Uncertainty surrounding telehealth flexibilities and artificial intelligence regulation will shape healthcare technology trends this year, while cyberattacks continue to batter the sector, experts say.
AI is an alluring technology for the industry, but healthcare organizations have to grapple with safety and accuracy concerns as they roll out the tools — and they face a potentially hazy regulatory environment as President-elect Donald Trump begins his second term in office.
Telehealth is facing its own regulatory challenges after a year-end bill that would have extended Medicare virtual care flexibilities for two years fell apart in December. Now, those pandemic-era policy changes will only last through March, adding new anxieties for telehealth groups and providers who argue unpredictability hampers investment in virtual care.
Healthcare organizations will also likely continue to face a wave of cyberattacks, a serious threat to care delivery as the sector relies ever more heavily on connected devices and systems.
Meanwhile, digital health funding could increase this year after years of declines. Some companies could combine or ink initial public offerings — potentially pushing other firms to go public if they’re successful, experts say.
“There’s an appetite for public offerings,” said said Matt Wolf, director and healthcare senior analyst at consultancy RSM US. “They just have to do the right public offering.”
Here are the biggest trends in healthcare technology in 2025.
AI regulation enters a new administration
AI has become one of the most exciting emerging technologies for healthcare executives, sparking hopes it could help solve pernicious challenges like provider burnout or workforce shortages.
Still, it’s not easy to implement the tools, given concerns about accuracy and bias, as well as the work needed to vet and pilot products before they’re deployed. Plus, healthcare organizations need to monitor AI tools’ performance over time due to the risk of model drift, where environmental factors underlying the model change and worsen its performance.
That’s one reason why health systems looking to deploy AI tools will be seek greater transparency from and deeper partnerships with vendors in 2025, said Brian Anderson, CEO of the Coalition for Health AI, an industry group developing guidelines for responsible AI use in healthcare.
Without input from companies selling AI tools, it’s a challenge to figure out whether the model’s performance is still satisfactory — even for the most well-resourced health systems, he said.
“At a technical level, you can’t monitor for drift if you don’t know what the initial settings were, essentially, with the data set,” Anderson said.
Many health systems are likely focused on deploying AI in areas that don’t involve clinical decision-making, like assisting with coding, billing or prior authorization requests, he said.
There’s higher tolerance for mistakes when it comes to automating those administrative tasks, and there are likely already errors involved when humans are at the helm, said Michael Gao, CEO and co-founder of healthcare AI company SmarterDx.
Plus, health systems operate on slim margins, so increasing revenue through automating administrative tasks is attractive.
“The things that hospitals can do to increase that margin, either finding more revenue by better documentation or being able to fight back against denials of insurance companies, I think that will still be top of mind just for the reason of, honestly, survival,” Gao said.
Healthcare organizations looking to implement AI products will also have to grapple with how the incoming Trump administration could regulate the technology.
The Biden administration began laying the groundwork for federal AI oversight, including through a sweeping executive order issued in fall 2023 that launched a number of research initiatives and pushed federal agencies to name chief AI officers.
The order is “probably the most significant AI regulation in the United States,” said Mark Dredze, interim deputy director for the Johns Hopkins University Data Science and AI Institute, during a webinar in December.
However, Trump has promised to repeal the executive order and significantly scale back the federal government workforce, creating a confusing picture for AI regulation in the new administration, Drezde said.
Drezde said it remains unclear what changes Trump will pursue. Will he roll back the entire executive order, or put something new in its place? Will there be less research funding for AI initiatives, or would government workers with AI expertise lose their jobs or leave for the private sector?
The Trump administration will likely want to put its own fingerprints on AI regulation, said Tom Leary, senior vice president and head of government relations at health IT professional organization HIMSS.
Competition with other countries for AI dominance could push the Trump administration to focus on funding and regulating the technology, Dredze said.
“If you want to compete with China to build the best AI here, you need to invest in research funding. You need to invest in talent in the United States. You need to set a clear regulatory framework for U.S. companies,” he said.
Other governments — including states or other countries — could also make regulatory moves that affect U.S. AI developers and healthcare organizations too, Leary said. For example, the European Union passed its own framework for AI development and deployment last year.
“Multinational corporations that have customers in lots of different parts of the world are going to want to build products that meet standards, and if the AI Act out of the EU is the most clear, […] companies are going to build against those requirements, and then they’re going to sell their products elsewhere,” Leary said.
Cybercriminals continue to target healthcare
Cybersecurity proved to be a major challenge for the healthcare sector in 2024, and organizations are taking notice, experts say. But bringing the industry’s cyber protections up to snuff will take time — and hackers are unlikely to stop targeting healthcare firms.
The industry is coming off a year that included multiple high-profile attacks. In early 2024, the entire healthcare ecosystem struggled to manage the fallout from the cyberattack against Change Healthcare, a technology firm and claims processor owned by industry giant UnitedHealth.
The attack — which exposed data from a record-breaking 100 million Americans — was a “milestone event” that highlighted the interconnected nature of the sector, said Errol Weiss, chief security officer at the Health Information Sharing and Analysis Center, or Health-ISAC.
UnitedHealth CEO Andrew Witty testifies before the Senate Finance Committee on Capitol Hill on May 1, 2024 in Washington, D.C. The cyberattack on subsidiary Change Healthcare exposed data from 100 million people.
Kent Nishimura/Getty Images via Getty Images
The year also included other cyberattacks at key healthcare suppliers — like the ransomware attack on blood donation center OneBlood and pathology provider Synnovis in the U.K. — that demonstrated the importance of resilience planning when critical services are suddenly unavailable.
“I think the wake-up moment there was how suppliers could have a single point of failure impact on delivery of healthcare,” Weiss said.
This year, organizations will likely focus on managing cyber vulnerabilities with their vendors, said RSM’s Wolf. What kinds of data are they sharing with third parties? Do they want to consolidate services to a trusted vendor — or maybe have additional service providers in case one option goes offline?
Still, improving cybersecurity takes time, said Flavio Villanustre, senior vice president of technology and chief information security officer at LexisNexis Risk Solutions.
“Building a security-centric culture is not something that you can do overnight, right?” he said. “So it is likely that we’ll see additional incidents before this gets better.”
And though it’s hard to predict if the sector will weather another huge cyberattack like Change in 2025, cybercriminals will certainly try, experts say.
“Healthcare data is so incredibly valuable that there will absolutely be attempts,” Wolf said. “I can’t say that we will for certain see a large event like that, but I wouldn’t be surprised if we did.”
Another looming telehealth cliff
Telehealth flexibilities in Medicare will once again face a looming expiration deadline in 2025 after a spending bill that would have extended them for two years was torpedoed last month.
The policies, which were enacted during the COVID-19 pandemic and significantly expanded telehealth coverage in the insurance program, are operating under temporary waivers, though some have been made permanent. They include flexibilities that allow patients to receive telehealth in their homes or access non-mental healthcare through audio-only calls.
The changes were set to expire at the end of 2024. But they generally receive bipartisan support from legislators, so experts expected them to be extended once again for another two years in a year-end funding package.
However, the stopgap legislation that would have preserved the flexibilities through 2026 was derailed after Trump and allies Vivek Ramaswamy and Elon Musk raised concerns about the bill’s cost.
Elon Musk embraces President-elect Donald Trump during a campaign rally on October 5, 2024 in Butler, Pennsylvania. A year-end spending bill that would have extended telehealth flexibilities in Medicare for two years was derailed after Trump and Musk raised concerns about the bill’s cost.
Anna Moneymaker / Staff via Getty Images
Eventually, Congress came to a deal, narrowly averting a government shutdown. President Joe Biden signed a scaled back funding bill into law in late December that preserves the Medicare telehealth flexibilities for only three months.
The short extension poses another challenge for providers that offer virtual care services, telehealth advocates say.
“While we are grateful lawmakers averted a year-end telehealth cliff for millions of Medicare beneficiaries, the fact Congress was only able to secure a short-term extension of critical flexibilities and the significant uncertainty the process created for providers and patients underscores the urgent need for permanent solutions,” Alye Mlinar, executive director of Telehealth Access for America, said in a statement shortly after the funding bill was passed.
Providers have already raised concerns that the temporary nature of many telehealth flexibilities — and reimbursement for those services — could make it difficult to justify further investment in virtual care.
Clarity is key for many healthcare organizations, HIMSS’ Leary said. Congress could continue to kick the can on making the flexibilities permanent, but providers want to understand the parameters for telehealth delivery in Medicare — and be sure the program and other insurers will continue to pay for it.
“Health insurers, in a lot of ways, are following what Medicare does,” Leary said. “So if Medicare pulls back, we don’t have a full guarantee that the other private insurers won’t pull back either.”
More M&A, IPOs on the horizon for digital health
Digital health funding could increase in 2025 compared with recent years, and more companies may combine or make the leap to go public, experts say.
The sector is coming off three years of declining venture capital investment, where more startups turned to unlabeled or silent fundraising rounds and average deal sizes declined.
Mergers and acquisitions among digital health companies could also pick up this year, experts say. Investors, financial sponsors and strategic buyers are considering a growing number of deals, RSM’s Wolf said.
Still, the M&A environment looks different from the pandemic era. When interest rates were low, there was more wiggle room in the deal-making process — so companies could still finalize M&A that hit some snags, like lower earnings than anticipated, he said.
“Now the interest rates are much higher, that margin for error is so much lower,” Wolf said. “And so companies [and] investors have to be much more careful about the deals that they make. But they are hungry to make deals.”
The new year could also prove a turning point for digital health companies looking to go public. Few have gone public in recent years, and many that previously hit the public markets have seen their share prices plummet.
But some digital health firms are preparing to go public this year — and their performance could be a harbinger for other IPOs, said Neil Patel, head of ventures at startup builder Redesign Health.
“You might see some enter into the market in early 2025, and if things have been going well for probably like half of the year, then maybe the second half of the year has more activity,” Patel said.
The digital health sector overall is still pretty young, only making up a significant portion of venture investing about six years ago, said Lynne Chou O’Keefe, founder and managing partner at venture capital firm Define Ventures.
And the companies considering going public this year have had more time to develop their businesses than the initial group of digital health firms that debuted on the public markets during the pandemic.
“This next class of IPOs of companies that we think are preparing themselves are going to be in a fully different revenue scale than what we’ve seen before, just a very different maturity curve than what we saw in 2020 and ‘21,” she said.