The End of Sexy Medtech: How Value-Based Care Changed the Game

Since its inception in 2010, the Affordable Care Act (ACA) has been a lightning rod for debate in both political and business circles. While many industries felt the ripple effects of its sweeping reforms, few were as vocal as the medical device sector, where the introduction of the 2.3% excise tax was met with widespread concern.

The industry rightfully argued that this tax would strangle innovation and lead to job cuts, casting the ACA as a potential threat to medtech. The tax was permanently repealed in December 2019. As Scott Whitaker, president and CEO of AdvaMed, said at the time, the end of the medical device tax allowed the medtech industry to focus on developing innovations that save and improve patients’ lives and create high-paying, high-tech jobs in America.

Once you look beyond the dreadful excise tax, it’s clear the ACA helped reshape the medtech industry for the better, expanding its market, spurring innovation, and aligning it more closely with the future of healthcare. But of course, the crux of the ACA is increased access to the healthcare system for Americans who were uninsured or underinsured prior to the legislation.

Today, 45 million Americans are enrolled in healthcare coverage as a direct result of the Affordable Care Act, and insurance companies can no longer deny coverage to or penalize patients with pre-existing conditions. More access to the healthcare system means increased demand for medical device products and services.

Beyond that, the Affordable Care Act has helped to improve the way medical device companies do business. The ACA essentially ended what some have called the “sexy medtech era” by accelerating the shift to value-based care. Do you remember what business models were like before? Medical device companies tended to focus on bringing the sexiest device to market with little regard for cost. In 2016, the National Library of Medicine (NLM) published a paper in which the authors argued that the move to value-based payment models would force device manufacturers to redirect R&D investments from “the spectacular toward the prudent.”

And they have been proven right. Today the system rewards manufacturers for innovating better products at the same cost or lower, with improved outcomes. Device manufacturers are more mindful of the overall cost of care and have shifted to offering more patient-centric solutions. Medtech has also learned to become strategic partners of health systems rather than simply acting as suppliers.

During this "post-sexy era," digital health technologies and personalized solutions have been one of the key aspects of how medtech companies have adapted to the ACA’s changes. Take Zimmer Biomet’s smart knee implant, the Persona IQ.

Image of the Persona IQ knee implant courtesy of Zimmer Biomet

Inside the operating room, Persona IQ is just another knee implant. There are no trade-offs clinically, no extra time needed in surgical technique, and it pairs well with Rosa, the company’s surgical robotics system. The value of the Persona IQ implant comes outside the operating room. Zimmer Biomet partnered with Canary Medical, a medical data company, on the technology. The Persona IQ combines Zimmer Biomet's Persona knee implant  with Canary Medical's implantable canturio te tibial extension sensor technology that measures and determines range of motion, step count, walking speed, and other gait metrics. Persona IQ works together with Zimmer Biomet's remote care management platform, my mobility with Apple Watch, as well as other components of the company's ZBEdge Connected Intelligence Suite.

Zimmer Biomet’s smart knee implant is just one example of how the Affordable Care Act and the shift toward value-based care have ushered in an era in which the lines between traditional medical devices and digital health solutions have blurred to offer patients the best of both worlds. There’s also been a greater emphasis placed on telehealth solutions that support in-home care and aging in place.

A notable movement toward innovation that enables many routine tasks to be either automated or administered by lower-skilled healthcare workers – a trend that was further pushed along by the COVID-19 pandemic and the ongoing hospital labor shortage – has also been born in the "post-sexy era."

By aligning with the ACA’s goals, medtech companies have thrived in the face of regulatory change. Innovation in value-based technologies is no longer an option but a necessity, pushing the industry toward more efficient and patient-centered care.

The authors of the NLM paper also talk about defragmentation, which refers to a seamless flow of data that follows the patient across various care settings. By reducing information gaps, healthcare systems can lower costs and improve outcomes. AI and digital health tools are accelerating this, allowing for real-time data collection and predictive insights. This is clearly ushering in an era where medtech is more integrated into the patient’s entire care journey.

By emphasizing quality and accountability, the law also has raised the bar on safety, efficacy, and data-driven outcomes – even if patient advocacy groups would argue that the bar remains too low.

Despite initial concerns about how the Affordable Care Act would impact medical device manufacturers, it is now clear that the industry has experienced significant growth during the “post-sexy era” driven by increased demand, the push for innovation, and the expansion of coverage. It’s not that the devices on the market today lack flash, they simply must offer more value to the system overall. In other words, they can’t be sexy for the sake of it.

The medical devices of today are not about abandoning innovation or cutting-edge technologies, but about finding a balance where innovation also offers substantial value to patients and the broader healthcare system. Devices can still be revolutionary—just not at the expense of patient outcomes or cost-effectiveness.

While no piece of legislation is without flaws, the ACA’s impact on the medtech industry illustrates that reform, when done thoughtfully, can spur innovation and growth. The future of healthcare—and medtech—lies in value, outcomes, and patient-centered solutions. Thanks to the ACA, we’re already well on our way.