By Kyle Forcier
The medtech market is in flux. While emerging technologies and shifting care settings present growth opportunities for manufacturers, capitalizing on these trends requires adjusting traditional sales and revenue optimization processes to meet evolving contract structures and customer preferences.
Revenue optimization strategies are significantly influenced by shifts in the business and market environment, as well as challenges arising from supply chain issues, unpredictable customer demand, and evolving regulatory requirements. More companies are realizing the importance of effective revenue management. According to Model N research, process efficiency and cost reduction are the top priorities for life science and high-tech companies in 2024.
To take advantage of emerging opportunities, medtech manufacturers will need organizational agility and insights to quickly pivot their business models.
Medtech Growth Opportunities
New technologies and industry shifts are unlocking new markets and expanding existing customer bases. Several innovations and trends will alter the medtech landscape in 2024 and beyond.
Increased procedure volume: Surgery volumes are rebounding following the massive decrease caused by the pandemic. The increase translates to higher utilization and sales of medtech products. Manufacturers can expand products and services for current customers and benefit from high demand for specific procedures.
Growth of ambulatory surgery centers: Healthcare is increasingly shifting away from hospitals. More than 80% of surgeries are performed in an outpatient setting, a trend that is expected to continue. The growth in ambulatory surgery centers (ASCs) generates demand for medical devices and equipment tailored to these care environments. Smaller ASCs can quickly adopt new technology, prompting medtech manufacturers to adapt their sales and pricing strategies to tap into this market.
Robotics: The age of medical robotics has arrived. Over the last few years, this area has transitioned from experimentation to actual use. Many hospitals and care providers are investing in robotics, indicating a wider adoption and a growing need for equipment. Robots offer many opportunities to improve care quality and efficiency. Robotic arms enhance surgeons’ dexterity and precision, leading to less-invasive procedures, reduced tissue damage, and faster recovery times.
Surgical robots can also expand care access. People in rural areas often have limited healthcare options, but a robot’s remote capabilities mean a doctor doesn’t have to be in the room—or even the state—to treat patients. As a result, more people can receive treatment, and providers can perform more procedures.
Robotic technology has implications for physical therapy, medicine distribution, and many other medical functions. Growing medical robot use and deployment will boost market demand, so medtech companies should prepare.
Virtual care: The pandemic showed the viability of telehealth. Now, patients and providers are embracing it. According to one government report, 22% of adults reported using telehealth within the previous four weeks, and about 80% of physicians plan to continue using this technology. Experts project the market will grow from $140 billion to $500 billion by 2030.
Telehealth has enabled improved care coordination, access, patient outcomes, and overall efficiency for health systems. As virtual visits become more common, hospitals, doctors’ offices, and other providers will need equipment to provide their services. Medtech manufacturers have an opportunity to develop new products catering to remote treatment protocols.
Wearables and other diagnostic equipment: Demand for wearable technology is skyrocketing. Many people use wearables to track their steps and workouts, but these gadgets also hold great potential for medical care. Wearables allow real-time monitoring of vital metrics outside clinical settings, providing valuable health data to inform diagnoses and treatment decisions.
Advances in diagnostics, like point-of-care testing solutions and AI-enhanced imaging tools, are leading to quicker diagnoses and improved patient outcomes. Medical providers will increasingly find applications for these technologies and incorporate them into their practices. These trends offer medtech manufacturers the opportunity to expand beyond traditional clinical equipment and sell devices that appeal to a wider set of users.
Medtech Revenue Management Challenges
Opportunities aren’t the only elements on the horizon for medtech companies. Several macroeconomic and market factors will present challenges in the coming year.
Economic pressures: The rising cost of raw materials, manufacturing, and administration will keep straining revenue in 2024. Two-thirds of medtech executives named supply chain and logistics as a top factor impacting their companies’ innovation. Medical device makers must account for longer lead times, production constraints, and shipping disruptions in their revenue management planning.
Moreover, hospitals and care providers face financial strain. As a result of tighter budgets, customers are demanding lower prices or delaying equipment investments. This downward pricing pressure impedes manufacturers’ ability to pass along increased costs, further squeezing margins. These economic factors will make demand forecasting especially difficult in 2024.
Staffing shortages: The labor market continues to challenge manufacturers. The majority of executives report talent shortages, high attrition, and limited consultant and contractor availability. Older workers are retiring faster than younger workers are entering the field, contributing to growing skills and labor gaps. In fact, many industry leaders think staffing shortages will impact their companies more significantly in 2024 than last year.
Trade regulations: Geopolitical tensions pose new hurdles. The United States is poised to enact more chip export controls on China this year. As the countries levy additional restrictions against one another, manufacturers must adjust their supply chains to remain compliant and competitive. Channel visibility becomes increasingly critical in this environment.
New payment structures: ASCs have less available capital than health systems and need fewer devices. They tend to prefer more flexible financing options, such as payment plans or subscriptions. These financing models require companies to restructure contracts and revenue management. Pricing, payment, and account data accuracy become even more critical with the transition from upfront to recurring revenue. Companies are beginning to master these changes, with medtech executives reporting less difficulty managing alternative payments. However, the number of companies not offering these financing options increased considerably since last year.
Adapting to the Market
Remaining competitive in this environment will require medtech manufacturers to focus on process efficiency improvements. But nearly all (99%) of companies continue to rely on spreadsheets for revenue management at least some of the time—a strategy lacking the accuracy and ease of use necessary to effectively execute revenue management.
Manual spreadsheets are error-prone and cumbersome to maintain. The bigger the business grows, the harder spreadsheet management gets. Channel, sales, and contract data often exist in disparate and siloed locations, impeding visibility and analysis. Manufacturers using manual workflows risk pricing and billing errors and missed opportunities to leverage data for decision-making.
AI-powered solutions allow medtech companies to automatically aggregate, analyze, and act on products sold through the indirect channel. A centralized contract database informs more segmented, customized pricing guidelines to improve negotiation outcomes, empowering sales teams to close more advantageous deals faster. Finance teams can easily identify the exact purchase price to ensure accurate invoicing and rebates.
An AI platform can analyze internal and external data to detect patterns and trends, resulting in greater visibility into demand fluctuations, customer needs, and market dynamics. This insight shapes pricing strategies and production schedules while also identifying strategic opportunities.
Navigating the evolving medtech landscape requires both agility and foresight. Manufacturers must adapt their business models and revenue optimization strategies to capitalize on emerging opportunities while also overcoming market challenges. Embracing data-driven insights and AI-powered solutions will be crucial for optimizing pricing, forecasting, and effective revenue management.