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<h3>Point-of-Care Ultrasound (POCUS) Transformed Hospitals. Why Hasn’t It Scaled in Outpatient Care?</h3>Point-of-care ultrasound hasproven valuable in emergency medicine and critical care. In emergency departments and ICU, POCUS is now routine and used to diagnose pneumothorax, check cardiac function, evaluate undifferentiated shock, guide vascular access, and accelerate decision-making in ways that are both evidence-based and operationally indispensable. The clinical utility is real. The technology works.And yet, despite hospital success and an estimated $3–6 billion invested across handheld hardware and AI-enabled ultrasound platforms over the past decade, POCUS has not achieved comparable scale in outpatient care.That divergence is not a technology failure.It is a commercial architecture failure.<figure id="figure-6f10pwtj0fmm1kf3yw"><img id="6f10pwtj0fmm1kf3yw" src="https://cdn.durable.co/blocks/22oRmEQv1rcR0t1woEqpIE8RpgON6qqHtxaWXlbWavtSGtE8Tst0pCFExB0hF4tq.png" alt="Handheld Point of Care Ultrasound Probe and Tablet" title="Handheld Point of Care Ultrasound Probe and Tablet" class="object-cover bg-gray-100 rounded-2xl md:rounded-3xl lg:rounded-4xl" style="aspect-ratio: 16/9; object-position: center center;" data-corners="default" data-aspect="16:9" data-caption="" data-positionx="undefined" data-positiony="undefined" data-fullwidth="false" data-mce-src="https://cdn.durable.co/blocks/22oRmEQv1rcR0t1woEqpIE8RpgON6qqHtxaWXlbWavtSGtE8Tst0pCFExB0hF4tq.png" data-mce-style="aspect-ratio: 16/9; object-position: center center;"></figure><h3>The Denominator Illusion</h3>Total addressable market (TAM) models typically begin with a clean equation: number of clinicians multiplied by patient visits multiplied by attach rate. The implication is straightforward. If ultrasound is portable, affordable, and AI-assisted, then nearly every outpatient clinician becomes a potential imaging node.But the real denominator is not "all outpatient clinicians who could benefit from just having an handheld ultrasound probe in hand."Rather the value is only unlocked for clinicians practicing in revenue-cycle mature environments, with imaging quality assurance governance, CPT-concordant documentation workflows, payer policy alignment, and without destabilizing internal referral economics (where reimbursement is better for standard imaging).Thus that outpatient group who can benefit is materially smaller.The TAM assumes frictionless reimbursement. The outpatient ecosystem is anything but frictionless.<h3>CPT and Medical Policy Were Not Built for Handheld Workflows</h3>Most ultrasound CPT codes were constructed around comprehensive diagnostic studies performed in formal imaging environments. They assume defined view sets, structured interpretation standards, and department-level archiving and compliance processes. Payer medical policies were written within that same architectural understanding and many do not even contemplate the presence of POCUS. Some could argue there are no CPT codes reflective of POCUS, only for full ultrasound.&nbsp; Beyond that there are frequency limits, medical necessity criteria, and site-of-service assumptions reflect an imaging department model...a far cry from a handheld, AI-guided, AI-Post-Processed, and clinician-performed workflow embedded in a 15-minute visit.In some health plans, certain ultrasound studies also require prior authorization. If a handheld POCUS exam is performed without navigating that requirement, reimbursement denial risk is predictable. If documentation does not meet defined view expectations, downcoding is predictable. If medical necessity is not explicit in the record, payer recoupment risk is predictable.These are not edge cases. They are structural features of the outpatient payment system.Yet many MedTech manufacturers behave as though existing CPT codes are inherently sufficient. Few have engaged payers to evolve medical policy language to reflect handheld workflows. Few design product requirements explicitly around audit and reimbursement defensibility. Few model denial rates as a core commercialization variable.Reimbursement was not "addressed later." It might be assumed that&nbsp; it was never comtemplated and engineered into the product strategy.Ultrasound outside hospital walls is not a device sale. It is a payment-governed diagnostic service, but commercial approaches have yet to evolve.<h3>The Sonographer Shortage Narrative Is Economically Incomplete</h3>It is true that sonographer capacity is constrained in the United States and Internationally. In emergency and critical care settings, POCUS has mitigated that constraint in time-sensitive environments where throughput and acuity justify workflow friction.But expanding user bases beyond a sonographer via AI guidance in an outpatient clinic does not eliminate standard view requirements, image quality needs, documentation requirements, quality oversight, interpretation liability, denial management, or prior authorization workflows. It shifts the burden.Labor substitution does not automatically create scalable margin. When clinician time expands to meet documentation standards and effective reimbursement is reduced by bundling, denials, or policy edits, already brittle unit economics become more fragile. If a family physician spends 12-15 minutes performing and documenting a limited study that reimburses at $50-80 after payer edits, the effective hourly rate may be lower than baseline E&amp;M work and that is before accounting for denial risk.The "math ain't mathing" in fee-for-service outpatient environments.<h3>The Incentive Conflict Under Fee-for-Service</h3>Under fee-for-service payment, comprehensive imaging studies frequently reimburse at higher rates than limited POCUS exams. Referral-based imaging supports specialist economics. In many systems, POCUS is substitutional rather than additive and may be more of a quick look before full imaging, but jusitifiable business cases are often absent.Reducing downstream imaging is clinically rational. It may represent system-level savings. But unless the performing entity bears risk or shares in those savings, it may represent local revenue erosion.The language of value-based care appears frequently in pitch decks. But without modeling who captures economic value, it remains rhetoric. Care enablement "potential" does not automatically translate into financial sustainability.<h3>Why POCUS Scaled in Hospitals</h3>The contrast with hospital adoption is instructive. Emergency departments and ICUs already operate within institutional infrastructures that support archiving, QA, compliance, and billing. Facility economics absorb variability in professional reimbursement and operate under DRG structures. Time-sensitive decisions justify operational friction and internal cannibalization is minimal.Payment architecture supported scale.Outpatient environments lack that structural alignment.<h3>Billions Invested, and Still No Escape Velocity</h3>Disclosed venture capital across handheld and AI ultrasound companies exceeds $1.5 billion. When OEM R&amp;D, commercialization infrastructure, and platform development are considered, ecosystem investment plausibly reaches $3–6 billion over the past decade.If that level of capital has not unlocked broad outpatient scale despite strong evidence that POCUS changes clinical management in a substantial proportion of encounters, then the limiting factor is not probe engineering.It is revenue-cycle design.It is payer engagement.It is utilization management alignment.It is business model innovation.The industry advanced image acquisition and image quality. It has not yet solved monetization of its R&amp;D beyond the walls of the hospital.<h3>The Real TAM</h3>Ultrasound technology is ready. The evidence base is substantial. The care enablement potential in outpatient settings is meaningful.But the true addressable market is constrained to settings that can:<ul><li>Capture reimbursement defensibly</li><li>Navigate prior authorization requirements</li><li>Survive audit scrutiny</li><li>Maintain governance infrastructure</li><li>Align incentives around avoided downstream utilization</li></ul>That defines the real denominator.A full solution in the outpatient include not only the Probe, but training, credentialing, PACS, reporting, readers, QA, management pathways, and much more. Until product development is engineered around what a full solutionneeds to enable payment architecture, value-chain economics, and policy engagement from inception (not bolted on after commercialization), then outpatient projections will remain theoretical, suboptimal and visionary about what could be.Handheld POCUS has the potential to reshape ambulatory and post-acute medicine, but probes and AI alone will not deliver escape velocity.Scale in healthcare is governed by economics.And economics require design.------------------------------------------------------------------------<a data-mce-href="https://erikabel.org/blog/the-outpatient-pocus-and-ai-litmus-test--why-aaa-screening-can-scale-and-others-won-t--part-2" href="https://erikabel.org/blog/the-outpatient-pocus-and-ai-litmus-test--why-aaa-screening-can-scale-and-others-won-t--part-2">Follow on for Part 2</a>, where I examine specific use cases where AI investment may be misaligned and also highlight the one potential application where payment architecture, clinical guidelines, and market gaps align perfectly...its just waiting for the MedTech development.

The Ultrasound TAM Mirage: Why Billions Haven’t Unlocked Outpatient POCUS Scale

<h2>The $5 to $500 Problem: This Is Not a Biosimilar Problem. It Is a Benefit Design Problem.</h2>Biosimilars were designed under the core premise of decreasing drug spending through competition.In many payer analyses, they do. But for commercially insured patients, the experience at the pharmacy counter tells a different story. Lower net payer cost does not automatically translate into lower patient out-of-pocket (OOP) costs. In some cases, OOP exposure increases after biosimilar entry.Worse yet, when affordability worsens, adherence falls...and when adherence falls, medical costs and utilization rises.This is the patient cost paradox in the biosimilar era.<h3>Humira vs Biosimilars: How Copay Assistance Supports Medication Adherence</h3>Originator biologics such as adalimumab (Humira) have historically been paired with robust patient support programs (PSPs) and copay assistance. These programs significantly influence adherence and persistence.A managed care analysis of HUMIRA’s patient support program found:<ul><li>29% higher medication adherence (64.8% vs 50.1%)</li><li>22% lower discontinuation (51.4% vs 65.9%)</li><li>35% lower disease-related medical costs ($10,162 vs $15,511)</li><li>Despite 12% higher drug spending, total healthcare costs were 9% lower among PSP participants.¹</li></ul>Nationally, manufacturer copay cards offset an estimated $19.8 billion in patient OOP costs in 2023, with 63% of brand-name prescriptions using copay assistance.²Lower point-of-sale cost improves persistence on high-value therapy. The data are consistent across chronic conditions.<h3>Do Biosimilars Lower Patient Out-of-Pocket Costs? Evidence from Commercial Insurance</h3>The assumption that biosimilar competition reduces patient affordability burden does not consistently hold true in commercial markets.Recent analyses show:<ul><li>Biosimilar claims were 13% more likely to have nonzero OOP compared with reference biologics (adjusted OR 1.13).³</li><li>Annual OOP spending increased 12% within two years after biosimilar availability.³</li><li>Early infliximab biosimilar competition showed no meaningful improvement in patient OOP affordability.⁴</li></ul>Biosimilars may reduce acquisition cost, but benefit design determines patient exposure.Commercial reimbursement structures are rebate-driven and contract-specific. Coinsurance, deductibles, tier placement, and accumulator policies can offset or negate acquisition savings at the patient level.The result can be a cost cliff rather than cost relief.<h3>Copay Accumulator Adjustment Programs (CAAPs): Impact on Adherence and Discontinuation</h3>Copay accumulator adjustment programs prevent manufacturer assistance from counting toward deductibles or annual out-of-pocket maximums.Their impact on specialty drug adherence is measurable:<ul><li>233 fewer fills per 1,000 patients</li><li>20% increased discontinuation</li><li>12% lower adherence in high-deductible plans⁵ </li></ul>States that banned copay accumulators experienced:<ul><li>41–63% reductions in patient liability</li><li>14% greater odds of adherence</li><li>13% reduction in discontinuation risk⁶</li></ul><blockquote>This is benefit design shaping patient behavior.</blockquote><h3>Autoimmune Medication Abandonment and High Out-of-Pocket Costs</h3>The relationship between OOP cost and prescription abandonment in RA is steep. Among new initiators of biologic therapy:<ul><li>Abandonment was 1.3% when OOP ≤ $250</li><li>Abandonment rose to 32.7% when OOP &gt; $550⁷</li><li>Copay assistance was associated with 79% lower odds of abandonment.⁸</li></ul>Patients with rheumatoid arthritis (RA) for instance have a 3.5-fold higher risk of cost-related medication non-adherence compared with individuals without chronic disease.⁹When a stable patient paying $5 per month with copay support is switched to a biosimilar without equivalent assistance AND OOP increases to several hundred dollars per fill,&nbsp; abandonment and discontinuation risk rise sharply.Net savings at the plan level do not eliminate financial toxicity at the patient level.<h3>Medicare vs Commercial Insurance: Why Biosimilar Out-of-Pocket Trends Differ</h3>Medicare beneficiaries experience different dynamics. A 2026 study found biosimilar competition was associated with lower OOP costs in Medicare, with mean annual patient spending declining from over $200 to approximately $165 within four years.¹⁰The structural reason is reimbursement design. Medicare reimbursement is directly linked to average sales price (ASP). Commercial markets operate within rebate-based frameworks and variable benefit structures that can diverge from acquisition cost trends. This divergence explains why biosimilar affordability improvements appear more consistently in Medicare than in commercial plans.<h3>Cost Sharing, Medication Adherence, and Mortality: Broader Evidence Across Chronic Disease </h3>The RA findings align with broader research on cost sharing and health outcomes. A <a data-mce-href="https://www.nber.org/papers/w28439" href="https://www.nber.org/papers/w28439" target="_blank" rel="noopener">National Bureau of Economic Research study</a> examining abrupt increases in cost sharing found that higher OOP exposure reduced medication use and increased mortality, even for high-value therapies.¹¹In heart failure, Medicare Part D benefit design has been associated with median annual OOP costs exceeding $2,000 for guideline-directed quadruple therapy (GDMT), creating barriers to optimal treatment adoption.¹²Across disease states, the pattern is consistent as shown below:<figure id="figure-89ip6cfpzmlra692d" class=""><img id="89ip6cfpzmlra692d" src="https://cdn.durable.co/blocks/18sLGXZk92GCcpxgOnNZ7gnwrgM62IF4hd3HhAu4PVTUMBBIQ07mJwb7HiT1vn36.png" alt="" title="" class="object-cover bg-gray-100 rounded-2xl md:rounded-3xl lg:rounded-4xl" style="aspect-ratio: 16/9; object-position: center center;" data-corners="default" data-aspect="16:9" data-caption="" data-positionx="undefined" data-positiony="undefined" data-fullwidth="false" data-mce-src="https://cdn.durable.co/blocks/18sLGXZk92GCcpxgOnNZ7gnwrgM62IF4hd3HhAu4PVTUMBBIQ07mJwb7HiT1vn36.png" data-mce-style="aspect-ratio: 16/9; object-position: center center;"></figure>At the same time, many health plans report persistent concerns about rising utilization patterns and avoidable acute care spend.It may be worth examining whether benefit design itself is contributing to that utilization. When high-value chronic therapies are exposed to abrupt or unpredictable cost sharing, reduced adherence should not be surprising. In that context, some portion of downstream utilization may not be a failure of patient behavior, but rather a predictable response to OOP financial exposure.<figure id="figure-99muc8fs8omlrickrf"><img id="99muc8fs8omlrickrf" src="https://cdn.durable.co/blocks/12GMI6rJhYB5GiWs7QXWzJmyu4aadkIHbIApWEv2IVd41VPfs5g2VZCj7E3Q5Irc.png" alt="" title="" class="object-cover bg-gray-100 rounded-2xl md:rounded-3xl lg:rounded-4xl" style="aspect-ratio: 16/9; object-position: undefined undefined;" data-corners="default" data-aspect="16:9" data-caption="Table 1: Cost Sharing and Outcomes Across Chronic Disease" data-positionx="undefined" data-positiony="undefined" data-fullwidth="false" data-mce-src="https://cdn.durable.co/blocks/12GMI6rJhYB5GiWs7QXWzJmyu4aadkIHbIApWEv2IVd41VPfs5g2VZCj7E3Q5Irc.png" data-mce-style="aspect-ratio: 16/9; object-position: undefined undefined;"><figcaption class="body-normal text-gray-500 mt-2">Table 1: Cost Sharing and Outcomes Across Chronic Disease</figcaption></figure>If affordability drives adherence, and adherence drives outcomes, then benefit design becomes part of the causal pathway.<h3>The Biosimilar Cost Paradox: Net Price vs Patient Price </h3>The biosimilar debate is largely framed as a transaction between manufacturers, PBMs, and health plans. The language centers on acquisition cost, rebate leverage, and projected PMPM savings. It is a business-to-business optimization exercise.What is notably absent is the patient.Specifically, absent from the discussion is the evidence on what keeps patients stable, adherent, and out of higher-cost settings. There is no lack of data showing that point-of-sale affordability drives adherence. Copay assistance, predictable cost exposure, and financial continuity materially influence persistence in chronic disease. Yet those variables rarely appear in formulary deliberations.The commercial negotiation optimizes net price. The patient experiences [suboptimal] benefit design.The table below illustrates that misalignment. On one side is the B2B focus driving contracting decisions. On the other is the patient-facing reality that determines whether therapy is taken consistently enough to deliver value.<figure id="figure-229lzeafzmlraihrq"><img id="229lzeafzmlraihrq" src="https://cdn.durable.co/blocks/13JGPxNW2rdD1I91GEMxjB27mIZKw2l1tQ5ACjagDXifW7MhwN0GKVYrm565wYIS.png" alt="" title="" class="object-cover bg-gray-100 rounded-2xl md:rounded-3xl lg:rounded-4xl" style="aspect-ratio: 16/9; object-position: undefined undefined;" data-corners="default" data-aspect="16:9" data-caption="Figure 1: B2B vs Patient-Facing Misalignment" data-positionx="undefined" data-positiony="undefined" data-fullwidth="false" data-mce-src="https://cdn.durable.co/blocks/13JGPxNW2rdD1I91GEMxjB27mIZKw2l1tQ5ACjagDXifW7MhwN0GKVYrm565wYIS.png" data-mce-style="aspect-ratio: 16/9; object-position: undefined undefined;"><figcaption class="body-normal text-gray-500 mt-2">Figure 1: B2B vs Patient-Facing Misalignment</figcaption></figure>If a formulary decision lowers net payer cost but increases abandonment or destabilizes disease control, system savings may be offset by downstream medical costs.Net price is not the same as patient price.That distinction should be central in biosimilar policy discussions and likely even more broadly.<h3>Policy and Benefit Design Solutions to Improve Biosimilar Affordability </h3>To align biosimilar competition with patient affordability:<ul><li>Protect point-of-sale affordability for high-value chronic biologics</li><li>Evaluate copay accumulator policies using real-world adherence data</li><li>Incorporate abandonment and adherence metrics into outcomes-based contracts</li><li>Apply value-based insurance design principles to specialty medications </li></ul>Biosimilars are a critical tool for controlling drug spending, but competition that increases financial toxicity undermines value.Lower acquisition cost alone is not the goal. Lower total cost of care, without shifting burden to patients, should be.&nbsp; References:1. Brixner D, Rubin DT, Mease P, et al. <a data-mce-href="https://pubmed.ncbi.nlm.nih.gov/31081461/" href="https://pubmed.ncbi.nlm.nih.gov/31081461/">Patient support program increased medication adherence with lower total health care costs despite increased drug spending</a>. J Manag Care Spec Pharm. 2019.2. Lalani HS, Hwang CS, Kesselheim AS, Rome BN. <a data-mce-href="https://jamanetwork.com/journals/jama/fullarticle/2825160" href="https://jamanetwork.com/journals/jama/fullarticle/2825160">Strategies to help patients navigate high prescription drug costs</a>. JAMA. 2024. 3. Feng K, Russo M, Maini L, Kesselheim AS, Rome BN. <a data-mce-href="https://pubmed.ncbi.nlm.nih.gov/38551589/" href="https://pubmed.ncbi.nlm.nih.gov/38551589/">Patient out-of-pocket costs for biologic drugs after biosimilar competition</a>. JAMA Health Forum. 2024. 4. Feng K, Kesselheim AS, Russo M, Rome BN. <a data-mce-href="https://pubmed.ncbi.nlm.nih.gov/36227630/" href="https://pubmed.ncbi.nlm.nih.gov/36227630/">Patient out-of-pocket costs following the availability of biosimilar versions of infliximab</a>. Clin Pharmacol Ther. 2022. 5. Sherman BW, Epstein AJ, Meissner B, Mittal M. <a data-mce-href="https://pubmed.ncbi.nlm.nih.gov/31318506/" href="https://pubmed.ncbi.nlm.nih.gov/31318506/">Impact of a co-pay accumulator adjustment program on specialty drug adherence</a>. Am J Manag Care. 2019. 6. Patel A, Sheinson D, Wong WB. <a data-mce-href="https://www.jmcp.org/doi/10.18553/jmcp.2024.30.9.909" href="https://www.jmcp.org/doi/10.18553/jmcp.2024.30.9.909">Patient liability, treatment adherence, and treatment persistence associated with state bans of copay accumulator adjustment programs</a>. J Manag Care Spec Pharm. 2024. 7. Hopson S, Saverno K, Liu LZ, et al. <a data-mce-href="https://pmc.ncbi.nlm.nih.gov/articles/PMC10397931/" href="https://pmc.ncbi.nlm.nih.gov/articles/PMC10397931/">Impact of out-of-pocket costs on prescription fills among new initiators of biologic therapies for rheumatoid arthritis</a>. J Manag Care Spec Pharm. 2016. 8. Wong WB, Donahue A, Thiesen J, Yeaw J. <a data-mce-href="https://pubmed.ncbi.nlm.nih.gov/36692908/" href="https://pubmed.ncbi.nlm.nih.gov/36692908/">Copay assistance use and prescription abandonment across race, ethnicity, or household income levels for select rheumatoid arthritis and oral oncolytic medicines</a>. J Manag Care Spec Pharm. 2023. 9. Harrold LR, Briesacher BA, Peterson D, et al. <a data-mce-href="https://pubmed.ncbi.nlm.nih.gov/23322458/" href="https://pubmed.ncbi.nlm.nih.gov/23322458/">Cost-related medication nonadherence in older patients with rheumatoid arthritis</a>. J Rheumatol. 2013. 10. Riegler JS, Kesselheim AS, Rome BN. <a data-mce-href="https://jamanetwork.com/journals/jamanetworkopen/fullarticle/2843963" href="https://jamanetwork.com/journals/jamanetworkopen/fullarticle/2843963">Out-of-pocket spending for biologic drugs after biosimilar competition for Medicare patients</a>. JAMA Netw Open. 2026. 11. Chandra A, Flack E, Obermeyer Z. <a data-mce-href="https://www.nber.org/papers/w28439" href="https://www.nber.org/papers/w28439">The Health Costs of Cost-Sharing</a>. NBER Working Paper 28439. 2021.&nbsp; 12. Faridi KF, Dayoub EJ, Ross JS, et al. <a data-mce-href="https://pubmed.ncbi.nlm.nih.gov/35738713/" href="https://pubmed.ncbi.nlm.nih.gov/35738713/">Medicare Coverage and Out-of-Pocket Costs of Quadruple Drug Therapy for Heart Failure</a>. J Am Coll Cardiol. 2022 Jun 28;79(25):2516-2525.

Biosimilars and Patient Out-of-Pocket Costs: The Hidden Affordability Problem

AI's Looming Path to Failure in Healthcare: As We Automate, We MUST Renovate

As PBMs, payers, employers, and health systems increasingly adopt biosimilars to manage costs, it is critical to distinguish between two fundamentally different patient populations: treatment-naïve patients and stable patients on established therapy. While many biologic agents, both originators and biosimilars, are used across autoimmune diseases, ankylosing spondylitis (AS or SpA) presents unique risks when disease control is disrupted. AS is a chronic autoimmune disorder that primarily affects the spine and sacroiliac joints, causing progressive pain, stiffness, and structural damage; loss of control can result in irreversible spinal or hip fusion, severe chronic pain, and permanent, life-altering mobility impairment.<blockquote>This issue is not academic for me.</blockquote>I have ankylosing spondylitis and have been clinically stable on Humira (adalimumab) for three plus years — a stability achieved through evidence-based care and it has changed my life thanks to Brian Horgan, PA-C and AHN Rheumatology. Yet despite sustained disease control, I continue to face pressure to switch therapies from PBMs for non-medical reasons, reinforcing why advocacy grounded in clinical evidence matters for patients beyond my own experience.<h3>What the Evidence and Guidelines Say</h3>The 2019 American College of Rheumatology(ACR), Spondylitis Association of America(SAA), and Spondyloarthritis Research and Treatment Network (SPARTAN) guidelines provide a strong recommendation against mandated non-medical switching from originator TNF inhibitors to biosimilars in patients with stable ankylosing spondylitis.[1] This isn't about biosimilar efficacy — it's about the clinical risks of non-medical switching in patients who have achieved disease control.<h3>What the Data Shows:</h3><ul><li>The ABILITY-3 Trial showed 53% of patients who discontinue Humira (adalimumab) experience disease flare, and critically, 44% NEVER regain disease remission upon retreatment. This is real risk if the biosimiliar is ineffective [2]</li><li>Real-world studies demonstrate that non-medical switching is associated with reduced remission rates from 92.7% to 80.9%, with some biosimilars showing[3] 12-month drug survival rates as low as 73% compared to 90% for others [4]</li><li>Non-Medical switching increases total healthcare costs by ~$4,000 per patient per year, with healthcare resource utilization rising[5] 4-37% post-switch, potentially[6] offsetting any drug cost savings</li><li>Moreover, 80% of AS costs are work-related productivity losses — disease flares drive disability and employee absenteeism, not just medical expenses [7]</li></ul><h3>The Right Approach:</h3>✅ Biosimilars as first-line therapy in treatment-naïve patients supported by comparable efficacy data ✅ Biosimilars after treatment failure or intolerance = appropriate clinical indication with viable opportunity ❌ Mandated switching in stable patients introduces unnecessary clinical risk without clear benefit and risk “breaking” what is “fixed”<h3>A Call for Attention from the Stakeholders</h3>The goal should be sustainable cost management, not short-term drug cost reduction that increases downstream utilization. Shared decision-making between physicians and patients (not administrative mandates) should guide treatment decisions in stable patients.<h3>Key Stakeholders:</h3><ul><li>PBMs: Express Scripts Pharmacy Benefit Services, CVS Caremark, Optum Rx, Prime Therapeutics</li><li>Specialty Pharmacies: CVS Specialty, Walgreens Boots Alliance, Optum Specialty Pharmacy, Accredo Specialty Pharmacy, Amber Specialty Pharmacy, Avella Specialty Pharmacy, Senderra Specialty Pharmacy</li><li>Manufacturers: AbbVie, Amgen, Samsung Bioepis, Sandoz, Boehringer Ingelheim, Pfizer, Coherus BioSciences, Organon, Mark Cuban Cost Plus Drug Company, PBC&nbsp;</li></ul>I would like to give special commendation and recognition to Rightway Healthcare and Jordan Feldman, who are leading new disruptive PBM approaches and recognized a unique recognition path forward with exception in this disease state in their biosimilar strategy.<h3>Evidence-based formulary design should recognize that:</h3><ul><li>Treatment-naïve patients are ideal candidates for biosimilar initiation Stable patients on originator biologics face real clinical risks from non-medical switching</li><li>Total cost of care includes flares, work disability, and healthcare resource utilization</li></ul>The majority of US physicians (84%) oppose non-medical switching in stable patients, with concerns about treatment efficacy (57%), patient safety (53%), and mental health impacts (59%) especially in AS/SpA.[8]Let's align Payer and PBM policy with clinical evidence and guidelines. Biosimilars have an important role in healthcare, but that role should be defined by medical appropriateness, not blanket switching mandates in the absence of the full economic picture.<h2>References</h2>1. Ward MM, Deodhar A, Gensler LS, et al. <a data-mce-href="https://www.ncbi.nlm.nih.gov/pmc/articles/PMC6764882/" href="https://www.ncbi.nlm.nih.gov/pmc/articles/PMC6764882/">2019 Update of the American College of Rheumatology/Spondylitis Association of America/Spondyloarthritis Research and Treatment Network Recommendations for the Treatment of Ankylosing Spondylitis and Nonradiographic Axial Spondyloarthritis</a>. Arthritis &amp; Rheumatology. 2019.&nbsp;2. Landewé R, Sieper J, Mease P, et. al. <a data-mce-href="https://pubmed.ncbi.nlm.nih.gov/29961640/" href="https://pubmed.ncbi.nlm.nih.gov/29961640/">Efficacy and safety of continuing versus withdrawing adalimumab therapy in maintaining remission in patients with non-radiographic axial spondyloarthritis (ABILITY-3): a multicentre, randomised, double-blind study.</a> Lancet. 2018 Jul 14;392(10142):134-144. doi: 10.1016/S0140-6736(18)31362-X. Epub 2018 Jun 29.3. Scrivo R, Castellani C, Mancuso S, et al. <a data-mce-href="https://pubmed.ncbi.nlm.nih.gov/35916302" href="https://pubmed.ncbi.nlm.nih.gov/35916302">Effectiveness of Non-Medical Switch From Adalimumab Bio-Originator to SB5 Biosimilar and From ABP501 Adalimumab Biosimilar to SB5 Biosimilar in Patients With Chronic Inflammatory Arthropathies: A Monocentric Observational Study</a>. Clinical and Experimental Rheumatology. 2023.&nbsp;4. Glintborg B, Loft AG, Omerovic E, et al. <a data-mce-href="https://pubmed.ncbi.nlm.nih.gov/30396903" href="https://pubmed.ncbi.nlm.nih.gov/30396903">To Switch or Not to Switch: Results of a Nationwide Guideline of Mandatory Switching From Originator to Biosimilar Etanercept. One-Year Treatment Outcomes in 2061 Patients With Inflammatory Arthritis From the DANBIO Registry</a>. Annals of the Rheumatic Diseases. 2019.&nbsp;5. Wolf D, Skup M, Yang H, et al. <a data-mce-href="https://pubmed.ncbi.nlm.nih.gov/28363696" href="https://pubmed.ncbi.nlm.nih.gov/28363696">Clinical Outcomes Associated With Switching or Discontinuation From Anti-TNF Inhibitors for Nonmedical Reasons</a>. Clinical Therapeutics. 2017.&nbsp;6. Liu Y, Skup M, Yang M, Qi CZ, Wu EQ. <a data-mce-href="https://pubmed.ncbi.nlm.nih.gov/35737227" href="https://pubmed.ncbi.nlm.nih.gov/35737227">Discontinuation and Switchback After Non-Medical Switching From Originator Tumor Necrosis Factor Alpha (TNF) Inhibitors to Biosimilars: A Meta-Analysis of Real-World Studies From 2012 to 2018. </a>Advances in Therapy. 2022.&nbsp;7. Cooksey R, Husain MJ, Brophy S, et. al. <a data-mce-href="https://pubmed.ncbi.nlm.nih.gov/26185984/" href="https://pubmed.ncbi.nlm.nih.gov/26185984/">The Cost of Ankylosing Spondylitis in the UK Using Linked Routine and Patient-Reported Survey Data.</a> PLoS One. 2015 Jul 17;10(7):e0126105. doi: 10.1371/journal.pone.0126105. PMID: 26185984; PMCID: PMC4506082.8. Teeple A, Ellis LA, Huff L, et al. <a data-mce-href="https://pubmed.ncbi.nlm.nih.gov/30712393" href="https://pubmed.ncbi.nlm.nih.gov/30712393" data-mce-selected="inline-boundary">Physician Attitudes About Non-Medical Switching to Biosimilars: Results From an Online Physician Survey in the United States</a>. Current Medical Research and Opinion. 2019.&nbsp;

When Cost Savings Aren't Really Savings: The Hidden Economics of Non-Medical Switching in Ankylosing Spondylitis

Part 1 | The Dirty Words in Healthcare: Unpacking Utilization Management & Prior Auth

<h2>Business Models That Health Systems Can Actually Adopt</h2>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.<ul><li>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 <a data-mce-href="https://www.siemens-healthineers.com/" href="https://www.siemens-healthineers.com/">Siemens Healthineers</a>.</li><li>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 <a data-mce-href="https://www.medtronic.com/" href="https://www.medtronic.com/">Medtronic</a>, <a data-mce-href="https://us2.ai/" href="https://us2.ai/">US2.ai</a>, and <a data-mce-href="https://www.ultromics.com/" href="https://www.ultromics.com/">Ultromics</a> illustrate how utilization-driven economics naturally incent adoption, workflow integration, and sustained use.</li><li>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 <a data-mce-href="https://www.dexcom.com/" href="https://www.dexcom.com/">Dexcom</a> demonstrate how outcomes, utilization, and recurring revenue can reinforce each other over time.</li><li>Other: <a data-mce-href="http://www.stryker.com" href="http://www.stryker.com">Stryker</a> 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.</li></ul><h3>What unites these models is not pricing creativity, but rather alignment</h3>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.<h3>AI software accelerates the need for this shift</h3>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.<h3>Table 1: What Business Model Evolution May Look Like&nbsp;</h3><table border="1" data-mce-style="border-collapse: collapse; width: 100%; margin-left: auto; margin-right: auto;" style="border-collapse: collapse; width: 100%; margin-left: auto; margin-right: auto;"><tbody><tr><td style="width: 19.9981%;" data-mce-style="width: 19.9981%;">Component</td><td style="width: 19.9981%;" data-mce-style="width: 19.9981%;">MedTech Current State</td><td style="width: 19.9981%;" data-mce-style="width: 19.9981%;">MedTech Future State</td><td style="width: 19.9981%;" data-mce-style="width: 19.9981%;">How Providers Get Paid</td><td style="width: 20.0073%;" data-mce-style="width: 20.0073%;">Why This Matters</td></tr><tr><td style="width: 19.9981%;" data-mce-style="width: 19.9981%;">Core Hardware / Devices</td><td style="width: 19.9981%;" data-mce-style="width: 19.9981%;">Large upfront capital or lease sale</td><td style="width: 19.9981%;" data-mce-style="width: 19.9981%;">Capital remains, but decoupled from software and AI value</td><td style="width: 19.9981%;" data-mce-style="width: 19.9981%;">Paid per procedure regardless of device age</td><td style="width: 20.0073%;" data-mce-style="width: 20.0073%;">Capital risk sits fully with the provider</td></tr><tr><td style="width: 19.9981%;" data-mce-style="width: 19.9981%;">Core Platforms (PACS, RIS, VNA)</td><td style="width: 19.9981%;" data-mce-style="width: 19.9981%;">Annual licenses tied to installs or users</td><td style="width: 19.9981%;" data-mce-style="width: 19.9981%;">Fees tied to active use and uptime</td><td style="width: 19.9981%;" data-mce-style="width: 19.9981%;">Included in procedure payment</td><td style="width: 20.0073%;" data-mce-style="width: 20.0073%;">Software cost disconnected from utilization today</td></tr><tr><td style="width: 19.9981%;" data-mce-style="width: 19.9981%;">Clinician Interpretation</td><td style="width: 19.9981%;" data-mce-style="width: 19.9981%;">---</td><td style="width: 19.9981%;" data-mce-style="width: 19.9981%;">---</td><td style="width: 19.9981%;" data-mce-style="width: 19.9981%;">Paid per case (professional fee)</td><td style="width: 20.0073%;" data-mce-style="width: 20.0073%;">Revenue already scales with volume</td></tr><tr><td style="width: 19.9981%;" data-mce-style="width: 19.9981%;">AI for Image Capture</td><td style="width: 19.9981%;" data-mce-style="width: 19.9981%;">Bundled into capital purchase as a feature</td><td style="width: 19.9981%;" data-mce-style="width: 19.9981%;">Per-use or tiered utilization pricing</td><td style="width: 19.9981%;" data-mce-style="width: 19.9981%;">Paid per case or add-on (if CPT/HCPCS code available)</td><td style="width: 20.0073%;" data-mce-style="width: 20.0073%;">Forces measurement of adoption and workflow value</td></tr><tr><td style="width: 19.9981%;" data-mce-style="width: 19.9981%;">AI for Post-Processing &amp; Insights</td><td style="width: 19.9981%;" data-mce-style="width: 19.9981%;">Embedded in capital price with no usage tracking</td><td style="width: 19.9981%;" data-mce-style="width: 19.9981%;">Utilization- or outcome-based OpEx</td><td style="width: 19.9981%;" data-mce-style="width: 19.9981%;">Paid per case or add-on (if CPT/HCPCS code available)</td><td style="width: 20.0073%;" data-mce-style="width: 20.0073%;">Aligns revenue to clinical and economic impact</td></tr></tbody></table><h3>None of these models are margin neutral</h3>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.<blockquote>"Installed Base" ends at install. "Adoption and utilization" compound over time and land in brand partnership capital.</blockquote><h3>Connect to Compare Notes</h3>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 <a data-mce-href="https://zcal.co/erikabel" href="https://zcal.co/erikabel">here</a>.<h3>Keep going:</h3><ul><li><a data-mce-href="https://erikabel.org/blog/part-1---capital-sales--medtech-s-business-model-and-growth-problem" href="https://erikabel.org/blog/part-1---capital-sales--medtech-s-business-model-and-growth-problem">Part 1: "Why Health Systems Aren’t ‘Sold’ on MedTech Innovation"</a></li><li><a data-mce-href="https://erikabel.org/blog/part-2---capital-sales--medtech-s-business-model-and-growth-problem" href="https://erikabel.org/blog/part-2---capital-sales--medtech-s-business-model-and-growth-problem">Part 2: &nbsp;"A 'Click' Deeper into the CapEx Model Mismatch in MedTech"&nbsp;</a></li><li><a data-mce-href="https://erikabel.org/blog/part-3---capital-sales--medtech-s-business-model-and-growth-problem" href="https://erikabel.org/blog/part-3---capital-sales--medtech-s-business-model-and-growth-problem" data-mce-selected="inline-boundary">Part 3: "From 'Installed Base' to 'Adoption &amp; Utilization'"</a> </li></ul>

Part 4 | Capital Sales: MedTech’s Business Model and Growth Problem

Erik Abel

Thought Leader Portfolio (clean hero, blog, and about).

Erik Abel is a healthcare strategist and operator bridging clinical, payer, and MedTech ecosystems to scale AI and digital health solutions that improve access, outcomes, and profitability across fee-for-service, hybrid, and value-based models. With over two decades of leadership translating innovation into reimbursable, market-ready solutions—including a nine-figure acquisition, nationwide diagnostic deployment, and measurable payer adoption—he is recognized for advancing healthcare innovation and commercial growth through research, thought leadership, and advisory work that converts complex care, technology, and policy environments into sustainable value across the healthcare continuum.


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