How health systems are envisioning AI’s potential

Modern Healthcare – Friday, December 5, 2025
By Gabriel Perna and Tim Broderick

Health systems aren’t just excited about using artificial intelligence as a tool to improve back-office operations. They’re also keen to use it for clinical diagnosis.

A report published this week by J.P. Morgan Chase examined major health tech trends including venture capital investment into AI. It also looked at how health systems plan to deploy the technology and who is using digital health technology most frequently.

Of the health tech and tech-enabled healthcare services that received venture capital funding rounds this year, 75% have been concentrated on AI-focused companies, the report found. A significant percentage of the venture capital money invested into health tech came from megadeals of more than $100 million.

Here are three takeaways from the report.

Health systems favor AI for administrative and clinical use cases

Much has been made of how AI has been adopted to reduce administrative burden, either by improving physician documentation and revenue cycle management functions or by helping hospitals manage patient capacity. Executives also are adopting the technology to improve clinical diagnoses.

The report cited a McKinsey survey asking health system executives to identify critical areas of AI investment. Of those surveyed, 75% said they are using AI to reduce administrative burden and 74% said they are using it to improve clinical efficiency. Beyond those two areas, 55% said AI will be able to improve patient engagement.

Megadeals carry VC funding in 2025

AI has been at the center of nearly every big funding deal this year. The health tech sector is on pace to have its biggest year in terms of venture capital funding since 2022. Companies such as Abridge, which has developed AI documentation software for providers and payers, and Innovaccer, which has developed AI agents to help providers with patient scheduling and communications, received massive funding rounds this year.

Only 3% of health tech venture capital funding rounds in 2025 were megadeals, defined as $100 million or more by J.P. Morgan. But they represented 42% of all venture capital investment into health tech through Sept. 30. AI companies are receiving significantly higher post-money valuations compared with non-AI companies, according to the report.

Use of digital health varies by age

The report looked at how different age groups are using digital health technology. Among those aged 25 to 44 years old, 68% said they have used virtual care in the past 12 months, according to a survey conducted in the fall of 2024. Sixty percent of those aged 18 to 24 said they had used virtual care in the same time period.

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