Scaling Digital Health in 2025: Lessons from JPM Healthcare Conference

Observations from JPM Healthcare Conference 2025

The 43rd annual J.P. Morgan Healthcare Conference in San Francisco has once again underscored the transformative shifts in the healthcare industry. This also happens to be my 9th time attending the conference. For as many years as I’ve been analyzing/investing in healthtech, 2025 is poised to be a pivotal year in healthtech. Below, I explore five areas as a reflection of this year’s JPM Health conference, driving 2025 to be a standout year for healthtech. 

1. Evolution of Digital Health Investment Landscape (2016–2025)

The digital health investment landscape has evolved dramatically over the past decade. From $4.7 billion in 2016 to a peak of $29.2 billion in 2021, funding has since stabilized, with $10.1 billion raised in 2024 across 497 deals. Normalizing for inflation, the 2024 investment dollars are on par with 2019. However, I would like the funding environment in 2025 to look more like 2016-2017, i.e. $6-$9B in 2024 dollars, but it could be wishful thinking. The rationale for lower investment dollars being the velocity of early-stage health AI deals in 2022-24 has mimicked a bit of 2015-2017’s dawn of digital health deals. This sets up 2025 to potentially see increased velocity of growth deals (Series B-D), just as 2018 saw greater velocity of growth health-tech deals. Thus, all things being equal, albeit in 2025 valuations possibly propelled by AI premiums – the upside potential for growth investors could be impacted. In addition, I am also mindful however, that lower valuations may not come to pass for a couple of reasons – 1) deep-pocketed healthcare funds; and 2) AI’s influence in healthcare (and associated deal hubris). Nonetheless, the arc of investments over the last 9 years reflects a maturing market where early-stage funding now dominates, signaling a shift toward nurturing younger startups with less capital-intensive needs. The average deal size has also normalized to pre-pandemic levels, indicating a recalibration after the COVID-19 funding boom.

2025 is shaping up as a pivotal year for digital health companies. Many late-stage startups that struggled with downward valuation pressures are now seeking mergers or acquisitions (M&A) to survive. And large funds are helping to catalyze this shift, in part because they have accumulated a portfolio mimicking a “healthcare index” that allows mapping of the strong with the weak, but also because you need scale to drive meaningful innovation in healthcare. 

2. The Role of M&A in Shaping Healthtech

M&A has always been a staple exit scenario in healthcare – Healthcare IT M&A volume reached 265 transactions announced or completed in 2024, outpacing the prior year by 2.7%. After a reset year in 2024 marked by smaller, strategic deals, falling interest rates and post-election certainty are expected to spur larger transactions this year. Companies are increasingly using M&A not just for scale but to integrate capabilities that address broader customer needs. 

For instance, Geodesic’s own portfolio Transcarent, announced its acquisition of publicly listed Accolade (NASDAQ: ACCD), and analysts from Truist, Wells Fargo, and Canaccord Genuity believe the combined scale and depth of offerings to be beneficial for end-customers. Similarly, Commure’s acquisition of Augmedix expanded its AI-powered clinical workflow offerings, while Fabric Health’s series of acquisitions transformed it into a robust virtual care platform. These consolidations enable companies to offer end-to-end solutions, which appeal to large healthcare customers seeking comprehensive service providers. This trend will likely accelerate as scaled players with fiscal discipline and technological sophistication separate themselves from narrowly focused competitors.

3. Financial Recovery Among Health Systems

After a tumultuous COVID era, be it for profit (e.g. HCA, UnitedHealth) or nonprofit (e.g. Sutter Health, Intermountain Health) health systems, they have made significant strides in improving financial performance through improved topline as members seek procedures/services but also through cost improvements led by strategic restructuring and technology adoption. Providence Health’s “Recover and Renew” initiative exemplifies this transformation, delivering $1 billion in operational improvements by reducing contract labor costs, optimizing patient length of stay, and expanding value-based care platforms. Similarly, Advocate Health’s “Rewire 2030” framework focuses on national service lines, wellness programs, and academic excellence as pillars for long-term sustainability.

These systems are increasingly investing in AI and digital health tools to enhance operational efficiency and patient outcomes. For example:

• Investments in genomic data platforms like Truveta aim to accelerate drug discovery.
• Partnerships with home care providers support value-based care models.
• AI-driven analytics improve resource allocation and patient engagement.

4. Jobs AI Can Solve in Healthcare

There was sufficient chatter on Artificial intelligence (AI) at JPM 2025. Clearing the fog, AI is well-positioned to tackle several high-value jobs within the healthcare ecosystem:

• Administrative Efficiency: Automating tasks such as billing, coding, and prior authorization can save billions annually while reducing administrative burdens.
• Clinical Decision Support: Tools like diagnostic algorithms and predictive analytics aid clinicians in making faster, more accurate decisions.
• Patient Engagement: Personalized communication platforms driven by AI can improve adherence to treatment plans while enhancing patient satisfaction.
• Workforce Augmentation: Ambient scribing tools free up clinicians’ time for patient care by automating documentation processes.
• Digital pathology: e.g. Accelerating cancer diagnostics and personalized care through partnerships like Mayo Clinic and Nvidia.

However, unlocking significant dollars for AI implementation requires overcoming barriers such as interoperability challenges, regulatory compliance, and demonstrating clear ROI. For instance, providers are particularly drawn to enterprise-grade AI solutions that integrate seamlessly into existing workflows rather than standalone point solutions. Partnerships like AWS and General Catalyst aim to fast-track such enterprise tools by leveraging cloud infrastructure for scalability and compliance. 

These applications not only address critical pain points but also align with payer priorities around cost reduction and quality improvement—making them attractive investments for healthcare stakeholders.

6. Advice for Founders: Navigating the Future

For founders navigating this complex landscape of industry dynamics, here are a few key focus areas, from my experience investing/analyzing healthtech companies:

1. Demonstrate Value Quickly: Investors are prioritizing startups that can show clear ROI within short timeframes. I would have said <18 months for healthcare up until a couple of year ago, but with AI companies are able to demonstrate ROI in <1 year. 
2. Build Enterprise-Grade Solutions: Focus on scalability, compliance, and interoperability to meet the demands of large healthcare customers.
3. Leverage Strategic Partnerships: Collaborate with established players to accelerate go-to-market strategies.
4. Diversify Offerings: Avoid being pigeonholed into narrow point solutions; instead, start with a wedge with a demonstrable ROI, and aim for platforms that address multiple use cases.
5. Prepare for M&A Opportunities: With consolidation on the rise, founders should position their companies as attractive acquisition targets by demonstrating financial discipline and technological leadership.

Conclusion – Bullish on Healthcare Scaled Digital Health Software & Services Opportunities for 2025 

The JPM Healthcare Conference 2025 highlights an industry at an inflection point where innovation meets pragmatism. The evolution of digital health investments reflects a maturing market focused on sustainable growth, with M&A activity as a tool to consolidate capabilities across the value chain, creating opportunities for scaled players. AI continues to hold immense promise but requires thoughtful implementation strategies to unlock its full potential within healthcare systems. 

For founders charting their paths forward, the message is clear: focus on delivering measurable value while building scalable solutions that align with broader industry trends. The future of healthcare innovation depends on collaboration between Davids and Goliaths—an ecosystem where all players can thrive together to drive impactful change.