AI companies,” Dredze said.
It remains to be seen how the regulatory environment for AI will evolve under the new administration, but health systems will have to stay agile as they navigate potential changes in oversight and compliance requirements.
Telehealth faces regulatory uncertainty
Telehealth has been a bright spot for the healthcare industry, allowing patients to access care from the comfort of their homes during the COVID-19 pandemic. But the future of telehealth is now in flux as policymakers grapple with how to regulate virtual care.
Telehealth providers and organizations have been pushing for permanent flexibilities in telehealth regulations, but a bill that would have extended Medicare virtual care flexibilities for two years stalled in Congress at the end of 2024. Now, those flexibilities are set to expire in March, leaving telehealth stakeholders in limbo.
“The uncertainty surrounding telehealth regulations is a major concern for providers and patients alike,” said Sarah Johnson, CEO of the American Telemedicine Association. “We need clear guidelines and permanent solutions to ensure that telehealth can continue to thrive and expand.”
Telehealth has proven to be a valuable tool for increasing access to care, especially in rural and underserved areas. But without clear regulations in place, providers may be hesitant to invest in telehealth technology, potentially limiting patients’ access to virtual care.
“Telehealth has the potential to revolutionize healthcare delivery, but we need policies in place to support its growth,” Johnson said. “We urge lawmakers to prioritize telehealth regulations and work towards permanent solutions that benefit both providers and patients.”
Cybersecurity threats continue to rise
Cyberattacks have become a growing concern for healthcare organizations as they increasingly rely on connected devices and systems to deliver care. In 2024, the healthcare industry saw a surge in cyberattacks, with ransomware attacks targeting hospitals, clinics, and other healthcare providers.
“Cybersecurity threats are a serious risk to patient safety and data security,” said Michael Smith, CIO of a large healthcare system. “Healthcare organizations must prioritize cybersecurity measures to protect patient information and ensure the continuity of care.”
Healthcare organizations are investing in cybersecurity tools and training to protect against cyber threats, but the evolving nature of cyberattacks presents a challenge.
“Cybersecurity is an ongoing battle, and healthcare organizations must remain vigilant in their efforts to protect patient data,” Smith said. “We must continue to invest in cybersecurity measures and stay ahead of emerging threats to safeguard our patients and our systems.”
Digital health funding on the rise
Despite the challenges facing the healthcare industry, digital health funding is on the rise. Investors are increasingly interested in digital health startups, with some companies considering initial public offerings to raise capital.
“Digital health has the potential to transform the healthcare industry, and investors are taking notice,” said Matt Wolf, director at RSM US. “We expect to see increased funding for digital health startups in 2025, as investors look for innovative solutions to healthcare challenges.”
Some digital health companies may choose to go public to raise capital and expand their reach, potentially prompting other startups to follow suit. The growing interest in digital health funding reflects a broader trend towards innovation and technology adoption in healthcare.
“Digital health startups have the potential to revolutionize the healthcare industry, and investors are eager to support their growth,” Wolf said. “We expect to see continued investment in digital health in 2025, as companies seek to address the evolving needs of patients and providers.”
Overall, 2025 promises to be a year of change and innovation for the healthcare technology industry. From AI regulation to telehealth policies, cybersecurity threats, and digital health funding, healthcare organizations will need to stay agile and adaptive to navigate the shifting landscape of technology in healthcare.
As we move into 2025, the landscape of healthcare technology and AI development is poised for significant changes. With the rapid advancement of technology in the healthcare sector, companies are facing new challenges and opportunities that will shape the future of the industry.
One of the key factors influencing the healthcare technology sector is the increasing regulatory scrutiny from governments around the world. According to experts, regulations imposed by governments, both domestic and international, can have a significant impact on AI developers and healthcare organizations. For example, the European Union passed its own framework for AI development and deployment last year, which has implications for companies operating in the region.
David Leary, a healthcare technology expert, highlighted that multinational corporations with customers in different parts of the world will need to adhere to various regulatory standards. This means that companies may need to build products that meet the requirements set by different regulatory bodies, such as the AI Act in the EU. Compliance with these regulations will be essential for companies looking to sell their products globally.
Another major challenge facing the healthcare sector in 2025 is cybersecurity. The industry has been a frequent target for cybercriminals, and the past year saw several high-profile attacks on healthcare organizations. The attack on Change Healthcare, which exposed data from 100 million Americans, underscored the vulnerability of the sector to cyber threats.
Experts emphasize the importance of enhancing cybersecurity measures within healthcare organizations. Errol Weiss, Chief Security Officer at Health-ISAC, highlighted the interconnected nature of the healthcare ecosystem and the need for resilience planning in the face of cyberattacks. Organizations will need to focus on managing cyber vulnerabilities with their vendors and strengthening their security protocols to prevent future attacks.
Telehealth, which saw a significant expansion during the COVID-19 pandemic, faces another challenge in 2025. The expiration of telehealth flexibilities in Medicare is looming, after a spending bill that would have extended them was derailed. The short extension of these flexibilities poses challenges for providers offering virtual care services, who are seeking permanent solutions to ensure continuity of care.
Meanwhile, the digital health sector is expected to see increased funding and activity in 2025. Experts predict a rise in mergers and acquisitions among digital health companies, as well as more companies going public. After a period of declining venture capital investment, the sector is poised for growth and innovation in the coming year.
Overall, the healthcare technology landscape in 2025 is marked by regulatory challenges, cybersecurity threats, and opportunities for growth and innovation. Companies operating in this space will need to navigate these challenges and seize the opportunities presented by the evolving healthcare technology landscape.
Investors, financial sponsors, and strategic buyers are actively considering a growing number of deals in the current M&A environment, according to insights shared by RSM’s Wolf. However, the landscape has shifted since the pandemic era, with higher interest rates leading to less margin for error in deal-making. Companies and investors now need to exercise greater caution in their decision-making, although the appetite for deals remains strong.
The year ahead could mark a significant turning point for digital health companies eyeing public offerings. While few have gone public in recent years and some have experienced share price declines post-IPO, there is renewed interest in this sector. Neil Patel, head of ventures at Redesign Health, anticipates that some digital health firms will make their public debut in 2025, with their performance potentially influencing future IPO activity in the space.
The digital health sector is relatively young, having gained prominence in venture investing only about six years ago. Lynne Chou O’Keefe, founder and managing partner at Define Ventures, notes that companies planning to go public this year have had more time to mature their businesses compared to earlier entrants in the market. As a result, the upcoming wave of IPOs is expected to showcase a higher level of revenue scale and business maturity.
As the market continues to evolve, investors and stakeholders are closely monitoring the performance of digital health companies and the overall M&A landscape. The coming year holds promise for innovative firms seeking to go public and capitalize on growing investor interest in the healthcare technology sector. Stay tuned for updates on the latest developments in the dynamic world of M&A and digital health.
