Part 4 | Capital Sales: MedTech’s Business Model and Growth Problem
Business Models That Health Systems Can Actually Adopt
If adoption and utilization are the real measures of success, then business models must be designed to support them economically, not just clinically.
The good news is that viable alternatives already exist. The more uncomfortable truth is that they require MedTech to move beyond the capital sales mindset that has defined the industry for decades.
Across cardiac, imaging, orthopedics, and digitally enabled workflows, several commercial models are emerging that better align innovation with how providers actually operate and get paid. One of the reasons capital sales persist is that reimbursement logic has historically been anchored to hardware and technical fees. But when you map the full clinical and billing workflow, a different picture emerges. Software, AI acquisition, AI post-processing, and clinical interpretation already align more naturally to per-use and OpEx economics, even when hardware remains capitalized. The opportunity is not theoretical. It is already sitting inside the billing stack. The models that follow simply align MedTech economics to this reality.
- Flat subscription model:, often described as MedTech as a Service (MTaS) bundle hardware, software, maintenance, upgrades, and support into a predictable monthly fee. This approach works best in environments with stable volumes and a need for budget certainty. For health systems, the benefit is straightforward. Cost shifts from a large capital outlay to an operating expense that fits within annual budgets and cash flow planning. The tradeoff is inefficiency for low utilization sites, but adoption barriers drop immediately. This pattern is increasingly visible in platform-based offerings from Siemens Healthineers.
- Pay-per-use or tiered utilization pricing ties fees directly to procedures, scans, or AI inferences, often informed by payer mix. This model aligns cost with reimbursement and significantly lowers upfront risk. More importantly, it reframes ROI in terms CFOs recognize. Instead of underwriting a multi-year capital bet, breakeven can be evaluated monthly or quarterly based on utilization. Connected device ecosystems such as those from Medtronic, US2.ai, and Ultromics illustrate how utilization-driven economics naturally incent adoption, workflow integration, and sustained use.
- Hybrid outcome-linked models layer performance-based economics on top of OpEx pricing. A base operating fee covers fixed costs, while portions of payment are tied to adherence, utilization quality, or outcomes. These structures are more complex to contract and govern, but they create the strongest alignment with payers and providers. Platforms such as Dexcom demonstrate how outcomes, utilization, and recurring revenue can reinforce each other over time.
- Other: Stryker is incorporating flexible payment and usage-aligned approaches that resemble MedTech-as-a-Service (MTaaS), though often framed as financial and service offerings rather than a pure subscription model. The company’s offerings include pay-per-use pricing and bundled service contracts that reduce upfront burden and better align cost with provider cash flow, signaling movement toward more utilization-friendly business models.
What unites these models is not pricing creativity, but rather alignment
As adoption and utilization grow, contract value grows alongside provider volume. Recurrent revenue expands in a way that fits naturally into provider revenue cycles rather than fighting them. The relationship shifts from transaction to partnership, and lifetime value compounds instead of peaking at install. Instead of asking a system to underwrite a seven-figure purchase with a multi-year payback, the breakeven conversation moves to a monthly or quarterly horizon. For example, if a health system generates eight hundred dollars in reimbursement per scan and pays one hundred dollars per scan for technology and services, breakeven may occur at fifteen to twenty incremental procedures per month. That math fits naturally into operating reviews, not capital committees.
As adoption and utilization grow, something important happens - the long-term contract value grows with it over the life of the contract...perhaps to 2-3X the CapEx contract value. Revenue scales alongside provider volume rather than being fixed at install. The partnership deepens because the vendor is now incented to support workflow integration, training, and sustained use. Recurrent revenue expands without breaking the provider’s back because it backs directly into their native cash-flow cycle and accounts receivable timing.
AI software accelerates the need for this shift
When AI is decoupled from hardware, it can be priced per use or bundled flexibly across departments and sites. Early adopter agreements increasingly include data sharing and evidence generation clauses. Low-risk pilots generate real-world data. That data supports coverage, coding, and reimbursement conversations. As reimbursement evolves, utilization increases and the economic flywheel turns faster.
Legacy equipment does not disappear in this transition. Much of the installed base remains clinically functional. In many cases, SaMD overlays, retrofits, or grant-supported modernization provide a more realistic path than full replacement. Capital barriers drop. Utilization rises and innovation advances without forcing disruptive capital resets.
Table 1: What Business Model Evolution May Look Like
| Component | MedTech Current State | MedTech Future State | How Providers Get Paid | Why This Matters |
| Core Hardware / Devices | Large upfront capital or lease sale | Capital remains, but decoupled from software and AI value | Paid per procedure regardless of device age | Capital risk sits fully with the provider |
| Core Platforms (PACS, RIS, VNA) | Annual licenses tied to installs or users | Fees tied to active use and uptime | Included in procedure payment | Software cost disconnected from utilization today |
| Clinician Interpretation | --- | --- | Paid per case (professional fee) | Revenue already scales with volume |
| AI for Image Capture | Bundled into capital purchase as a feature | Per-use or tiered utilization pricing | Paid per case or add-on (if CPT/HCPCS code available) | Forces measurement of adoption and workflow value |
| AI for Post-Processing & Insights | Embedded in capital price with no usage tracking | Utilization- or outcome-based OpEx | Paid per case or add-on (if CPT/HCPCS code available) | Aligns revenue to clinical and economic impact |
None of these models are margin neutral
They trade short-term certainty for long-term durability. They require diligence and investment in product metadata infrastructure, cloud and data governance strategy, compliance, transparent service-level agreements, HEOR capabilities, and new sales and finance operating models.
What they unlock is worth it. Predictable recurring revenue. Contracts whose lifetime value grows as adoption grows. Deeper provider trust. And partnerships built on shared success rather than one-time transactions.
The next decade of MedTech will not be won by shipping more features. It will be won by aligning innovation with how care is actually paid for and sustained.
"Installed Base" ends at install. "Adoption and utilization" compound over time and land in brand partnership capital.
Connect to Compare Notes
If you are a MedTech leader rethinking capital sales, utilization-based models, enterprise transformation and how to better align innovation with incumbent cash flow models in the healthcare value , I am actively comparing notes. Always open to thoughtful collaboration and leadership conversations. Grab some time to connect here.