2025 Medical Technology Trends Outlook: AI Regulation, Cybersecurity, and Telemedicine Take Center Stage

Experts say uncertainty over telehealth flexibility, a murky outlook for AI regulation, and relentless cyberattacks will shape health technology trends in 2025.

AI is highly attractive to the healthcare industry, but organizations deploying these tools must navigate security and accuracy issues—while also facing a potentially unclear regulatory environment as President-elect Donald Trump begins his second term.

Telehealth also faces its own regulatory challenges. Late last year, a bill that would have extended Medicare virtual care flexibilities for two years died in December. Now, these pandemic-era policy changes only last through March, adding new anxiety for telehealth groups and providers, who say policy uncertainty hampers investment in virtual care.

Healthcare organizations may also continue to face a wave of cyberattacks. As the industry grows more reliant on connected devices and systems, cyberattacks pose a serious threat to healthcare delivery.

Meanwhile, digital health funding could increase this year after years of decline. Experts say some companies may merge or pursue initial public offerings (IPOs)—and if successful, could push others to go public as well.

"There is interest in the public markets," said Matt Wolf, director and senior healthcare analyst at consulting firm RSM US. "They just need to do the public offering right."

Here are the biggest trends in health technology in 2025.

AI regulation enters a new administration

AI has become one of the most attractive emerging technologies for healthcare executives, with hopes it can help solve stubborn challenges like physician burnout or workforce shortages.

However, implementing these tools is not easy given concerns about accuracy and bias, as well as the review and pilot work required before deployment. Additionally, due to the risk of model drift—where the environment behind the model changes and causes performance to decline—healthcare organizations also need to monitor AI tools' performance over the long term.

That's why health systems planning to deploy AI tools will seek greater transparency from vendors and build deeper partnerships in 2025, said Brian Anderson, CEO of the Coalition for Health AI. The industry group is developing guidelines for responsible AI use in healthcare.

Without input from companies selling AI tools, judging whether model performance remains satisfactory is a challenge even for the most well-resourced health systems, he said.

"Technically, if you don't know what the initial setup is—essentially what the data situation is—you can't monitor drift," Anderson said.

He also noted that many health systems may focus on deploying AI in non-clinical decision areas, such as assisting with coding, billing, or prior authorization requests.

Michael Gao, CEO and co-founder of healthcare AI company SmarterDx, said there is a higher tolerance for errors when automating these administrative tasks, and errors may already exist when humans are in charge.

Additionally, health systems have thin profit margins, so increasing revenue through automating administrative tasks is attractive.

"The things hospitals can do to improve margins—whether it's increasing revenue through better documentation or being able to fight insurance denials—I think that's still going to be the top priority, frankly, for survival," Gao said.

Healthcare organizations seeking to implement AI products must also contend with how the incoming Trump administration may regulate the technology.

The Biden administration has begun laying the groundwork for federal AI regulation, including a sweeping executive order issued in fall 2023 that launched multiple research initiatives and pushed federal agencies to appoint chief AI officers.

Mark Dredze, interim associate director of Johns Hopkins University's Data Science and AI Institute, said during a December webinar that the order "is probably the most significant AI regulation in the United States."

However, Trump has pledged to repeal the executive order and significantly reduce the federal workforce, painting a chaotic picture for AI regulation under the new administration, Dredze said.

Dredze said it remains unclear what Trump will do. Will he completely revoke the entire executive order, or replace it with a new one? Will AI research funding decrease, or will government workers with AI expertise lose their jobs or jump to the private sector?

The Trump administration may want to put its own stamp on AI regulation, said Tom Leary, senior vice president and head of government relations at HIMSS, a health IT professional organization.

Dredze noted that competition with other countries over AI dominance may push the Trump administration to focus on funding and regulating the technology.

"If you want to compete with China and build the best AI in the U.S., you need to invest in research funding, invest in talent in the U.S., and have a clear regulatory framework for U.S. companies," he said.

Leary said other governments—including states or other countries—may also take regulatory actions that affect U.S. AI developers and healthcare organizations. For example, the European Union passed its own framework for AI development and deployment last year.

"Multinational companies with customers in many parts of the world will want to build products that meet standards, and if the EU AI Act is the clearest, then companies will build to those requirements and then sell products elsewhere," Leary said.

Cybercriminals continue to target the healthcare industry

Experts say cybersecurity became a major challenge for the healthcare industry in 2024, and organizations have begun to take it seriously. But improving the industry's cyber defenses takes time—and hackers are unlikely to stop targeting healthcare companies.

The industry saw several high-profile attacks in the past year. In early 2024, the entire healthcare ecosystem was grappling with the aftermath of a cyberattack on Change Healthcare, a technology company and claims processor owned by industry giant UnitedHealth.

The attack—which led to a record data breach of 100 million Americans—was a "milestone event" that highlighted the industry's interconnectedness, said Errol Weiss, chief security officer at the Health Information Sharing and Analysis Center (Health-ISAC).

The year also saw other cyberattacks on critical healthcare suppliers—such as a ransomware attack on blood donation center OneBlood and an attack on UK pathology services provider Synnovis—events that underscored the importance of resilience planning when critical services suddenly become unavailable.

"I think the wake-up moment is how vendors can become a single point of failure affecting healthcare delivery," Weiss said.

This year, organizations may focus on managing cyber vulnerabilities with vendors, said Wolf of RSM. What data are they sharing with third parties? Are they consolidating services with trusted vendors, or adding additional service providers in case one option goes offline?

Still, improving cybersecurity takes time, said Flavio Villanustre, senior vice president of technology and chief information security officer at LexisNexis Risk Solutions.

"Building a security-centric culture doesn't happen overnight, right?" he said. "So before things get better, we're likely to see more incidents."

Although it's hard to predict whether the industry will experience another massive cyberattack like Change in 2025, experts say cybercriminals will certainly try.

"Healthcare data is so valuable, there will absolutely be attempts," Wolf said. "I can't say we'll definitely see a big event like that, but I wouldn't be surprised if it happens."

Telehealth faces another cliff

Telehealth flexibilities in Medicare will face another looming deadline in 2025, after a spending bill that would have extended them for two years was rejected last month.

These policies, created during the COVID pandemic, significantly expanded telehealth coverage in the program and are currently operating under temporary waivers, though some have been made permanent. They include flexibilities allowing patients to receive telehealth at home or obtain non-mental health services through audio-only calls.

These changes were originally set to expire at the end of 2024. But because they generally enjoy bipartisan support among lawmakers, experts expected them to be extended for another two years in the year-end funding package.

However, the temporary legislation that would have kept these flexibilities through 2026 was shelved after Trump and his allies Vivek Ramaswamy and Elon Musk raised concerns about the bill's cost.

Ultimately, Congress reached a deal that narrowly avoided a government shutdown. President Joe Biden signed a scaled-down funding bill in late December that only kept Medicare telehealth flexibilities for three months.

Telehealth advocates say this short-term extension poses another challenge for providers offering virtual care services.

"While we appreciate lawmakers avoiding a year-end telehealth cliff for millions of Medicare beneficiaries, Congress only securing a short-term extension of critical flexibilities, and the immense uncertainty this process creates for providers and patients, underscores the urgent need for a permanent solution," said Alye Mlinar, executive director of Telehealth Access for America, in a statement shortly after the funding bill passed.

Providers have previously raised concerns that the temporary nature of many telehealth flexibilities—and reimbursement for these services—could make it difficult to justify further investment in virtual care.

Clarity is crucial for many healthcare organizations, said Leary of HIMSS. Congress may continue to delay making the flexibilities permanent, but providers want to understand the parameters of telehealth services in Medicare and ensure the program and other insurers will continue to pay.

"Health insurers in many ways follow Medicare's lead," Leary said. "So if Medicare pulls back, we can't fully guarantee that other private insurers won't also pull back."

Digital health M&A and IPOs expected to increase

Experts say digital health funding could increase in 2025 compared to recent years, with more companies potentially merging or taking steps to go public.

The industry just experienced three years of declining venture capital investment, during which more startups turned to undisclosed or quiet funding rounds and average deal sizes shrank.

M&A among digital health companies could also accelerate this year, experts say. Wolf of RSM said investors, financial sponsors, and strategic buyers are considering a growing number of deals.

Still, the M&A environment is vastly different from the pandemic era. When interest rates were low, there was more room for maneuver during deals—so even if companies hit some obstacles (like earnings below expectations), they could still complete M&A.

"Now interest rates are much higher, and there's much less room for error," Wolf said. "So companies and investors have to be more careful about the deals they do. But they're eager to get deals done."

The new year could also be a turning point for digital health companies seeking to go public. Few companies have gone public in recent years, and many that previously entered the public markets saw their stock prices fall sharply.

But some digital health companies are preparing to go public this year—and their performance could be a bellwether for other IPOs, said Neil Patel, venture capital lead at startup builder Redesign Health.

"You might see some companies enter the market in early 2025, and if things go well for about six months, there could be more activity in the second half," Patel said.

The digital health industry as a whole is still fairly young, having only become a significant part of venture capital about six years ago, said Lynne Chou O'Keefe, founder and managing partner of venture capital firm Define Ventures.

And companies considering going public this year have had more time to build their businesses than the first wave of digital health companies that hit the public markets during the pandemic.

"We think the next batch of IPO companies being prepared will have a completely different revenue scale and a very different maturity curve than what we saw in 2020 and 2021," she said.