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What’s Holding Healthcare Back from AI Adoption?
This week we’re exploring the main barriers in AI adoption among Healthcare Systems.
Good morning, ! This week we’re exploring the main barriers in AI adoption among Healthcare Systems, post-acute care is projected to be the fastest growing care setting by 2035 with a 31% surge, Hartford HealthCare acquires Manchester and Rockville hospitals for $86.1M.
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TREND OF THE WEEK
The Outpatient Shift Is Accelerating
EY forecasts a sharp divergence in patient volume growth across care settings over the next decade—and the winners are clear.
From 2025 to 2035, post-acute care is projected to grow the fastest at +31%, followed by outpatient surgery (+20%) and general outpatient services (+18%). Meanwhile, inpatient (IP) days will grow just 10%, and emergency departments a mere 5%.
This reflects a broader structural pivot: care is moving away from acute, high-cost hospital settings toward decentralized, lower-acuity, higher-margin environments. The drivers are both clinical and financial—payer pressure, aging demographics, and tech-enabled care models that support faster recovery and remote monitoring.
Why it matters: Investors and strategics betting on traditional hospital volumes risk missing the bigger picture. Growth is being redefined around site-of-care shifts, with outpatient and post-acute settings becoming core to care delivery—and to healthcare returns. (More)
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HEALTHTECH CORNER
AI Funding Surges, But Hospitals Aren’t Sold Yet
Venture capital may be all-in on AI, but healthcare systems are still hedging.
75% of HealthTech and tech-enabled services deals in 2025 went to AI-focused companies, and Series B rounds—normally a signal of early platform bets—accounted for over 60% of that capital. Yet a JP Morgan survey of hospital leaders paints a more cautious picture:
77% cited immature AI tools as a top barrier to adoption
47% pointed to financial concerns, and
40% flagged regulatory uncertainty
Only 17% blamed clinician resistance. Translation: the demand isn’t the problem—the infrastructure is.
Still, ambient AI for documentation and diagnostic automation are gaining traction, especially among startups raising large rounds in 2025. Gen Z and Millennials are accelerating patient-side adoption, lowering friction for HealthTech AI interfaces.
Why it matters: Investors are betting ahead of operational readiness. For AI in HealthTech to convert hype into EBITDA, the next wave of startups must close the tool maturity gap—and navigate cost and compliance with enterprise fluency (More)
DEAL OF THE WEEK
Hartford HealthCare Buys Stability
Hartford HealthCare closed an $86.1M acquisition of Manchester Memorial Hospital and Rockville General Hospital from bankrupt Prospect Medical Holdings, turning a long-running Connecticut saga into a resolution focused on continuity, not financial engineering. The deal—Prospect’s only bid—came with heavy regulatory oversight, including commitments to preserve services, cap near-term payer rate negotiations, and keep key facilities operational.
The headline isn’t just the purchase price. Hartford HealthCare plans to invest $225.7M over three years, targeting workforce expansion, stronger outpatient and ambulatory care, 24/7 virtual primary care, and the reopening of a 30-bed behavioral health unit. In other words: fix the pipes before turning on the growth taps.
State officials were blunt. After years of private equity mismanagement, this transaction was framed as a reset—favoring access, affordability, and local care over leverage.
Bottom line: a nonprofit buyer, a distressed seller, and regulators aligned on one goal—stabilize first, optimize later. (More)
REGIONAL FOCUS
Following the RCM Money
North America still runs the table, controlling 55% of global RCM market share in 2024. This is less about population and more about administrative complexity—dense payer networks, fragmented reimbursement rules, and a long-standing reliance on outsourced billing and coding. Add EHR saturation, AI-enabled workflows, and relentless private equity consolidation, and the region’s dominance looks structural, not cyclical.
Europe, at 24%, is quietly scaling. While regulatory frameworks vary by country, the drivers rhyme: digitized reimbursement, hospital IT upgrades, and rising outsourcing adoption in the U.K., Germany, and the Nordics.
Asia-Pacific, with 17% share, is the real growth story. Infrastructure modernization, private hospital expansion, and broader insurance coverage are pushing providers toward automation—while India and Southeast Asia double as global RCM outsourcing hubs.
LAMEA’s5% reflects earlier-stage digitization, but Gulf investment and Brazilian payer reform suggest optionality ahead. (More)
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