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<h2>From "Installed Base" to "Adoption &amp; Utilization"</h2>If Parts 1 and 2 of this series explain why health systems cannot buy innovation, the next question is more uncomfortable.&nbsp;<blockquote>What happens when MedTech accepts that "installed base" is no longer the right success metric?</blockquote>Installed base measures what was sold. It says nothing about whether technology is adopted, consistently used, or economically relevant in delivering value. In today’s environment, that distinction matters more than ever.<h3>Adoption and utilization are where value is created or lost.</h3>When technology is installed but rarely used, health systems risk seeing sunk cost, not transformation. When AI is deployed as a pilot but never scaled, evidence generation stalls and confidence erodes. When utilization lags, reimbursement enablement conversations never mature. Innovation quietly dies without ever being rejected outright.This shift forces MedTech to confront something deeper than pricing. It requires a change in mindset across commercial, finance, and leadership teams and a shift in identity from "Vendor" to "Partner".The traditional CapEx model rewards placement. Sales teams were optimized to close transactions. Finance teams were optimized around one time revenue recognition. Once the equipment is installed, success is largely assumed.That model does not survive an environment where capital is constrained and value must be demonstrated continuously.<ul><li>Adoption and utilization based models demand different capabilities. Financial leaders must understand recurring revenue, utilization ramps, and forecasting under variability. They must also understand how cash actually flows through health systems, including payer mix, revenue cycles, and accounts receivable timing.</li><li>Sales incentives must evolve as well. Compensation structures that reward one time placements reinforce the very behavior that is now failing. In contrast, models that reward retention, utilization growth, training adoption, and multi year value creation change how teams engage customers.</li></ul><h3>This is not a minor operational tweak. It is a talent and leadership shift.</h3>Historically, the CapEx model does not require deep understanding of provider economics. That era is ending. MedTech leaders who are unwilling to evolve their financial and commercial thinking will find themselves optimizing a model that no longer scales.<blockquote>"If you do not like change, you will like irrelevance even less." - Eric Shinseki&nbsp;</blockquote>In the final part of this series, I will look at what can actually work in practice and which commercial models are proving capable of aligning innovation with how care is paid for.<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: "A 'Click' Deeper into the CapEx Model Mismatch in MedTech</a></li><li><a data-mce-href="https://erikabel.org/blog/part-4---capital-sales--medtech-s-business-model-and-growth-problem" href="https://erikabel.org/blog/part-4---capital-sales--medtech-s-business-model-and-growth-problem" data-mce-selected="inline-boundary">Part 4: "Business Models That Health Systems Can Actually Adopt"</a></li></ul>

Part 3 | Capital Sales: MedTech’s Business Model and Growth Problem

<h2>A "Click" Deeper into the CapEx Model Mismatch in MedTech&nbsp;</h2>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.<ul><li>Purchases are deferred.</li><li>Technology that is acquired is underutilized.</li><li>Pilots dry up and HEOR remains unproven.</li><li>MedTech revenue becomes cyclical and boom-bust.</li></ul>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.<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-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">Part 3: "From 'Installed Base' to 'Adoption &amp; Utilization'"</a></li><li><a data-mce-href="https://erikabel.org/blog/part-4---capital-sales--medtech-s-business-model-and-growth-problem" href="https://erikabel.org/blog/part-4---capital-sales--medtech-s-business-model-and-growth-problem">Part 4: "Business Models That Health Systems Can Actually Adopt"﻿</a></li></ul>

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

<h2>Why Health Systems Aren’t ‘Sold’ on MedTech Innovation</h2>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:<ul><li>What is the reimbursement and margin if we continue using our existing, functional assets?</li><li>What incremental reimbursement or margin does this new system, AI, or upgrade actually unlock?</li><li>Is there credible evidence it improves staffing efficiency or resource utilization versus today?</li><li>Does it move durable metrics like quality, safety, length of stay, or outcomes?</li></ul>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&nbsp;"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.<h3>Keep going:</h3><ul><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">Part 3: "From 'Installed Base' to 'Adoption &amp; Utilization'"</a></li><li><a data-mce-href="https://erikabel.org/blog/part-4---capital-sales--medtech-s-business-model-and-growth-problem" href="https://erikabel.org/blog/part-4---capital-sales--medtech-s-business-model-and-growth-problem">Part 4: "Business Models That Health Systems Can Actually Adopt"﻿</a></li></ul>

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

<h2>Introduction</h2>Eosinophilic esophagitis (EoE) is a chronic immune-mediated inflammatory disorder of the esophagus with a growing population impact. Prevalence estimates range from 13 to 49 cases per 100,000 people globally, with substantially higher rates reported in the United States at approximately 26 to 163 cases per 100,000 individuals.(1-3) This epidemiology makes clear that EoE is no longer a niche diagnosis. It is a common chronic disease with meaningful implications for patients, families, and the healthcare system.The scientific foundation for EoE diagnosis and treatment is strong. The challenge is not evidence quality. The challenge is that the way EoE care is delivered often imposes a level of burden that many patients cannot realistically sustain.As a clinician, a patient with EoE for more than 20 years, and a parent of a child with EoE, I see a growing divide between what guidelines recommend and what patients can realistically sustain. The issue is not the quality of the evidence. The issue is whether the current care model is operationally feasible for families navigating months of dietary restriction, serial sedated endoscopies, and constant lifestyle adjustment. Bridging that gap requires preserving rigor while rethinking how care is sequenced, monitored, and personalized.<h3>Clinical Burden Across the Lifespan</h3>EoE presents differently across age groups, but disease burden is substantial throughout life. Adults most commonly experience dysphagia, food impaction, and chest discomfort, while children often present with feeding difficulties, vomiting, abdominal pain, and impaired growth.(4,5) Across all ages, EoE is strongly associated with atopic comorbidities including asthma, allergic rhinitis, atopic dermatitis, and food allergy.(4,5)Treatment typically includes dietary elimination or elemental diets, proton pump inhibitors (PPIs), swallowed topical corticosteroids (STCs), and procedural interventions such as endoscopic esophageal dilation for fibrostenotic disease.(6,7) Swallowed topical corticosteroids have demonstrated greater effectiveness at inducing clinical and histologic remission compared with PPIs and are recommended over systemic corticosteroids because of superior safety profiles.(6,7)Despite these options, disease control frequently requires prolonged therapy, iterative adjustments, and objective monitoring over months to years.<h3>The Cost of the Current Care Model</h3>Real-world insurance claims data quantify what patients and clinicians experience anecdotally. In a large U.S. retrospective analysis, individuals with newly diagnosed EoE incurred significantly higher all-cause healthcare costs than matched controls both before and after diagnosis. Mean per-patient costs exceeded ten thousand dollars annually at baseline and rose to more than fifteen thousand dollars during follow-up, representing several-fold higher costs than individuals without EoE.(8)Cost burden varies meaningfully by age. Annualized EoE-related healthcare costs during follow-up were highest among pediatric patients and adolescents, with mean expenditures exceeding five thousand dollars per year.8 In these populations, outpatient encounters, physician office visits, and pharmacy utilization were the primary cost drivers. In adults, EoE-related costs were driven predominantly by inpatient admissions and ambulatory surgical center visits, reflecting greater reliance on procedural care.(8)These findings reflect routine clinical practice rather than controlled trial environments and reinforce that current EoE care pathways are resource-intensive across the lifespan.<h3>The Problem Is Not Efficacy…. It Is Feasibility</h3>Empiric elimination diets are highly effective. The six-food elimination diet achieves histologic remission in 61 to 73 percent of patients, while less restrictive two-food or four-food approaches achieve remission in 43 to 54 percent.(9,10) These outcomes justify their central role in clinical guidelines.Yet long-term adherence remains poor. Discontinuation rates approach 40 to 50 percent in both adult and pediatric populations.(9,10)&nbsp; The drivers are consistent. Broad dietary restriction, increased food costs, family burden, social disruption, nutritional complexity (food labeling), health literacy and the requirement for repeated endoscopic confirmation of response.For many patients, particularly families managing pediatric disease, a broad empiric elimination is not simply challenging. It is not realistic.<h3>The Monitoring Burden Drives Attrition</h3>Because symptoms correlate poorly with histologic activity, EoE management relies on objective monitoring.(4,5) Serial endoscopy has been the standard. While scientifically justified, this approach contributes substantially to procedural fatigue, cost, and care discontinuation.Esophageal string testing (EST) offers a validated, minimally invasive alternative for monitoring and surveillance (see Enterotrack). EST correlates strongly with histologic disease activity, with an area under the curve of 0.83 and sensitivity and specificity near 80 percent.11 Pediatric data demonstrate high completion rates and fewer required endoscopies when EST is incorporated into care.(12) Despite this, adoption remains limited, driven largely by reimbursement, payer adoption and workflow barriers rather than evidence gaps.(11,12)Integrating EST into routine monitoring represents a clear opportunity to reduce procedural burden while maintaining objective disease assessment.<h3>Where Sensitivity-Based Elimination Fits</h3>Allergy and gastroenterology societies appropriately caution against using IgG or IgG4 testing as diagnostic tools for food allergy.(6,7) Aside from managing provider ordered tests, groups like <a data-mce-href="https://www.everlywell.com/" href="https://www.everlywell.com/">EverlyWell</a> offer food sensitivity testing as an at-home IgG/IgG4<a data-mce-href="https://www.everlywell.com/products/food-sensitivity-comprehensive-test/" href="https://www.everlywell.com/products/food-sensitivity-comprehensive-test/"> Food Sensitivity Test</a>, which checks your blood for IgG antibodies to potentially triggering foods. Mediator release testing such as <a data-mce-href="https://www.nowleap.com/mrt-iii-the-future-of-food-sensitivity-testing/" href="https://www.nowleap.com/mrt-iii-the-future-of-food-sensitivity-testing/">MRT-LAA</a> by <a data-mce-href="https://www.nowleap.com/" href="https://www.nowleap.com/">Oxford Laboratories</a> is not addressed in current EoE guidelines and lacks direct EoE-specific validation.(6,13) These limitations are real and should be acknowledged.However, absence of diagnostic precision does not equate to absence of potential clinical utility in all contexts. This presents the scenario where sometimes, staunch clinicians take firm stances against such testing and reinforce the only option as empiric elimination diets. &nbsp;Unfortunately, these stances lead to disengaged patients that look elsewhere for answers and a missed opportunity for listening to the patient and family to develop a pragmatic and guided plan.Emerging evidence demonstrates that food-specific IgG4-guided elimination yields histologic remission in approximately 45 percent of adults with EoE.(14) Combined tissue IgG4 and peripheral T-cell assays show moderate accuracy, ranging from 53 to 75 percent, in identifying likely food triggers.(6) Standard allergy test-based diets continue to show modest predictive value and variable response rates.(13,15)In patients for whom broad empiric elimination is not feasible, sensitivity-based approaches can function as hypothesis-generating tools. When framed appropriately, IgG4 or MRT-LAA patterns may help prioritize a smaller set of foods for initial elimination – as steps towards feasible change management. Results should be communicated as signals rather than proof and applied within a step-up framework that escalates only if inflammation persists.This shifts the clinical question from “What can we definitively prove?” to “Where should we reasonably start for this patient?”<h3>A Hybrid Model That Balances Rigor and Real-World Reality</h3>A sustainable and patient-centered EoE care model can preserve guideline-based rigor while reducing unnecessary burden:<ol><li>Confirm diagnosis with endoscopy and histology(4,5)</li><li>Complete a twelve-week high-dose PPI trial(6)</li><li>Use empiric elimination when it is truly feasible and acceptable to the patient(9,10)</li><li>When empiric elimination is not feasible, apply sensitivity-based targeted elimination using IgG4 or MRT-LAA as adjunctive tools(6,14)</li><li>Incorporate EST for interim monitoring to reduce reliance on serial sedated endoscopy(11,12)</li><li>Apply a step-up philosophy to dietary escalation(9,10)</li><li>Reserve endoscopy for diagnosis, confirmation of remission, and discordant clinical scenarios&nbsp;</li></ol>This framework respects the hierarchy of evidence while acknowledging patient capacity, cost, and adherence as determinants of success.<h3>Why This Matters</h3>EoE is a lifelong condition. The science has matured, but delivery has not. Real-world data show that current care pathways carry substantial economic and procedural burden, particularly for children and families.(8) When patients disengage because care is unsustainable, outcomes suffer regardless of therapeutic efficacy. They disengage on treatments, the repeated endoscopies and also pursue alternatives for including food sensitivity testing all while attempting to develop a reasonable dietary plan. Why not embrace the journey and align on tests that may reasonably guide the patient, develop a monitoring that is less costly and burdensome. The elephant not yet on the table and underappreciated, is that elimination diets and their maintenance likely far exceed the medical costs that have been contemplated in the literature.Thus, advancing EoE care will require broader adoption of noninvasive monitoring, rigorous evaluation of sensitivity-based elimination as an alternative entry point, greater investment in nutrition support, and reimbursement models that reward high-value care rather than procedural volume.We can preserve the science while modernizing the experience and that evolution is overdue.<h3>A Practical Call to the Field</h3>For healthcare researchers, clinicians, professional societies, payers, and innovators working in EoE, there is significant value in observing how patients and families navigate this disease outside the clinic. Online peer-support communities provide unfiltered insight into where current care pathways break down, where guidance is insufficient, and where patients struggle to translate recommendations into daily life.Two such communities offer a particularly clear window into the lived experience of EoE:<ul><li><a data-mce-href="https://www.facebook.com/share/g/17pBz8eUab/?mibextid=wwXIfr" href="https://www.facebook.com/share/g/17pBz8eUab/?mibextid=wwXIfr">Facebook EoE Support Group</a></li><li><a data-mce-href="https://www.reddit.com/r/EoEsupport/s/41cjA0B5QO" href="https://www.reddit.com/r/EoEsupport/s/41cjA0B5QO">Reddit EoE Support Community</a> &nbsp;</li></ul>Reviewing these discussions offers insights into recurring gaps in patient education, diet implementation, monitoring strategies, and longitudinal support. For those committed to improving outcomes in EoE, these communities represent an important source of insight into real-world needs and opportunities to evolve how care is delivered.Advancing EoE care will require collaboration across gastroenterology, allergy, pediatrics, nutrition, and patient advocacy. Organizations such as American College of Gastroenterology, American Gastroenterological Association, NASPGHAN, American College of Allergy, Asthma and Immunology (ACAAI), and APFED are uniquely positioned to help close the gap between guideline intent and real-world experience. As EoE therapies advance, manufacturers such as Sanofi, Regeneron, Takeda, and others have an opportunity to lead not only on efficacy, but on feasibility, adherence, and real-world care delivery.<h3>References</h3><ol><li>Hirano I, Chan ES, Rank MA, et al. AGA Institute and the Joint Task Force on Allergy-Immunology Practice Parameters Clinical Guidelines for the Management of Eosinophilic Esophagitis. Gastroenterology. 2020;158(6):1776-1786.</li><li>Muir A, Falk GW. Eosinophilic esophagitis: a review. JAMA. 2021;326(13):1310-1318.</li><li>Dellon ES, Muir AB, Katzka DA, et al. ACG clinical guideline: diagnosis and management of eosinophilic esophagitis. Am J Gastroenterol. 2025;120(1):31-59.</li><li>Muir A, Falk GW. Eosinophilic esophagitis: a review. JAMA. 2021;326(13):1310-1318.</li><li>Dellon ES, Muir AB, Katzka DA, et al. ACG clinical guideline: diagnosis and management of eosinophilic esophagitis. Am J Gastroenterol. 2025;120(1):31-59.</li><li>Molina-Infante J, Lucendo AJ. Dietary therapy for eosinophilic esophagitis. J Allergy Clin Immunol. 2018;142(1):41-47.</li><li>Hirano I, Chan ES, Rank MA, et al. Gastroenterology. 2020;158(6):1776-1786.</li><li>Xu X, Maslova E, Kielar D, et al. Characteristics, treatment patterns, healthcare resource utilization, and costs in patients with eosinophilic esophagitis in the United States: a retrospective analysis of insurance claims data. Ther Adv Gastroenterol. 2025;18:1-20. doi:10.1177/17562848251391090.</li><li>Mayerhofer C, Kavallar AM, Aldrian D, et al. Efficacy of elimination diets in eosinophilic esophagitis: a systematic review and meta-analysis. Clin Gastroenterol Hepatol. 2023;21(9):2197-2210.e3.</li><li>Molina-Infante J, Lucendo AJ. J Allergy Clin Immunol. 2018;142(1):41-47.</li><li>Al Abdulqader AK. Advances in diagnostic techniques for eosinophilic esophagitis: a systematic review of emerging noninvasive methods. Eur J Med Res. 2025;30(1):924.</li><li>Quinn LA, Andrews R, Bauer M, Nguyen N. Utilization and impact of esophageal string testing in children with eosinophilic esophagitis: a 1-year experience. J Pediatr Gastroenterol Nutr. 2024;79(3):631-635.</li><li>Pitsios C, Vassilopoulou E, Pantavou K, et al. Allergy-test-based elimination diets for the treatment of eosinophilic esophagitis: a systematic review of their efficacy. J Clin Med. 2022;11(19):5631.</li><li>Lim AHW, Ngoi B, Perkins GB, et al. Outcomes of serum food-specific immunoglobulin G4 to guide elimination diet in patients with eosinophilic esophagitis. Am J Gastroenterol. 2024;119(6):1066-1073.</li><li>Visaggi P, Mariani L, Pardi V, et al. Dietary management of eosinophilic esophagitis: tailoring the approach. Nutrients. 2021;13(5):1630.</li></ol>

Modernizing Eosinophilic Esophagitis Care: When Evidence Meets Real-World Feasibility

<h2>The inertia of 1960s workflow decisions</h2>Warfarin entered clinical practice in 1948. Seventy-seven years later, most U.S. hospitals still require a standard administration time of 18:00....a timing convention built for healthcare system operations constraints that no longer exist. In earlier days, INR assays were batched overnight, results were slow, and evening dosing created a buffer between administration and next-day rounds. Modern labs return INRs in under 30 minutes, yet the 18:00 dose administration policy persists purely out of institutional habit.&nbsp;The legacy timing policies and practices however have created preventable inefficiency during the most critical phase of therapy - inpatient initiation. This is when patients require daily INR monitoring and rapid titration to reach therapeutic anticoagulation attempting to overcome a "warfarin hostage" situation where the patient stays inpatient only because of warfarin titration. But, are we in a place where the workflow no longer matches the pharmacology and operationally we have options to choose a different path?<h3>The mismatch is measurable</h3>A quality improvement study from Bristol Royal Infirmary found that 64 percent of warfarin doses were administered after 17:00 during minimal-staffing periods, with only 24 percent given within an hour of the recommended 14:00 timing. Erratic dosing driven by inconsistent on-call prescribing and reactionary dosing that did not contemplate drug mechanics often produced supratherapeutic INRs in 23 percent of cases. Standardizing administration to a daytime window improved adherence from 24 percent to 49 percent and reduced high INRs from 23 percent to 9 percent.¹The mechanism is straightforward. Warfarin’s anticoagulant effect does not materialize meaningfully for 24–36 hours, and full pharmacodynamic expression takes 72–96 hours. When INRs are drawn at 03:00–05:00 (only 9–11 hours after an evening dose) clinicians are interpreting the ascending limb of the curve rather than the true response to yesterday’s adjustment. The result is reactive overcorrection, oscillating INRs, delayed time-in-therapeutic-range, and longer length of stay.AHRQ patient-safety analyses have repeatedly flagged mismatched dosing and monitoring windows as preventable contributors to anticoagulation errors. The Joint Commission evaluates hospitals on anticoagulant process variation using warfarin as a tracer. CMS surveyors do the same.<h3>Systematic workflows deliver better outcomes</h3>Pharmacist-managed inpatient anticoagulation services demonstrate substantial gains when workflows are coordinated rather than inherited. In one study, pharmacist consultation increased the proportion of patients reaching therapeutic INR within 5 days from 38 percent to 88 percent, cut mean time to therapeutic INR from 6.5 to 3.9 days, reduced INR overshoots (&gt;4) from 27 percent to 2 percent, and shortened length of stay after warfarin initiation from 11 to 7.7 days.²These outcomes are not driven by better drugs. They are driven by better processes including standardized protocols, daily INR review at predictable times, and dose adjustments grounded in pharmacokinetics, pharmacodynamics and physiologic timing rather than convenience.<h3>Two operational changes fix most of the problem</h3>The evidence points to two simple improvements:<ul><li>Shift warfarin standard administration time to 10:00–14:00. This aligns dosing with peak staffing and ensures pharmacists and physicians can interpret INR values and adjust therapy on the same day. It also eliminates isolated evening medication passes that add workload without improving safety. </li><li>Align INR draws to 20–24 hours post-dose. This produces INRs that reflect true pharmacodynamic effect rather than early noise, enabling accurate titration and shorter time to therapeutic range.</li></ul>Neither requires new technology, new capital, or new regulatory frameworks. Just a willingness to stop operating as if current workflows still serve the purpose they were designed for in 1968.Warfarin isn’t going awayWhile DOACs have transformed anticoagulation management, warfarin remains essential for many clinical scenarios including mechanical valves, end-stage renal disease, LVADs, complex drug interactions, and patients who cannot afford newer agents. As long as the drug remains clinically necessary, its workflow should reflect current capabilities and not outdated constraints.Healthcare’s inertia is well known, but warfarin timing is a case study in how small operational decisions accumulate real cost. Length of stay. Patient safety. Staff efficiency. All influenced by a schedule that no longer makes sense. Hospitals invest millions in throughput, digital command centers, and “patient-flow redesign.” Yet a small, evidence-backed shift in warfarin timing may deliver meaningful gains in INR stability, safety, and LOS."The 1960's have called and asked for their workflow back and it's past time for us to approach it with new eyes."This is a high-ROI improvement addressed through a simple operational intervention: update a schedule that outlived its purpose half a century ago. The question is who will treat it as such?&nbsp;References<ol><li>Dyar R, Hall S, McIntyre B. Warfarin prescription and administration: reducing the delay, improving the safety. BMJ Qual Improv Rep. 2015;4(1):u204509.w1983.</li><li>Wong YM, Quek YN, Tay JC, Chadachan V, Lee HK. Efficacy and safety of a pharmacist-managed inpatient anticoagulation service for warfarin initiation and titration. J Clin Pharm Ther. 2011;36(5):585-591.</li><li>Ageno W, Gallus AS, Wittkowsky A, et al. Oral Anticoagulant Therapy. Chest. 2012;141(2 Suppl):e44S-e88S.</li><li>Gage BF, Fihn SD, White RH. Management and dosing of warfarin therapy. Am J Med. 2000;109:481-488.</li><li>Schulman S. Care of patients receiving long-term anticoagulant therapy. N Engl J Med. 2003;349:675-683.</li><li>Yang W, Ma J, Hu W, et al. Associated factors and safety of rapidly achieving therapeutic warfarin targets in hospitalized patients. Int J Clin Pharm. 2022;44:939-946.</li><li>Holbrook A, Schulman S, Witt DM, et al. Evidence-based management of anticoagulant therapy. Chest. 2012;141(2 Suppl):e152S-e184S. FDA. Warfarin Sodium label. Updated 2025.</li></ol>

The Hidden Cost of “That’s How We’ve Always Done It”: Warfarin Edition

Even though this analysis first circulated a few years ago, the findings remain just as relevant today. RAND and Harvard researchers led by Rachel Reid, MD, MS, published in JAMA confirmed what many in the industry have sensed...despite value-based reimbursement from payers, physician compensation inside health systems remains overwhelmingly volume-driven. Only 9% of primary care and 5% of specialist compensation is tied to value metrics.&nbsp;Nonetheless, there is a critical nuance worth noting…. the payer-to-health system contract is often completely separate from how health systems and practices compensate their providers.<ul><li><a data-mce-href="https://www.rand.org/news/press/2022/01/28.html" href="https://www.rand.org/news/press/2022/01/28.html" title="Despite Push to Reward Physicians for Quality and Value, Most Health Systems Base Pay on Volume" target="_blank" rel="noopener">RAND Article: "Despite Push to Reward Physicians for Quality and Value, Most Health Systems Base Pay on Volume"</a></li><li><a title="Physician Compensation Arrangements and Financial Performance Incentives in US Health Systems" href="https://jamanetwork.com/journals/jama-health-forum/fullarticle/2788514" target="_blank" rel="noopener" data-mce-href="https://jamanetwork.com/journals/jama-health-forum/fullarticle/2788514">JAMA Publication: "Physician Compensation Arrangements and Financial Performance Incentives in US Health Systems"</a></li><li>Thought provoking review of this by <a data-mce-href="https://www.linkedin.com/posts/ericbrickermd_paid-incentives-healthcare-activity-7393980862242983937-5AMM" href="https://www.linkedin.com/posts/ericbrickermd_paid-incentives-healthcare-activity-7393980862242983937-5AMM" target="_blank" rel="noopener">Eric Bricker, MD&nbsp;</a></li></ul><h3>The Hidden Disconnect</h3>Even when a payer rewards a system for lowering cost or improving quality, those funds may not flow directly to the individual physicians driving that change. Internal compensation formulas often remain built on:<ul><li>Work RVUs that reward throughput</li><li>Fixed salaries for coverage stability</li><li>Stipends or call pay for access obligations</li></ul>This structural lag may explain why most “value-based” arrangements still behave like volume-based engines at the provider and health system level.<h3>Inside the Compensation Cascade</h3>Within a single system, physician pay can vary dramatically across departments and individuals. A cardiologist might be paid by RVUs, a hospitalist by shift, and an imaging physician by stipend… all under the same payer contract.That complexity makes it difficult to align clinical behavior with system-level value targets.<h3>Mapping the Models</h3>In U.S. health systems, the flow of professional and technical revenue depends on whether care is delivered in an inpatient (bundled under DRG) or outpatient setting. Admitted encounters typically roll the technical component into the hospital DRG, while professional fees are billed separately by the physician group. For outpatient or ED discharges, both professional and technical components are billed independently, aligned to site-of-service fee schedules and governed by revenue cycle responsibilities, payer contracts, and local compliance rules.As organizations move toward risk-bearing or shared savings models, several compliance and regulatory guardrails must remain top-of-mind.<ul><li style="list-style-type: none;" data-mce-style="list-style-type: none;"><ul><li>Anti-Kickback Statute (AKS), Stark Law, and Fee-Splitting prohibitions continue to shape how compensation structures can be legally designed and distributed.</li><li>Risk adjustment activities require defensible documentation that reflects active monitoring, evaluation, and treatment planning for any new or reaffirmed diagnosis.</li><li>Corporate Practice of Medicine (CPOM), credentialing and scope of practice rules differ by state, defining what physicians, nurses, and other clinicians may perform and bill under supervision or delegation.</li><li>Data privacy and AI governance frameworks are also tightening, particularly where clinical decision support or analytics influence patient care or reimbursement.</li></ul></li></ul>These elements make compensation design as much a compliance exercise as an economic one. Even well-intentioned incentive models can create exposure if documentation, credentialing, or governance do not align with regulatory expectations.<h3>Provider Compensation Models</h3>Below is a concise high-level representative summary of 17 physician compensation and revenue integration models, spanning from traditional salary and RVU structures to emerging risk-sharing and joint venture models:<table style="border-collapse: collapse; width: 100%;" border="1" data-mce-style="border-collapse: collapse; width: 100%;" data-mce-selected="1"><tbody><tr><td style="width: 50%;" data-mce-style="width: 50%;">1. &nbsp; &nbsp; &nbsp;Hourly Compensation</td><td style="width: 50%;" data-mce-style="width: 50%;">Description: Fixed hourly rate for time worked Professional Revenue: Not linked to output; revenue retained by employer or hospital Technical Revenue: Retained by the hospital for capital and operating expenses</td></tr><tr><td style="width: 50%;" data-mce-style="width: 50%;">2. &nbsp; &nbsp; &nbsp;Salary-Based Compensation</td><td style="width: 50%;" data-mce-style="width: 50%;">Description: Fixed annual salary tied to coverage expectations Professional Revenue: Indirectly influences salary reviews or discretionary bonuses Technical Revenue: Hospital-retained</td></tr><tr><td style="width: 50%;" data-mce-style="width: 50%;">3. &nbsp; &nbsp; &nbsp;Productivity-Based (RVU)</td><td style="width: 50%;" data-mce-style="width: 50%;">Description: Pay driven by RVUs generated through procedures and interpretations Professional Revenue: Directly tied to production; incentivizes higher volume Technical Revenue: Hospital-retained unless joint ownership exists</td></tr><tr><td style="width: 50%;" data-mce-style="width: 50%;">4. &nbsp; &nbsp; &nbsp;Performance-Based (Quality Incentives)</td><td style="width: 50%;" data-mce-style="width: 50%;">Description: Compensation linked to quality, safety, and satisfaction metrics Professional Revenue: Quality scores factor into bonus pools Technical Revenue: Hospital-retained; may fund quality infrastructure</td></tr><tr><td style="width: 50%;" data-mce-style="width: 50%;">5. &nbsp; &nbsp; &nbsp;Blended Model</td><td style="width: 50%;" data-mce-style="width: 50%;">Description: Combines salary, productivity, and quality components Professional Revenue: RVUs and quality metrics define bonus potential Technical Revenue: Retained by hospital, with potential for limited revenue sharing</td></tr><tr><td style="width: 50%;" data-mce-style="width: 50%;">6. &nbsp; &nbsp; &nbsp;Stipend-Based</td><td style="width: 50%;" data-mce-style="width: 50%;">Description: Fixed payment for call coverage or defined service obligations Professional Revenue: Usually encompassed in stipend Technical Revenue: Retained by hospital</td></tr><tr><td style="width: 50%;" data-mce-style="width: 50%;">7. &nbsp; &nbsp; &nbsp;Partnership or Equity-Based</td><td style="width: 50%;" data-mce-style="width: 50%;">Description: Physicians share ownership of the practice or service line Professional Revenue: Distributed through ownership shares Technical Revenue: Shared if group owns equipment; otherwise hospital-retained</td></tr><tr><td style="width: 50%;" data-mce-style="width: 50%;">8. &nbsp; &nbsp; &nbsp;Shift-Based with Differential Pay</td><td style="width: 50%;" data-mce-style="width: 50%;">Description: Variable pay based on timing or coverage intensity (nights, weekends) Professional Revenue: Not directly linked Technical Revenue: Retained by hospital</td></tr><tr><td style="width: 50%;" data-mce-style="width: 50%;">9. &nbsp; &nbsp; &nbsp;Locum Tenens</td><td style="width: 50%;" data-mce-style="width: 50%;">Description: Temporary coverage, daily or hourly pay Professional Revenue: Flat rate, not tied to volume Technical Revenue: Retained by hospital or health system</td></tr><tr><td style="width: 50%;" data-mce-style="width: 50%;">10. &nbsp;Hybrid Models</td><td style="width: 50%;" data-mce-style="width: 50%;">Description: Custom blend (salary, productivity, and quality) aligned to service goals Professional Revenue: Influenced by procedural billing or population outcomes Technical Revenue: Hospital-retained, with potential sharing for equipment co-ownership or performance agreements</td></tr><tr><td style="width: 50%;" data-mce-style="width: 50%;">11. &nbsp;Value-Based / Risk-Sharing</td><td style="width: 50%;" data-mce-style="width: 50%;">Description: Incentives tied to cost containment, outcomes, and total cost of care (eg, ACOs, bundled payments, ACO REACH) Professional Revenue: May include shared savings or downside risk participation Technical Revenue: Shared indirectly through total cost performance Strategic Relevance: Central to payer-provider alignment and CIN sustainability</td></tr><tr><td style="width: 50%;" data-mce-style="width: 50%;">12. &nbsp;Co-Management Agreements</td><td style="width: 50%;" data-mce-style="width: 50%;">Description: Physicians compensated for operational oversight of a defined service line (eg, imaging, cath lab) Professional Revenue: Unchanged for clinical work; administrative stipend layered on Technical Revenue: Hospital-retained but optimized through throughput and quality gains Strategic Relevance: Aligns physician engagement in hospital efficiency and compliance</td></tr><tr><td style="width: 50%;" data-mce-style="width: 50%;">13. &nbsp;Gainsharing / Alignment Incentives</td><td style="width: 50%;" data-mce-style="width: 50%;">Description: Bonus distribution from hospital cost savings tied to utilization or efficiency metrics Professional Revenue: Supplemental, separate from billing Technical Revenue: Derived from hospital cost reductions or bundled payment reconciliation Strategic Relevance: Bridges physician engagement in cost stewardship</td></tr><tr><td style="width: 50%;" data-mce-style="width: 50%;">14. &nbsp;Global Budget / Capitation</td><td style="width: 50%;" data-mce-style="width: 50%;">Description: Fixed PMPM or per-population payment encompassing all or most servicesProfessional Revenue: Patient Panel-based distribution modelTechnical Revenue: Integrated within capitated rate or shared risk poolStrategic Relevance: Core to VBC models and payer-provider joint ventures</td></tr><tr><td style="width: 50%;" data-mce-style="width: 50%;">15. &nbsp;Academic / Research &amp; Teaching</td><td style="width: 50%;" data-mce-style="width: 50%;">Description: Compensation for education, research, or grant-funded work Professional Revenue: Effort-based salary allocations or grant supplementsTechnical Revenue: Institutional, typically excluded from direct compensationStrategic Relevance: Common in AMCs and hybrid faculty-clinician structures </td></tr><tr><td style="width: 50%;" data-mce-style="width: 50%;">16. &nbsp;Joint Venture / Service Line Ownership</td><td style="width: 50%;" data-mce-style="width: 50%;">Description: Shared ownership of imaging centers or outpatient facilities between hospitals and physician groupsProfessional Revenue: Direct billing plus profit distributions Technical Revenue: Shared based on equity and operating agreements Strategic Relevance: Common in MSO-PC virtual health and diagnostic joint ventures</td></tr><tr><td style="width: 50%;" data-mce-style="width: 50%;">17. &nbsp;Non-Clinical Incentive Models</td><td style="width: 50%;" data-mce-style="width: 50%;">Description: Rewards for leadership, innovation, or transformation work (eg, AI deployment, service redesign) Professional Revenue: Project-based or discretionary stipends Technical Revenue: N/A Strategic Relevance: Supports clinician engagement in digital and operational innovation</td></tr></tbody></table>Each has distinct implications for how professional and technical revenue flow — and how value truly reaches the front line (or not).<h3>The Foundational Framework Requisite: How Health Care Gets Paid</h3>I often leverage Kevin Quinn's paper, “<a data-mce-href="https://pubmed.ncbi.nlm.nih.gov/26259075/" href="https://pubmed.ncbi.nlm.nih.gov/26259075/">The 8 Basic Payment Methods in Health Care</a>” to help educate on the building blocks of the current healthcare business models in use and although published in 2015, it remains relevant even a decade later. &nbsp;Thus, before redesigning compensation, it helps to revisit the underlying payment building blocks that shape how money flows through the system. Quinn outlined eight basic payment methods and their derivatives, shown below:<figure id="figure-w8208v1cymioxu9ut"><img id="w8208v1cymioxu9ut" src="https://cdn.durable.co/blocks/1fYR8BFnSggF8m8iKv1PfiRke6m6cASjoTkUzjYJNOiRlKXkrmkKwDPjpf9WhyjE.png" alt="" title="" class="object-cover bg-gray-100 " style="aspect-ratio: 3/2; object-position: undefined undefined;" data-corners="no-rounded" data-aspect="3:2" data-caption="From: Quinn K. The 8 basic payment methods in health care. Ann Intern Med. 2015 Aug 18;163(4):300-6. doi: 10.7326/M14-2784." data-positionx="undefined" data-positiony="undefined" data-fullwidth="false" data-mce-src="https://cdn.durable.co/blocks/1fYR8BFnSggF8m8iKv1PfiRke6m6cASjoTkUzjYJNOiRlKXkrmkKwDPjpf9WhyjE.png" data-mce-style="aspect-ratio: 3/2; object-position: undefined undefined;"><figcaption class="body-normal text-gray-500 mt-2">From: Quinn K. The 8 basic payment methods in health care. Ann Intern Med. 2015 Aug 18;163(4):300-6. doi: 10.7326/M14-2784.</figcaption></figure>Contemplating Payment Reforms and Implications for Physician Compensation Many payment reforms including ACOs, bundled payments, patient centered medical homes, and shared savings extend these models by linking performance to population outcomes, yet physician compensation has largely lagged behind in adopting corresponding incentive frameworks. Also highlighted in Quinn’s work:&nbsp;<figure id="figure-qz1dz936cmioxy70v"><img id="qz1dz936cmioxy70v" src="https://cdn.durable.co/blocks/20mSlgxBSZ63E378EZvXuZeaCiau8Dmc7XEgI00QpcxQI6DHwvFVkgOu1hmHuXix.png" alt="" title="" class="object-cover bg-gray-100 " style="aspect-ratio: 3/2; object-position: center center;" data-corners="no-rounded" data-aspect="3:2" data-caption="From: Quinn K. The 8 basic payment methods in health care. Ann Intern Med. 2015 Aug 18;163(4):300-6. doi: 10.7326/M14-2784." data-positionx="undefined" data-positiony="undefined" data-fullwidth="false" data-mce-src="https://cdn.durable.co/blocks/20mSlgxBSZ63E378EZvXuZeaCiau8Dmc7XEgI00QpcxQI6DHwvFVkgOu1hmHuXix.png" data-mce-style="aspect-ratio: 3/2; object-position: center center;"><figcaption class="body-normal text-gray-500 mt-2">From: Quinn K. The 8 basic payment methods in health care. Ann Intern Med. 2015 Aug 18;163(4):300-6. doi: 10.7326/M14-2784.</figcaption></figure><h3>Considerations in the Path Forward</h3>Health systems that aspire to true value-based care must integrate compensation design into their broader contracting, governance, and performance frameworks. Until those incentives align, physicians will continue operating in two economies: one funded by value, another rewarded by volume.The future of physician alignment will not be decided by payer contracts alone. It will depend deeper business innovation with regard to how health systems choose to translate value into compensation and how transparently they connect clinicians to the outcomes they create.

How Physicians Are Really Paid: Is There a Disconnect Between Value and Volume?

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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