You see the same problem in aviation. Other than the largest commercial airliners that are used in the most developed countries to fly passengers, most aircraft (cargo, general aviation, etc) are all using 50 year old designs. Why? Liability. Despite instruments having become much lighter, heartier (to weather conditions such as icing, etc), and more accurate than in the past, aircraft continue to rely on old designs. Because nowadays, creating a new aircraft and certifying it costs a _lot_ of money. So Piper, Cessna, Boeing, and others continue to use old designs that have already been certified, despite there being cheaper ways to achieve just as reliable or more reliable aircraft due to newer technology.
The "innovation" in the medical start-up space would be "indemnification".
Take a startup that has real results and fund them through FDA approval and backstop them when they get sued because the device isn't 100% (no device ever is).
I had a long talk at CES about 5 years ago with a doctor who created an asthma monitoring device for his daughter that would notify him and the school nurse when his daughter had an attack. I guarantee that device worked pretty damn well due to self-interest.
He couldn't get anybody to touch it. Everybody knew that you were going to get sued the moment some child died and a message didn't get delivered. Nobody would indemnify him even if he somehow managed to get through full FDA approval.
Want innovation in bio? Backstop the little people who have real devices and real results rather than funding well-connected, turtleneck-clad marketing charlatans.