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Health systems will continue to deploy artificial intelligence products in 2026, buoyed by hopes that the technology will automate tasks and reduce expenses — a major concern as financial pressures loom, experts say.
Over the past couple of years, vendors have largely focused on implementing AI tools to administrative and back office worksuch as ambient scribes for documentation and products to accelerate revenue cycle management and pre-authorizations.
Health systems will likely stay on this path this year, driven in part by the financial risks that are likely to occur. significant cuts in Medicaidsay the experts.
Meanwhile, health AI companies could receive an even larger share of digital health funding in 2026, as investors invest in high-demand startups. Some of these companies could consider mergers and acquisitions, with the aim of adding new AI capabilities and providing a more comprehensive offering to buyers, experts say.
The increase in use and investment in AI comes amid a fragmented regulatory regime, creating a complex environment for health systems seeking to deploy AI tools this year. The Trump administration has taken a deregulatory stance toward AI in general.
“This is a perfect storm because there is an economic necessity for the healthcare industry to move further toward artificial intelligence,” said Sharon Klein, partner and co-chair of privacy, security and data protection at law firm Blank Rome. “There’s no real guidance on this from regulators. In fact, it’s the opposite.”
States take the lead in regulation
Health organizations may have to wait for clear federal guidance regarding AI this year, while states increasingly take the wheel and create a patchwork of laws that can be difficult for health organizations to follow, experts say.
“We are still awaiting action from the federal government to define the limits to which AI can be used in health care,” said Dan Silverboard, a partner at law firm Holland & Knight. “In the meantime, states have really taken the lead in making these decisions. »
In 2025, the Trump administration announced it would reduce AI oversight in an effort to boost the implementation of the technology. An action plan published last summer provided that the government remove “onerous” regulations this could slow down the development and deployment of AI.
So far, the Trump administration has kept that promise. In December, President Donald Trump signed an executive order that could challenge some state AI laws and called for a national framework that would take precedence over state regulations. In the health sector, the Assistant Secretary for Technology Policy/Office of the National Coordinator for Health Information Technology proposed a rule last month, it would remove AI “model card” certification requirements.
In the absence of federal AI laws, states have attempted to pass laws regulating the technology — and they may continue to propose laws this year, experts say.
During last year’s legislative session, all 50 states, plus Puerto Rico, the Virgin Islands and Washington, D.C., introduces AI legislationaccording to the National Conference of State Legislatures. Nearly 40 states have adopted or promulgated around a hundred measures.
Many AI laws are not specific to the healthcare industry, although some states have implemented legislation that requires providers to disclose AI use to patients or restricts insurers’ use of AI in utilization management decisions, according to one study. Ropes & Gray law firm tracker.
Different state AI laws can add complexity to healthcare organizations, Klein said. Some states have adopted more general regulations on AI, such as Colorado AI Law — while other legislation focuses on specific sectors or uses, such as education or childhood laws.
“It’s very complicated for organizations to understand all of their requirements,” Klein said. “It took us years to understand how the patchwork of state privacy laws (personally identifiable information and protected health information) worked with federal laws and regulations and how they could all coexist. And now it’s accelerating with artificial intelligence.”
Trump’s decision to also ignore state laws creates new uncertainty and confusion for businesses, and its decree might not hold up in court.
Some states are move forward with their projects for AI legislation anyway: New York Governor Kathy Hochul signed a bill on AI shortly after the executive order was issued last month, as a Republican lawmaker from Florida introduces AI legislation end of December.
Growing opportunities for mergers and acquisitions
AI companies could begin consolidating in 2026 with the aim of offering a more comprehensive product to healthcare organizations, experts say.
Right now, many health systems are ready to experiment with AI tools and narrow use cases, said Tom Kiesau, managing partner and head of AI and digital at consulting firm Chartis.
But over the next few years, more organizations may be interested in larger AI platforms, he said. The concerns of health systems and other technology buyers regarding managing a multitude of point solutions is not newgiven the challenges of overseeing relationships with multiple suppliers.
“People say, ‘We have a lot of suppliers, a lot of point solutions. There are a lot of costs. Who can consolidate? We may be able to reuse some savings here,” Kiesau said.
AI providers could benefit from a merger. For example, a number of companies offer AI-based documentation products or scribes that typically record doctors’ conversations with patients and write clinical notes.
“There are over 100 funded AI scribe companies that are all basically offering the same product and all catering to the same market,” said Dr. Sunny Kumar, a partner at venture capital firm Informed Ventures. “In reality, you probably won’t have more than 100 … successful companies in two, three, five, ten years.”
Smaller competitors that haven’t captured as much market share may have valuable technology that could make them ripe for an acquisition, said Brian Wright, senior research analyst for health care at PitchBook.
Private equity firms could be an interested buyer in acquiring AI companies and bundling them into a platform offering, said Beth Mosier, director of consultancy West Monroe’s healthcare M&A team.
“This is a very predictable and scalable investment that allows you to get a return on your investment without taking on a huge risk,” Mosier said.
AI startups face competition from EHRs
Electronic health record vendors – including major players like Epic and Oracle Health – to have we are increasingly looking to integrate AI in their offers. The integration of technology within large, established healthcare companies could pose a competitive threat to startups this year, experts say.
EHR vendors have a few advantages over AI startups, including their familiarity with the market. EHRs are already essential to healthcare delivery, so using AI tools alongside records is likely an attractive option for providers.
“It’s sort of the path of least resistance, and it will at least be a starting point for where health systems are going to go,” said Holland & Knight’s Silverboard.
While the AI tools offered by EHR companies may be attractive, that doesn’t necessarily spell doom for small providers in 2026, experts say. Even large EHR vendors can only focus on a limited number of different products, Kumar said. An EHR company may want to offer scribe, revenue cycle management and planning tools, but may only be able to invest in a handful of products.
Smaller AI startups may also be more willing to work with health organizations to tailor their offerings to their specific needs, said Peter Jackson, an attorney at law firm Greenberg Glusker.
“New entrants are more willing to do customizations and work more directly with customers,” he said. “Traditional providers don’t do that. They provide a one-size-fits-all solution for everyone, for the most part.”
Funding for AI startups could increase again
AI startups received a significant share of overall digital health funding last year, and the technology could account for an even larger share of investments in 2026, experts say.
Last year, 54% of investments in the sector went to AI-based companies, according to venture capital firm and consulting firm Rock Health. That’s an increase from 2024, when AI startups recovered 37% of overall digital health funding.
In 2026, the industry will likely see money invested in a smaller number of large-scale platforms, like last year, said Megan Zweig, president and CEO of Rock Health Advisory.
“We saw these companies that were able to move from pilot mode to this full-scale mode, and showed that they could gain the trust of users, that they could sort of overcome some of the challenges of the science of implementing all of this — they were raising very, very large series,” she said.
More funding could flow to companies offering tools that automate work surrounding clinical care, such as appointment scheduling and billing, said Kumar of Informed Ventures.
“You can increase the efficiency of a clinician by 3 or 4 times, so you don’t need as many support staff per clinician,” he said. “This can significantly reduce overall health care costs.”