Understanding Your Medical Device Market Size

For medical device startups, mapping out a realistic Total Addressable Market (TAM) is an essential step in developing a commercialization strategy. To assist with this process, StartUpRx has developed a web-based data tool: the Medical TAM Explorer:

Medical TAM Explorer (Opens in a new tab)

Built using CMS Medicare claims data across 1.3 million providers and 6,000 hospitals, the tool provides a baseline view of procedure volumes, geographic distribution, and historical reimbursement benchmarks. Because every technology has a different commercial trajectory, the platform includes a built-in calculator. By entering your specific device Average Selling Price (ASP) and projected market adoption rates, you can generate your own rough TAM estimates and target the hospital segments that align with your business model.

The CMS data only shows Medicare Fee-for-Service cases. The TAM calculation scales that up to estimate the total all-payer inpatient volume for that DRG:
Total volume = Medicare FFS cases ÷ (Medicare share × FFS fraction within Medicare)

So if Medicare is 35% of all payers and 45% of Medicare is FFS (55% is MA), then Medicare FFS is only 15.75% of the total market. Dividing by that gets you to ~100% of all cases — Medicare FFS + Medicare Advantage + Medicaid + commercial/private insurance + self-pay.

Two important caveats worth understanding:

Volume is all-payer, but device price is yours. The revenue estimate is total volume × adoption × your device ASP. That’s correct for estimating your revenue as a manufacturer — you charge the hospital the same price regardless of who’s paying the hospital. The payer mix affects the hospital’s economics, not yours directly.

The volume assumption carries real uncertainty. The procedure rate per 1,000 patients can differ between Medicare and commercial populations (age, comorbidities, benefit design). The Low/Base/High range captures some of that uncertainty, but it’s all driven by the single payer-mix assumption you enter — which is why the tool labels it clearly as user-researched and not calculated.

The TAM numbers are an estimate of your total device revenue opportunity across the entire U.S. inpatient market for that DRG, not just Medicare. That’s the right framing for a device startup’s market sizing.

Take a look:

Medical TAM Explorer (Opens in a new tab)