Strategies that medtech companies and manufacturers can use to advance in the medtech market.
The 2024 medtech market presents many growth prospects, but manufacturers must optimize their internal processes to seize these opportunities. The way patients and providers use medtech is changing, and so are buyers’ preferences. Traditional revenue management strategies no longer meet internal or external needs.
Market volatility, supply chain disruptions, changing demand signals, and evolving regulatory frameworks mandate that medtech companies take a data-driven approach to pricing, contracting, and market access — one that balances value realization with customer expectations. Data and analytics will drive process efficiency and operating cost reductions — a top innovation priority for life science and high-tech companies in 2024.
Areas of Opportunity
With the rapid advances in healthcare, medtech companies have opportunities in two areas: new care delivery approaches and device use cases.
Changing Care Delivery Approaches
Hospitals are reporting a surge in procedure volumes following a severe dip during the pandemic. More surgeries mean higher device utilization and an increased need for equipment. Manufacturers have opportunities to sell equipment for high-demand procedures and diversify their product and service portfolios with current customers.
More than 80% of surgeries are performed in an outpatient setting. The growing popularity of ambulatory surgery centers (ASCs) is driving demand for medical devices and equipment tailored to these care environments. ASCs’ smaller sizes mean they more quickly adopt new technology, but they also possess fewer capital resources. Medtech companies must pivot their selling approaches and pricing structures to attract these buyers.
Telehealth has become a permanent fixture in healthcare. About 80% of physicians plan to continue using this technology, and forecasts indicate the market will grow from $140B to $500B by 2030. Increasing usage means more hospitals, doctors’ offices, and other care providers will need equipment to facilitate telehealth. Medtech companies can capitalize on the trend by developing innovative products that enable healthcare workers to provide virtual care.
New Technology
Robotics have crossed from experimental pilots to larger-scale implementation. Medical robotics can improve everything from surgery to physical therapy. For example, robotic arms augment clinician capabilities and promote less invasive procedures and faster recoveries. The technology also enables specialists to treat patients regardless of geographical distances, increasing care access and procedure volume. Growing robotics use cases and wider adoption mean medtech manufacturers must prepare for a surge in demand.
The general population has embraced wearables, and the medical community is increasingly exploring the devices’ healthcare applications. The continuous information captured by this technology provides critical insights to inform diagnoses and treatments. Wearables’ popularity and utility create a wider market outside the clinical setting.
Point-of-care testing (POCT) and imaging advancements present another opportunity. These technologies are leading to quicker diagnoses and improved patient outcomes. As these capabilities improve, care providers will increasingly implement them into their practice and seek new equipment.
Medtech Hurdles
Manufacturers must also consider several macroeconomic and market factors as they work toward revenue optimization.
Economic Challenges
Rising materials, manufacturing, and overhead expenses are squeezing profit margins across the medtech sector. At the same time, hospitals and other customers are demanding lower prices or postponing purchases due to their own budget constraints. This pricing pressure makes it harder for device makers to recoup escalating business costs.
Two-thirds of medtech leaders cited logistics and distribution as leading obstacles to innovation this year. Manufacturers must account for longer lead times, production limits, and shipment delays in their business plans, adding additional complexity to demand forecasting.
Executives think staffing shortages will have a more significant impact on their companies this year. Most report labor challenges, including talent shortages, high attrition, and limited consultant and contractor availability. The skills gap continues to widen as older workers retire faster than new workers enter the field.
Regulatory Developments
Rising geopolitical tensions will impact manufacturers. The U.S. and China continue to levy restrictions against one another, including additional chip export controls on China this year. Channel visibility becomes increasingly critical to maintaining regulatory compliance. Nearly one-third of medtech executives say global instability will have a significant impact on innovation in 2024.
Other regulations surrounding privacy and cybersecurity will also come into play over the next several years.
New Financing Models
Medtech customers’ financial preferences are changing. Many contracts are shifting from upfront to recurring revenue. This change is due in part to the rise of ASCs, which have less available capital than health systems. While they are quicker to adopt new tech, ASCs want alternate payment options, such as long-term financing or subscriptions.
Companies must adapt their revenue management approach to accommodate these new requests, making pricing, payment, and account data accuracy even more critical. Fortunately, companies are successfully adjusting, with executives reporting less difficulty managing recurring revenue.
Evolving Revenue Optimization Approaches
Staying competitive in today’s medtech environment necessitates a focus on improving operational efficiency. However, 99% of medtech companies still rely to some extent on cumbersome spreadsheets for revenue management, creating challenges with data accuracy, visibility, and analysis.
Channel, sales, and contract data often exist in disparate and siloed locations. Manually gathering this information requires significant resources and often leads to errors, resulting in pricing and billing mistakes and missed business opportunities.
AI-powered tools help medtech companies improve revenue management. These solutions automate data gathering, consolidation, and analysis for increased efficiency and utility. Centralized data allows sales and finance teams to build segmented, customized pricing guidelines, which empower salespeople and improve negotiation outcomes. The database also enables finance teams to quickly and easily find the applicable price for accurate billing and rebates.
An AI-powered platform allows companies to proactively react to market changes. Analyzing data from disparate sources — both internal and external — informs pricing strategies and production schedules while also identifying strategic opportunities.
Now is the time to modernize revenue management processes to enhance operational efficiency. Companies taking a data-driven approach will position themselves to overcome market hurdles and capitalize on high-growth segments.
Kyle Forcier is a Senior Director of Services Sales for Model N. For more than 15 years, Forcier has focused his time in the life sciences space helping manufacturers increase their revenue, maintain compliance, and bring innovative ideas to the marketplace. He currently helps shape Model N’s strategic direction focusing on bringing complex, valuable solutions to the market to solve long-standing operational challenges within the medtech industry.
