The future of healthcare innovation is being shaped by a convergence of new technologies, evolving global medtech market dynamics, and shifting business models. At LSI USA ‘24, two of the industry’s most respected leaders—Alex Gorsky, former Chairman and CEO of Johnson & Johnson, and Rick Anderson, Chairman of Revival Healthcare Capital—shared their perspectives on how medtech innovation must evolve to meet the demands of an increasingly complex healthcare landscape.

From the rising cost pressures facing healthcare providers to the need for transformational, rather than incremental, technologies, this discussion highlighted the fundamental changes required to drive meaningful impact in the industry.

“If there was ever a time to be in healthcare—to be thinking about innovation, to be thinking about this nexus of new technologies, and the rigorous clinical regulatory, let alone commercial environment that we work in—now’s the time,” said Alex Gorsky.

The Market Shift: Why Healthcare Needs to Innovate Differently

The medtech industry has long operated under a familiar cycle: startups develop a promising technology, seek venture capital, and ultimately aim for an acquisition by a large strategic player. But that model is becoming increasingly unsustainable.

Rick Anderson emphasized that many traditional approaches to innovation, particularly incremental product development, may struggle to gain traction in the future.

“The market is going to bifurcate into truly transformational, enabling technology that is smart, delivers incredible patient benefit, and has an economic storyline to it,” said Anderson.

For many years, companies have profited from small improvements—whether it was the fifth version of a pedicle screw or minor refinements in surgical instruments. However, as cost pressures mount on healthcare providers, payors, and strategics, the demand for groundbreaking solutions that address workforce shortages, efficiency gaps, and care delivery challenges is rising.

“The days of coming out and saying, ‘Well, my device is 4% different, but I’m going to charge 25% more for it’—that’s not going to work,” said Gorsky.

Future of Healthcare Innovation: Rethinking Investment & Business Models

The panelists agreed that for medtech to succeed in the next decade, it must move beyond traditional medtech investment structures. The traditional Series A to Series C funding model is proving increasingly inadequate for transformational technologies that require hundreds of millions in capital.

“If you’re a CEO, you spend 40 to 50% of your time away from your team raising money. Now, imagine a world where you never have to raise money again for the next five years, and you can just focus on execution. That’s the kind of innovation model we need,” said Anderson.

He pointed to the “Build-to-Buy” model, in which private capital partners with strategics earlier in the development process, ensuring both financial backing and clear exit pathways. This model eliminates the inefficiencies of startups spending years chasing funding while trying to navigate clinical and regulatory strategies.

Navigating the Increasing Cost Pressures in Healthcare

For healthcare providers, the cost landscape is becoming increasingly difficult to navigate. With hospital costs rising by 35%, stagnant reimbursement increases, and labor shortages exacerbating operational challenges, the economics of medtech are being scrutinized more than ever.

Gorsky described the shift in mindset among hospital executives:

“We have to find ways to create new partnerships. We’re not going to save ourselves out of this—so the question is, how do we rethink business models to make innovation work within the financial realities of healthcare?”

These financial realities mean that high-cost capital equipment sales models may not be sustainable. Instead, companies must explore alternative approaches such as subscription-based models, pay-per-use structures, and integrated service offerings that align cost with utilization.

“The box called a hospital is going to be more challenged than ever,” Anderson added. “Different alternative sites of care are emerging, and enabling technologies—not just implants and devices—will become the focus of medtech ten years from now.”

The Role of AI, Digital, and Cross-Industry Collaboration

The integration of AI, cloud computing, and digital health solutions into medtech is no longer optional—it is essential. Both Gorsky and Anderson highlighted the need for greater collaboration between the traditional medtech industry and technology giants that are driving advancements in data analytics, automation, and connectivity.

“If all of us in this room aren’t thinking about how to build AI and digital capabilities into our businesses, we may have a three-year runway—but in 10 years, it’s going to change dramatically,” Gorsky warned.

However, the challenge lies in bridging the cultural and operational gaps between the medtech and tech industries. While Silicon Valley thrives on rapid iteration, healthcare operates in a world of regulatory oversight, clinical evidence, and long development cycles. Aligning these two mindsets is crucial for successful innovation.

“We had a dinner where we brought together some of the top minds in AI, medtech leaders, and former FDA officials, just to start speaking the same language,” Gorsky recalled. “It’s not a matter of if these worlds will come together—it’s how.”

Looking 10 Years Ahead: What Will Define Success?

When asked to predict what medtech will look like a decade from now, both panelists pointed to a fundamental shift in how care is delivered.

Ultimately, the future of healthcare innovation will require a new mindset—one that embraces risk, prioritizes collaboration, and challenges outdated economic models.

“We should be enablers of this transformation, not barriers to it,” Anderson concluded. “Let’s bring the technology to market, but let’s also rethink how we fund, commercialize, and scale it in a way that benefits patients, providers, and innovators alike.”

Conclusion: The Time for Transformation is Now

As Gorsky and Anderson emphasized, medtech is on the brink of unprecedented change. The next decade will bring new opportunities for those who can adapt, innovate, and rethink how healthcare technology is developed, funded, and deployed.

Want to hear more insights from industry veterans? Attend our next medtech conference from March 17th-21st in Dana Point, CA.