The Revenue Visibility Gap Eroding Medtech Margins

Evaluating opportunities for revenue optimization

More than half of surveyed leaders believe increasing revenue by reducing revenue leakage will impact profitability in 2026. Executives pointed to areas they think have the most potential.  

Medtech companies operate in a complex supply chain involving multiple distributors, group purchasing organizations and integrated delivery networks. Each of these parties collects various fees. If a manufacturer doesn’t have tight visibility, it may pay multiple administrative fees on the same transaction.  

Leakage also happens when manufacturers fail to bill the correct price. Many contracts grant earned discounts based on specific requirements, such as purchase volume. Sometimes, customers who don’t qualify for the price reduction or rebate mistakenly receive it anyway.  

Medtech companies often have multiple contracts or prices for a single product. If the manufacturer and distributor aren’t aligned on which contract price applies, the manufacturer may receive and pay an incorrect rebate or chargeback.  

While medtech companies that operate exclusively in the device space are typically not directly exposed to managed care utilization rebates, there are several possible reasons surveyed leaders suggested this. Some medtech companies sell products closely tied to pharmaceutical therapies, which may expose them to discount-like mechanisms common in the pharma industry.  

Others may be referring to rebate and pricing arrangements that, while not traditional managed care utilization rebates, are influenced by payer and reimbursement dynamics. Additionally, some medtech leaders may be anticipating future regulatory or policy shifts that expand medtech participation in programs historically associated with pharmaceuticals. 

Medtech leaders also see opportunities to strengthen their revenue operations to reduce losses from fees, rebates and discounts. The top areas for improvement cited by respondents were: 

Optimizing these areas requires a way to centralize and connect disparate data. This need for integration makes AI a strategic necessity. Almost two-thirds of life sciences leaders surveyed recognize the increasing potential for using AI in these functions. The top operational areas cited were deal analytics and process automation. 

AI is already a fundamental part of life science operations; 97% of all leaders surveyed use this technology for revenue management. Nine in 10 leaders agree AI is already delivering value.  

However, difficulty accessing needed information is the most cited barrier to automating workflows in the survey. This lack of interoperability will also stymy successful AI adoption.  

Disconnected data stands in the way of enhanced revenue management

Medtech leaders recognize the value of just-in-time data, yet less than 30% of life sciences executives have fully integrated their sales, rebate and other GTN information across channel and revenue management strategies. That means most companies must spend time and resources gathering disparate inputs, often resulting in incorrect, incomplete or outdated figures. Even those with full integration lack access to real-time data; weekly and monthly reports are more common. 

Taking steps to centralize data will deliver value in GTN management. When sales, contract, rebate and channel data are connected, companies can see the true net price of every product. Integrated data eliminates the visibility gaps that allow double payments to intermediaries, and automated systems have all the information they need to verify a customer’s correct price, including discount eligibility validation, before sending invoices or processing rebates. 

As for AI-powered analytics, these insights are only as reliable as the data feeding the algorithm. Fragmented systems won’t cut it if manufacturers want to get real value out of their investments. With real-time, quality data, companies can execute predictive demand and revenue forecasting, optimize pricing strategies and model scenarios. Anticipating the impacts of trade policies and tariffs will be valuable amid the current policy uncertainty.  

Building the right foundation for AI in revenue management

With the high hopes for AI, leaders must set themselves up for success by understanding what it takes to fully leverage this technology, including an integrated data foundation and defined goals. To turn AI’s potential into performance, leaders must build an integrated foundation that optimizes data for speed and accessibility while ensuring it’s structured for both human insight and machine consumption.