improve throughput, staffing ratios, or downstream outcomes is frequently thin, delayed, or highly site-specific.

From a health system perspective, the choice becomes clear. Preserve capital for enterprise risk and stability, or deploy it on equipment upgrades that do not change reimbursement and may not materially change operating performance.

The outcomes are predictable.

• Purchases are deferred.
• Technology that is acquired is underutilized.
• Pilots dry up and HEOR remains unproven.
• MedTech revenue becomes cyclical and boom-bust.

This is not a failure of innovation.

It is a failure of economic alignment and business model innovation. It is not just a matter of where does my solution fit in the value chain, but also how does it fit and align to my client business model, site of care and cash flow process.

Health systems are not rejecting technology. They are rejecting risk without return. Without a clear, credible path to adoption and sustained utilization that aligns with how care is paid for, even objectively good technology will struggle to scale.

In the next part of this series, I’ll explore what happens when MedTech shifts its success metric from installed base to adoption and utilization and why that shift forces a fundamental change in commercial models, financial leadership, and incentives.