1. More health systems implement AI tools

According to Brian Anderson, CEO of the Coalition for Health AI, many health systems will likely deploy AI in administrative areas, including coding, billing, or prior authorization requests, rather than for clinical decision-making.

Because health systems operate on slim margins, increasing revenue by automating administrative processes is appealing. "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," said Michael Gao, CEO and cofounder of the healthcare AI company SmarterDx.

As more health systems implement AI tools, they will likely seek greater transparency from, as well as deeper partnerships with, vendors to better understand how to use the tools and monitor their performance.

"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.

Healthcare organizations will also have to watch for any potential regulations on AI. In fall 2023, the Biden administration issued a broad executive order to lay the groundwork for federal AI oversight. According to Mark Dredze, interim deputy director for the Johns Hopkins University Data Science and AI Institute, the order was "probably the most significant AI regulation in the United States."

However, President Donald Trump said that he would repeal Biden's executive order on AI oversight and significantly reduce the federal government workforce.

So far, it's unclear what the Trump administration has planned for AI regulations, but competition with other countries could lead the administration to focus more on funding and regulating the technology.

"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," Dredze said.

2. Cyberattacks will continue to be a challenge

In 2024, cybersecurity was a major challenge for the healthcare sector, with multiple high-profile attacks. One attack, which exposed data from a record-breaking 100 million Americans, was a "milestone event" that highlighted how interconnected the healthcare industry is, according to Errol Weiss, chief security officer at the Health Information Sharing and Analysis Center.

This year, healthcare organizations will likely focus on working with vendors to manage any cybersecurity vulnerabilities — though progress will take time.

"Building a security-centric culture is not something that you can do overnight, right?" said Flavio Villanustre, SVP of technology and chief information security officer at LexisNexis Risk Solutions. "So it is likely that we'll see additional incidents before this gets better."

"Healthcare data is so incredibly valuable that there will absolutely be [more] attempts,” said Matt Wolf, director and healthcare senior analyst at consultancy RSM US. "I can't say that we will for certain see a [large-scale cyberattack like last year], but I wouldn't be surprised if we did."

"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," said Alye Mlinar, executive director of Telehealth for America.

According to Tom Leary, SVP and head of government relations at HIMSS, healthcare organizations will need clarity on telehealth flexibilities so they can be sure whether Medicare and other insurers will continue paying for virtual services. "Health insurers, in a lot of ways, are following what Medicare does," he said. "So if Medicare pulls back, we don't have a full guarantee that the other private insurers won't pull back either."

4. Digital health could see more M&A and IPOs

According to industry experts, digital health companies could see more funding in 2025 compared to recent years, and more companies may either combine or go public. Mergers and acquisitions (M&A) among digital health companies could also increase this year since investors, financial sponsors, and strategic buyers are considering more deals.

Companies and investors "are hungry to make deals," said RSM's Wolf. However, he noted that they "have to be much more careful about the deals that they make" now since "the interest rates are much higher, [and the] margin for error is so much lower."

Although digital health companies have not had much success with going public so far, this year could be a turning point, Olsen writes.

"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," said Neil Patel, head of ventures at Redesign Health.

Separately, Lynne Chou O'Keefe, founding and managing partner at Define Ventures, said the current group of companies considering going public are different than the ones that initially went public during the pandemic since they've had more time to develop their businesses.

"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.