I recently attended an interesting session at NJDVHIMSS led by ComplyAssistant that broadened my perspective on AI in healthcare. While most AI discussions focus on potential clinical improvements, operational efficiencies, and better patient outcomes, this session tackled something equally critical, the cybersecurity and compliance risks that come with this powerful new technology.

The Growing Threat Landscape

As healthcare organizations rush to adopt AI solutions, they're simultaneously expanding their attack surface. The intersection of AI and healthcare creates unique vulnerabilities that demand attention:

Data Privacy at Greater Risk

AI systems require vast amounts of data to function effectively, which means more protected health information (PHI) flowing through more systems. Each new AI tool represents another potential point of failure for HIPAA and HITRUST compliance. The question isn't just about unauthorized access anymore—it's about AI models themselves potentially misusing or exposing sensitive patient data through training processes, outputs, or inadequate safeguards.

Sophisticated Attacks Powered by AI

Cybercriminals aren't standing still, they're using AI too. We're seeing increasingly convincing deepfake attacks, like fake executives appearing on Zoom calls to collect sensitive information. Phishing attempts now feature AI-generated landing pages that are nearly indistinguishable from legitimate sites. Even multi-factor authentication, once considered a gold standard, is being compromised through AI-enhanced social engineering techniques.

Beyond Security: Quality and Equity Concerns

A separate session by Erin Sparnon highlighted another dimension of AI risk that healthcare organizations must address. Before deploying any AI solution, organizations should ask:

• Does this tool have a clear purpose and proven efficacy?
• Is it safe for patient care?
• Is it fair and equitable, or does it perpetuate bias against certain populations?
• Can we explain how it reaches its conclusions, or is it an impenetrable black box?

These questions matter not just for compliance, but for maintaining trust and delivering quality care.

Building a Responsible AI Strategy

The good news is that Healthcare organizations aren't navigating this alone. Multiple frameworks can guide responsible AI implementation, including HIPAA, HITRUST, NIST AI Risk Management Framework, the GAO AI Accountability Framework, and DoD AI Ethical Principles. While each has its nuances, they share common elements that form the foundation of a sound AI governance strategy:

Establish Robust Governance

Create dedicated committees to oversee AI adoption and use. This isn't just about checking boxes. It's about bringing together clinical, technical, compliance, and executive stakeholders to make informed decisions about AI deployment.

Define Clear Thresholds

Your organization needs to decide upfront on how much bias is acceptable. What level of explainability is required? What are the red lines for data usage? These thresholds should be documented and applied consistently during evaluation processes.

Update Compliance Programs

Your existing HIPAA and HITRUST policies weren't written with AI in mind. They need explicit updates to address AI-specific risks like model training on PHI, algorithmic decision-making, and automated data processing. This isn't optional. It's fundamental to maintaining compliance.

Evolve Your Cybersecurity Approach

If you're using the NIST Cybersecurity Framework, consider how it applies to AI systems specifically. The NIST AI Risk Management Framework provides additional guidance for identifying, assessing, and mitigating AI-specific risks.

Invest in Training

Your workforce needs to understand both the opportunities and risks of AI. This means training clinicians on appropriate use cases, educating IT teams on AI security considerations, and ensuring compliance staff can audit AI systems effectively.

Revamp Vendor Evaluation

Your vendor due diligence process needs new questions: How was the AI model trained? What data was used? How is bias detected and mitigated? What explainability features exist? How is the system monitored post-deployment? Standard vendor questionnaires need an upgrade.

Eliminate Black Boxes

Perhaps most importantly, ensure accountability and monitoring are built into every AI implementation. If you can't explain how a system reaches its conclusions or monitor its ongoing performance, it has no place in healthcare.

Moving Forward

AI's potential to transform healthcare is real, but so are the risks. The organizations that will succeed are those that approach AI adoption with both enthusiasm and caution, embracing innovation while building robust safeguards for patients, data, and organizational integrity.

The frameworks exist. The knowledge is available. Now it's up to healthcare leaders to implement these practices to capture all the value AI can provider without allowing AI-related incidents become the next major crisis in our industry.

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I get this question from innovators entering the health tech space all the time: "Why are health systems still migrating to Epic?"

It's a fair question. On paper, Epic seems like yesterday's technology:

• Not cloud-native: health systems must either host it themselves or pay Epic for hosting
• Usability complaints: many providers grumble about clunky design and cumbersome workflows
• Walled garden architecture: its closed ecosystem limits innovation and slows technological adoption

So why does Epic continue to win? Last week at NJDVHIMSS, I spoke with health system technologists deep in Epic implementations. Their answer surprised me, as it's only partly about the technology.

The Real Story: How Epic Built Its Moat

Epic started as one of many electronic health record systems. What distinguished it was not flashy features but rather the ability to feel "custom" across specialties without requiring custom code. For large health systems managing cardiology, oncology, pediatrics, and other specialties, Epic offered breadth and depth that appeared comprehensive at what seemed like a reasonable cost.

Then the momentum began, creating reinforcing dynamics that have proven difficult to reverse.

1. Reliability as a Feature

"It just works," one implementation consultant told me. In healthcare, where system downtime can have serious clinical consequences, Epic's track record for performance and security is highly valued. Self-hosting is not a limitation but rather a feature. Health systems seek control over their most critical infrastructure, and Epic delivers operational predictability.

2. Network Effects

Epic's Care Everywhere platform enables seamless hospital-to-hospital data sharing. When a patient moves between Epic-enabled systems, their records follow. As more health systems adopt Epic, the network becomes more valuable to everyone in it. It's the classic network effect, where each new adopter makes the platform stickier for existing users.

3. Ecosystem Dominance

Epic has established a presence throughout the healthcare workforce pipeline. Certification programs create a labor force trained specifically in Epic workflows and functionalities. Medical education at major academic centers introduces students to Epic early in their training. When hiring decisions favor candidates with Epic experience, the cycle reinforces itself, further entrenching Epic's position.

4. Switching Costs Are Substantial

Migrating away from Epic is not merely expensive but organizationally disruptive. Years of customized workflows, integrated systems, and staff training create substantial inertia. The question facing health systems often becomes: "Can we afford not to stay?"

5. The Gold Standard Effect

Epic has become synonymous with "enterprise-grade EHR." When health system boards evaluate options, Epic represents the safe choice. No one gets fired for choosing Epic. This is a case study of economies of scale in software.

What This Means for Innovators

If you're building in health tech, Epic's dominance is unlikely to diminish in the near term. If you're hoping to sell or work within large health systems, the relevant question is not "How do we replace Epic?" but rather "How do we build in Epic's world?"

The pragmatic approach is to design for interoperability. Build tools that integrate with Epic, extend its capabilities, or solve problems Epic cannot or will not address. The walled garden has gates; success requires understanding where they are and how to navigate them.

Epic prioritizes breadth over depth. It covers every specialty enough to be functional, but rarely goes deep in niche clinical workflows (e.g., dermatology imaging, fertility tracking, or rehab therapy planning). It also provides analytics tools (e.g., Population Health modules) to support value-based care, but it’s not going to take on risk contracts, become a provider group, or function as a payer.

Epic's competitive advantage extends beyond technology. It is built on reliability, network effects, workforce training, and organizational inertia working in concert. Understanding these dynamics is essential for anyone seeking to operate effectively in the healthcare IT landscape.

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At HLTH this year, I attended a session titled "Saying The Quiet Part Out Loud: PMB Edition"  focused on Pharmacy Benefits Managers, an area of healthcare I had barely explored. What emerged was a picture of an industry facing genuine structural pressures after decades of relative stability.

The Concentration Problem

Three companies control roughly 80% of all prescription claims in the U.S. CVS Caremark (part of CVS Health, which owns Aetna), Express Scripts (owned by Cigna), and OptumRx (part of UnitedHealth Group) together manage over 250 million covered lives! Each firm is vertically integrated, controlling insurance design, drug coverage, and pharmacy dispensing within a single organizational structure.

This concentration creates immense leverage with pharmaceutical companies and pharmacies. So why would anyone look elsewhere? How could innovation possibly break through?

Revenue Mechanisms Under Scrutiny

PBMs have traditionally made money through two controversial mechanisms. The first is spread pricing: a PBM might reimburse a pharmacy $95 for a medication while billing the health plan $100, pocketing the $5 difference. The health plan typically can't see what the pharmacy was actually paid, allowing the PBM to profit quietly on the gap.The second revenue source is DIR fees, which are essentially clawbacks. A pharmacy might receive $100 at the point of sale, only to have the PBM clawback $5-10 weeks or months later through "performance-based adjustments" or "network reconciliation fees."

These practices would be defensible if purchasers (governments, health plans, and employers) had confidence that PBMs were reducing net costs. Instead, many stakeholders now perceive that PBMs are introducing inefficiencies without delivering commensurate value.

Regulatory Response

The backlash is intensifying on multiple fronts. The FTC has launched high-profile antitrust actions alleging that PBM rebate and formulary practices favor high-rebate, high list-price drugs. The Inflation Reduction Act is reshaping Medicare Part D economics, reducing traditional PBM leverage. CMS has moved to eliminate retroactive DIR fees, requiring fees to be reflected at point-of-sale, which would be a direct hit to opaque PBM revenue practices.

State-level activity has been particularly aggressive. Numerous states have passed restrictions including licensure requirements, prohibitions on spread pricing, and in some cases, bans on PBM ownership of pharmacies. This creates a fragmented regulatory environment that raises compliance costs and generates litigation likely to establish precedents affecting the broader market.

The combined effect is revenue pressure on traditional rebate and spread-based channels, increased compliance costs, and growing regulatory scrutiny of the incentive structures that critics argue systematically favor more expensive therapeutics.

For details:

https://www.ftc.gov/news-events/news/press-releases/2024/09/ftc-sues-prescription-drug-middlemen-artificially-inflating-insulin-drug-prices

https://www.kff.org/medicare/explaining-the-prescription-drug-provisions-in-the-inflation-reduction-act

https://www.pharmacist.com/Advocacy/Issues/CMS-Eliminates-Retroactive-DIR-Fees

https://www.mintz.com/insights-center/viewpoints/2146/2025-05-19-pbm-policy-and-legislative-update-spring-2025

Alternative Organizational Models

This pressure is creating space for innovation. At the conference, I learned about emerging platforms like Judi (formerly Capital Rx) explicitly offering transparent, pass-through models. SmithRx markets "radically transparent" pricing with no hidden fees. TruthRx promotes 100% rebate pass-through and charges a clear per-member-per-month fee. Judi uses a "Single-Ledger Model" where they don't earn revenue on drug spend and pass through 100% of manufacturer rebates. Transcarent offers fully at-risk pricing with transparent, lowest net cost models.

These platforms leverage technology, such as real-time claims visibility, price shopping at point of sale, and digital member tools, to support their transparency promises. They represent competitive alternatives to traditional PBM models and signal where regulatory pressure is pushing the market.

Amazon's Entry

Amazon's activities in pharmacy add another dimension. Amazon Pharmacy provides online ordering with home delivery and insurance acceptance across many states. RxPass offers a subscription model for common generic medications at a fixed monthly fee. The company is expanding their rapid delivery of prescriptions in major metropolitan areas, leveraging logistical capabilities that traditional pharmacies cannot easily replicate.

Amazon's approach raises consumer expectations for convenience, pricing transparency, and digital experience. If Amazon moves deeper into benefit design or PBM services, the disruption to incumbents could be significant. The company's broader healthcare investments, including its acquisition of One Medical, suggest potential for vertical integration of a different form.

Constraints on New Entry

Substantial barriers to entry remain. New PBMs face challenges with data access. One speaker noted that winning a bid from a major PBM often means paying that same PBM for essential data feeds, a "loser's tax." Walgreens pointed out that in-store and mail order remain the most common prescription routes, while pharmacy deserts persist across the country. Small pharmacies struggle to maintain margins in the current environment.

Perhaps most significantly, vertical integration still offers major advantages that may border on anti-competitive. The oligopoly's control over cost structures and value propositions remains powerful.

Looking Forward

The PBM market is experiencing meaningful change. Regulatory pressure at both federal and state levels, employer experimentation with alternative contracting arrangements, and new organizational models built on transparency are all challenging established practices. Watch the FTC cases for structural remedies, CMS implementation of point-of-sale pricing rules, and state litigation outcomes. Watch where large employers move their business.

The conference session's title captured something real. Practices that were long understood but rarely discussed publicly are now subject to open debate and regulatory action. Whether that translates to systemic change remains to be seen, but the conversation has undeniably shifted.

My team from The Brydon Group and I recently took a look at companies in the women's health space. We were excited by the range of companies we found, but also disappointed that the scale isn't even greater. This led me to do a bit of research on femtech, and the clearest way I can think of to organize it is by life stage.

The Current State

The picture that emerges is one of significant unmet need. The U.S. maternal mortality ratio sits at approximately 22 deaths per 100,000 live births, among the highest in high-income countries. Over 80 percent of these deaths are considered preventable. Women wait an average of 6.6 years for an endometriosis diagnosis and 4.3 years for PCOS. Rural areas have far fewer services, and hot topics in health tech such as personalized medicine and longevity rarely focus on women.

This represents not just a health gap but an economic one. The femtech market is valued at ~$60 billion today and projected to reach over $100 billion by 2030, yet femtech receives only 1 to 2 percent of healthtech funding. Closing Black maternal health gaps alone could add ~$25 billion to GDP annually.

Young Adulthood

Health needs and conditions begin during adolescence and early adulthood, but many won't be diagnosed for years. The average woman with endometriosis will wait over six years from symptom onset to diagnosis. PCOS takes over four years. This delay has cascading effects on quality of life, fertility, and productivity.

Contraceptive innovation has stalled in recent decades. Beyond tracking apps and minor variations on hormonal methods, women have essentially the same options their mothers had. The connection between hormonal fluctuations and mental health remains poorly understood, despite affecting millions of women.

Companies like Flo and Clue have made period tracking mainstream, reaching tens of millions of users. Daye is developing diagnostic tampons that could screen for conditions during menstruation. But the opportunities remain substantial, such as early detection tools that could identify endometriosis or PCOS years earlier, novel contraceptive technologies that expand beyond hormonal methods, and integrated platforms connecting hormonal health with mental health support.

Fertility

The fertility space has seen more innovation than most areas of women's health. Maven Clinic, Kindbody, Modern Fertility, and Oova have built platforms for fertility testing, IVF navigation, and ovulation tracking. Telehealth has expanded access to fertility expertise. And employer benefits options like Carrot are becoming ever more sophisticated.

Yet significant barriers remain. IVF costs tens of thousands of dollars and is rarely covered by insurance, making it accessible primarily to higher-income women or those with employers willing to foot the bill. Services concentrate in urban areas, leaving rural and underserved communities behind. Male fertility receives minimal attention despite male factors contributing to roughly 50 percent of infertility cases. Women often discover fertility impacts of previously undiagnosed conditions only when trying to conceive, at which point interventions are more complex and costly.

The opportunities include affordable at-home testing and monitoring, male fertility diagnostics and treatments, AI tools that predict fertility windows and outcomes with greater accuracy, and platforms that democratize access to fertility expertise in underserved areas.

Prenatal and Postnatal Care

This stage presents some of the starkest gaps. The U.S. maternal mortality rate is the highest among wealthy nations. Black women experience maternal mortality rates three times higher than white women. Over 35 percent of U.S. counties are maternity care deserts, lacking birthing facilities or obstetric clinicians. Postpartum care is minimal and typically ends at the six-week checkup, despite most maternal deaths occurring in the postpartum period. Evidence-based supports like doulas, physical therapy, and nutrition counseling face minimal reimbursement and inclusion in care pathways.

Companies like Mahmee, Expectful, Swehl, Progency, Pacify, and Pomelo are addressing pieces of this puzzle through prenatal education, postpartum recovery, pelvic floor health, breastfeeding support, and virtual care. But the scale remains far below the need. At a minimum, more telehealth could provide earlier detection and more adherence to care plans than asking expecting moms to come in for weekly visits, especially for far-away care.

The opportunities are substantial, such as remote monitoring tools for high-risk pregnancies, postpartum care platforms extending support beyond six weeks, early warning systems using AI to detect physical and mental health complications before they become emergencies (like NeuroFlow does for ante- and postpartum depression and anxiety), solutions specifically designed for maternity care deserts, and equity-focused, evidence-based interventions both pre- and postpartum.

Midlife and Perimenopause

Menopause affects every woman but remains understudied relative to its prevalence. Symptoms are frequently dismissed or under-treated. Access to hormone replacement therapy is inconsistent, with many clinicians lacking training in menopause management. The substantial increase in cardiovascular risk following menopause often goes unrecognized. These health challenges frequently coincide with peak career years, creating productivity impacts that remain largely unmeasured.

Recent years have seen the emergence of companies like Midi Health, Elektra Health, and Evernow focusing specifically on menopause care and hormone therapy access. This represents progress, but the category remains underdeveloped relative to need. Some modern approaches, including partnerships with health systems, are trying to increase cancer screening as well, such as Solis and Teal Health, but access can still be limited.

Opportunities include comprehensive menopause care platforms addressing symptoms, hormones, mental health, bone health, and cardiovascular health. Better education for both clinicians, such as OBGYNs & PCPs, and patients is needed, along with financial alignment that supports appropriate care. Workplace wellness programs addressing menopause could improve both health outcomes and productivity. Integration of menopause care with cardiovascular and bone health monitoring could address the elevated risks of this life stage.

Aging and Longevity

This represents the least developed area in women's health technology. Women have longer lifespans than men but accumulate more disability-adjusted life years. Bone health screening typically occurs after fractures rather than as prevention. Women comprise two-thirds of Alzheimer's patients, yet research into sex-specific risk factors remains limited. Pelvic floor disorders affect a large percentage of older women but are rarely discussed. Sexual health in aging receives minimal attention in both research and product development.

A few companies like Escala are beginning to focus on this demographic, along with some bone and pelvic health companies. But comprehensive solutions are rare.

In this space, opportunities include bone density screening tools for earlier intervention, cognitive health tracking with women-specific risk assessment, non-invasive pelvic floor treatments, sexual wellness products for older women, and comprehensive healthy aging platforms that address longevity enablement rather than just disease management. There is likely a market for women's concierge care, as an example.

Cross-Cutting Themes

Several patterns emerge across life stages. Better diagnostics could prevent years of delayed detection and unnecessary suffering. Longitudinal data analysis may reveal important relationships between hormonal transitions and chronic disease development. Solutions focused on access disparities could address systematic gaps in care delivery, particularly for rural and underserved populations. Mental health integration is needed across all stages, as hormonal changes impact mental health from adolescence through menopause and beyond, and women are more likely to proactively seek mental health care. Preventive rather than reactive approaches may improve outcomes across multiple conditions.

The Path Forward

The sector has seen increased attention recently. Investment reached $2.2 billion in 2024. The Gates Foundation committed $2.5 billion to women's health research and development. Public awareness is growing.

Yet the gap remains substantial. Funding levels are disproportionate to both the health burden and economic impact of women's health conditions. The difference between achievable outcomes with timely, equitable care and current care delivery represents an opportunity for meaningful innovation.

The innovators who address these gaps across the lifespan could restore hundreds of thousands of healthy life years and unlock tens of billions in economic value. The question is not whether this market will grow, but how quickly we can close the gaps.

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While the healthcare industry braces for potential cuts to Medicaid and Medicare Advantage due to regulation like the Big Beautiful Bill (BBB), there's a silver lining that many primary care providers (PCPs) are missing, incentives to transition to value-based care (VBC). I wanted to understand more about these programs to think through how vendors like NeuroFlow or Ilant Health might take advantage of them. I hope this is helpful to others as well.

After more than a decade of pilots and iterations, CMS has finally created two programs (both for traditional Medicare) that could be impactful for smaller practices: Making Care Primary (MCP) and ACO Primary Care FLEX. Here's why PCPs should pay attention—and how to get started.

The Programs That Actually Work for Small Practices

Making Care Primary (MCP) - CMS's new 10-year flagship model

• Direct payments of $25-40 per patient per month to practices, paid at the beginning of each month

• For a 1,000-patient Medicare panel: $300K-480K annually

• No ACO required—perfect for independent practices

• Gradual ramp into risk-based contracts

ACO Primary Care FLEX - Add-on for existing Medicare ACOs

• $15-25 PBPM for qualifying low-revenue practices

• $180K-300K annually for 1,000 Medicare patients

• Focuses on practice transformation within ACO structure

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Where to Invest These Dollars for Maximum Impact

CMS explicitly encourages spending on:

🧠 Behavioral Health Integration - The biggest cost multiplier across all conditions

(Great news for a vendor like NeuroFlow)

• Collaborative care models

• On-site mental health clinicians

• Substance use disorder screening

🏠 Health-Related Social Needs

• Community health workers

• Transportation coordination

• Housing and food security partnerships

📱 Remote Patient Monitoring

• Cardiac, respiratory, and metabolic monitoring

• Chronic disease management

• Post-discharge follow-up

👥 Enhanced Staffing

• Care coordinators

• Population health nurses

• Data analysts

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A Strategic Roadmap for PCPs

Phase 1: Quick Wins (Low resource, fast ROI)

• Close preventive care gaps

• Standardize hypertension/diabetes protocols

• Risk-stratify your patient panels

Phase 2: Build Infrastructure (Moderate investment)

• Hire care coordinators

• Implement behavioral health screening

• Launch telehealth for follow-ups

Phase 3: Advanced Integration (Higher investment)

• Full behavioral health integration

• Comprehensive remote monitoring programs

• Social determinants interventions

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The Technology Enablement Opportunity

For healthcare IT companies, this represents a massive market opportunity. The dollars don’t go far if programs rely on staffing alone. PCPs will need:

• Patient engagement and registry solutions like DocResponse

• Analytics platforms for population health like HealthEC

• Remote monitoring technologies such as Caption Care & NeuroTrack

• Care navigation & other wrap-around services like Ilant Health, Sylvan Health

• Behavioral health integration tools like NeuroFlow

The key is understanding that these practices need turnkey solutions—not just software, but services and support to transform their care delivery models.

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Why This Time is Different

Unlike previous pilots like CPC+ (which NeuroFlow supported at Thomas Jefferson University Hospital back in 2019) that were too complex or aggressive for smaller practices, MCP and FLEX are designed with accessibility in mind. They provide:

• Upfront cash flow for transformation

• Multi-payer alignment reducing fragmented incentives

• Gradual risk progression

• Direct support for practice-level changes

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So, Now What?

While the broader healthcare landscape faces uncertainty, primary care providers have a clear path forward. The question isn't whether to embrace value-based care—it's how quickly you can get started.

For PCPs: The infrastructure investment made today with these dollars will position practices for success regardless of what happens with traditional fee-for-service models.

For healthcare technology companies: The practices entering these programs will need partners who understand both the clinical and business transformation required.

Despite some short-term challenges for value-based care, especially due to the BBB, these programs are worth looking at to drive investment.

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While at an Alliance for Care at Home conference in Chicago a few weeks ago, someone told me it's a better time to be in the business of hospice than home health. This surprised me, because hospice is a small niche within the broader home health and home care sector.

Digging in deeper, I've learned that these two sectors, as well as palliative care, show a range of different economic trajectories, and the policy environment is creating some surprising dynamics. Understanding how home health, hospice, and palliative care intersect (and compete) reveals a complex landscape where payment models and regulatory approaches vary wildly despite serving overlapping patient populations.

Hospice may have some extra advantages right now, but all three areas are still growing and will continue to grow for a while. Before diving in, let’s make sure we know what these services really are.

The Patient Journey: Where These Services Intersect

For a Medicare beneficiary facing serious illness, the care journey might look like this:

🏥 Physician diagnoses complex/serious illness
→ ➕ Goes through treatment for the diagnosed condition
→ 🏠 May receive home health care, especially post-acute
→ ♥️ Can access palliative care for comfort measures and care coordination
→ 💊 When prognosis is 6 months or less, hospice care begins

What's remarkable is how differently these overlapping services are funded and regulated, creating potentially perverse incentives throughout the continuum of care.

Market Growth: Speed vs Stability vs Emergence

Home Health: $162.3B (2024) → $284.3B (2030) | CAGR ~9.8%
Hospice: $29.9B (2024) → $39.1B (2030) | CAGR ~4.6%
Palliative Care: $15.1B (2024) → $26.8B (2030) | CAGR ~10.1%

Home health's nearly 10% growth rate reflects massive demographic tailwinds. The 65+ population will grow by 70% through 2060. Add in remote monitoring technology and Medicare Advantage expansion, and you have a sector riding multiple growth waves simultaneously.

Palliative care shows the highest growth rate as health systems increasingly recognize its value in reducing hospital readmissions and improving quality of life. However, reimbursement complexity remains its biggest challenge.

Hospice's steadier 4.6% growth signals market maturation. With hospice penetration among Medicare decedents already above 50%, growth comes mainly from longer lengths of stay and continued preference shifts toward home-based end-of-life care.

Policy Paradox: 2025 Payment Environment

Here's the paradox my conference acquaintance was referring to: the fastest-growing sectors face the most reimbursement uncertainty, while the mature market enjoys favorable policy winds.

Reimbursement Reality Check

To understand the economic incentives, imagine your Medicare-covered relative becomes seriously ill:

Home Health: If homebound and needing intermittent care, Medicare covers nursing, PT/OT, social services, and equipment. However, costs can be high for patients without Medigap coverage, especially for durable medical equipment. The 0.5% rate increase barely covers inflation while providers navigate expanded value-based payment models.

Palliative Care: Traditional Medicare often excludes care coordination and comfort medications, which are the very services that define palliative care. Medicare Advantage plans may offer better coverage, and health systems increasingly cover costs to reduce expensive hospital readmissions. But navigating what's covered remains a maze for families, creating market friction despite growing demand.

Hospice: Medicare fully covers the final 6 months via flat daily rates, including all equipment and medications. While comprehensive for patients, the payment model can incentivize early enrollment of healthier (less expensive) patients and potential under-treatment of complex cases. The 2.9% rate boost provides welcome margin relief.

Economic Timeline - How It Might Play Out

Short-term (2024-2026): Hospice wins on margins and regulatory relief. Home health faces cost pressures as administrative burdens rise faster than reimbursement. Palliative care sees rapid growth but struggles with reimbursement standardization.

Medium-term (2026-2028): Palliative care reimbursement models mature as CMS and Medicare Advantage plans recognize ROI from reduced hospital utilization. Home health technology investments in remote monitoring start paying efficiency dividends.

Long-term (2027-2030): Demographics drive the story. Home health's massive addressable market expansion from aging baby boomers overwhelms near-term policy headwinds. Palliative care becomes integrated throughout the care continuum. Hospice growth becomes constrained as market penetration approaches natural limits—there's only so much room to expand end-of-life services.

Investment Implications

For investors evaluating these opportunities:

Home Health: Accept near-term margin compression for superior long-term growth. Best suited for growth-oriented investors comfortable with 2-3 years of policy-induced volatility. Technology investments in telehealth and remote monitoring create competitive moats.

Palliative Care: Highest growth potential but requires navigating complex reimbursement landscape. Early movers who crack the payment model puzzle could capture outsized returns as the market standardizes.

Hospice: Stable margins and predictable growth appeal to yield-focused investors. Limited upside but lower execution risk. Consolidation opportunities as smaller providers struggle with compliance costs.

Consumer Takeaway

As someone with aging boomer parents, the lesson is clear: dig deep into insurance coverage for all three service types and understand provider incentives. The fragmented payment system means the "best" medical decision isn't always the most financially sensible one, a reality that shouldn't exist but defines today's healthcare landscape.

In Summary

Three sectors, different speeds, one destination: integrated, value-based home care. Home health trades short-term pain for long-term demographic destiny. Palliative care offers rapid growth for those who can navigate reimbursement complexity. Hospice provides stability, but it faces growth constraints as its addressable market matures.

The ultimate winners will be providers who can seamlessly deliver services across this continuum, optimizing for patient outcomes rather than payment silos.

Sources: Grand View Research, CMS Final Rules 2025, Research & Markets, Axxess, Axios, National Academy of Medicine

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As a small business owner, you've built something from scratch. The thought of selling might feel wrong—like you're giving up. But sometimes selling is the smartest way to actually get where you want to go.

Many successful founders reach a point where going solo starts working against them. If you're spending more time on admin work than growing your business, facing unexpected costs that strain your resources, or finding it harder to compete with larger players, you're not alone. These challenges often signal that you've reached the natural limits of what one person can handle. And that's not a failure, it's just the next decision point.

What's the Hidden Cost of Total Independence?

Complete control can feel appealing, but there are some rarely discussed trade-offs:

You're carrying all the risk: Every crisis, every unexpected expense, every staffing challenge lands on your desk. There's no shared burden or backup system.

You're paying premium prices: While larger competitors benefit from volume discounts, you're often paying retail for the same services. It creates a structural disadvantage.

You're focused on operations: Time spent on administrative tasks means less time with customers or developing the business. You naturally become the bottleneck.

Which Path Gets You Closer to Your Goals?

When you're ready to make a move, you've got four main choices:

Stay Independent

This maintains everything we just discussed. You keep control, along with all the challenges.

Sell to a Bigger Company

They'll often pay well because they can integrate your customers and products into their existing systems. The trade-off is that your team may face redundancy as roles overlap, and your culture typically gets absorbed into their corporate structure. Your business becomes a department within their organization, and may not be top priority.

Traditional Private Equity

Many PE firms are composed of financial specialists rather than experienced operators. They typically leverage debt financing, focus on cost-cutting for ~3 years, then sell. The associate they assign to work with you may have strong analytical skills but limited hands-on experience in your industry. They may not grasp the operational nuances that make your business work.

Work With an Operational Partner

This approach involves partnering with someone who has direct experience in your industry. They've built and run similar businesses, understand your market dynamics, and know what it takes to succeed. The partnership typically involves longer hold periods focused on sustainable growth rather than quick financial optimization.

Why Do Experienced Operators Often Choose the Partner Path?

This approach isn't perfect, as you're still transferring control. But there are compelling reasons why it appeals to seasoned business owners:

You're working with someone who understands your reality: Rather than someone who learned about your industry from research, you're partnering with someone who's actually built and run businesses like yours. They understand your customers, your competition, and your daily challenges.

They take a longer-term view: 5-10 year hold periods allow new company leadership to invest in what actually drives sustainable growth, such as developing your people, building genuine customer relationships, and improving your systems. The focus isn't on meeting next quarter's numbers.

They preserve what works: Experienced operators recognize that culture drives business performance. They're not incentivized to make dramatic staff cuts to hit predetermined financial targets or flip to hyper-growth strategies.

Your team benefits from the partnership: Instead of viewing employees as cost centers, they invest in development, better compensation, and career paths. Engaged employees typically create better customer experiences and stronger business results.

You can diversify while staying invested: You can take some money off the table to reduce your personal risk while participating in the upside from future growth. It's a balanced approach to wealth management.

How Can You Identify The Right Partners?

Anyone can present well in initial meetings. Here's how to assess whether they'll deliver on their promises:

• Do they stick to their initial offers? Or do they "discover" new issues and try to renegotiate the price?
• Is their due diligence process straightforward, or do they keep moving the goalposts?
• Can they show you actual examples of people they've promoted and developed at other companies?
• Do their other acquired companies actually grow and thrive, or do they just get stripped and sold or neglected?

In Summary

You didn't get this far by accident. You built something real through hard work, skill, and surrounding yourself with great people. The question isn't whether you can keep grinding it out at your current scale, but rather it’s whether that's actually going to get you where you want to be. Selling might mean finding the right partner who actually understands what you've built and wants to help you take it further.

If you're tired of carrying all the weight yourself, maybe it's time to see what a new approach could do for you and your business.

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The RISE conferences in Scottsdale last week showcased promising healthcare innovations alongside the realities of an industry grappling with policy uncertainty and implementation challenges. Just as leaders and technologists met to discuss the future of value-based care (VBC), home health, and quality measurement, the "big beautiful bill" was winding its way through Congress.   Five key themes emerged that could reshape healthcare—though their ultimate impact remains to be seen.

AI Seeks Its Healthcare Role

While AI's potential in healthcare is significant, organizations are still working through fundamental challenges around implementation. The many AI-focused conversations at RISE centered around identifying practical applications that can actually improve patient outcomes while navigating complex security requirements, data cleanup and provider resistance. Promising developments in predictive analytics and diagnostic tools are emerging, such as those provided by Accorded Health, but meaningful adoption across healthcare systems will likely take years as organizations work through workflow integration and trust-building with clinical staff. Some key leaders at the conference included Parakeet Health and Confido.

Value-Based Care Lingers in Experimentation Mode

The transition to value-based care continues to challenge healthcare organizations as they restructure around new payment models. Independent Practice Associations (IPAs) such as Yuvo Health, Accountable Care Organizations (ACOs), and Management Services Organizations (MSOs) are experimenting with new approaches, often leveraging technology like Arbital Health for contracting and collaboration, but many are struggling with the complexity of adoption and the funding environment. While the theory of prioritizing outcomes over volume is compelling, the practical implementation often reveals gaps that take considerable resources to address. Interoperability between systems continues to be one of the greatest challenges.

Home Care Shows Promise with Limitations

The expansion of home-based healthcare services represents both opportunity and challenge. Hospital-at-home programs, hospice care, and primary care services are demonstrating the potential to deliver care in patients' homes, supported by advancing technology like portable diagnostics, remote monitoring, and even mileage tracking (e.g. provided by Everlance). However, significant barriers remain around reimbursement complexity, regulatory hurdles, and the infrastructure needed to support clinical care outside traditional settings. Experts from organizations such as Medically Home, myLaurel Health, and HCCI, shared their thoughts of the present opportunities and challenges, and a vision for the future.  

Prevention Technologies Seek Market Fit

New screening technologies are emerging that could shift healthcare toward prevention, including at-home EEG screenings, dementia detection tools, and comprehensive disease profile tests. Examples at RISE included Caption Care for heart disease and Neurotrak for Alzheimer’s. While these innovations show promise for early detection and intervention, questions remain about their payment models and integration into existing care pathways. The shift from reactive treatment to proactive prevention aligns well with value-based care principles, but widespread adoption will depend on proving real-world outcomes and navigating complex reimbursement landscapes.

Policy Uncertainty Creates Winners and Losers

The conference occurred against the backdrop of the ongoing Congressional debate over the "big beautiful bill" that could substantially reduce Medicaid enrollment and impact hospital economics nationwide. While some attendees saw this as creating opportunities for innovation, such as enabling Medicaid adoption, the reality is that reduced coverage will  strain healthcare businesses that serve vulnerable populations. Payors face the challenge of maintaining services with reduced funding, and many smaller healthcare organizations may struggle to survive the transition.

The Reality of Transformation

The RISE conference highlighted how these themes are interconnected, with AI supporting value-based contracts, VBC creating incentives for home care, and policy pressures accelerating innovation. However, the transformation of healthcare is complex and slow. While the vision of integrated care networks that blend virtual and physical care is compelling, the practical challenges of implementation—from regulatory compliance to provider adoption to patient engagement—suggest that meaningful change will be measured in years, not months. We can still believe in a healthcare future that looks dramatically different: integrated care networks that blend virtual and physical care, leverage AI for prediction and prevention, and keep patients healthy in comfortable settings. As usual, working in health tech requires patience and persistence.

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Hello, and welcome to the Brydon Health blog, Our Take on Health Tech. We explore broad trends we discover while meeting with healthcare technology companies, often diving into specific topics that matter to leaders in our space. We hope you find this valuable and continue to read along.

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‍The M&A Question Every Healthcare CEO Faces

As Chief Product Officer at NeuroFlow, a mental health technology company, I was tapped by the CEO to lead our mergers and acquisitions (M&A) strategy. At first, I was skeptical—I was focused on organic growth through our core roadmap. But then I remembered words from my favorite product leader, Elad Gil: "Most companies wait too long before making their first acquisition."

In healthcare, this timing question is especially complex. Beyond financial and strategic fit, you need your target company to align on security, mission, and technology. So when is the right time?

Three Critical M&A Moments

1. Early Stage (Series A-B)
Consider acquiring other companies when lacking critical market-entry capabilities or when rapid competitor consolidation threatens survival. However, conducting M&A as an early startup is relatively rare.

2. Growth Stage (Bootstrapped or Series B-C+)
M&A becomes especially attractive when you've hit market saturation in core segments, face prohibitive customer acquisition costs, or encounter platform limitations that would require massive R&D investment versus acquiring existing solutions. At NeuroFlow, our first acquisition of Capital Solution Design (CSD)—which I led end-to-end—focused on customer acquisition costs, as we bought a company with pre-existing VA contracts.

3. Market Timing
Regulatory changes creating consolidation opportunities, technology shifts requiring new capabilities (AI, cybersecurity), or favorable capital conditions can trigger M&A consideration. We're currently in a period of rapid technical innovation, so opportunities abound.

Where the Action Is

Today, acquirers prioritize companies with strong data assets and proprietary technology, evidenced by billion-dollar deals for platforms with large user bases (e.g., CentralReach and Alto Pharmacy).

Digital health is heating up with a fascinating trend: "tapestry weaving"—healthtech startups acquiring other healthtech startups. In Q1 2025, 67% of M&A deals involved digital health companies buying peers, up from 53% in 2024. Examples include H1 purchasing Ribbon Health, Hone Health purchasing Ivee, and Hims & Hers acquiring Trybe Labs.

Another significant trend: 20-30% of deals are now driven by distressed companies seeking exits due to financial pressures, investor fatigue, and consolidation needs following the pandemic-era funding boom.

Consider how these trends and tailwinds could make M&A sensible for smaller, bootstrapped, or early-stage companies too.

Why Buy vs. Build?

Healthcare companies choose M&A for several compelling reasons:

• Roadmap acceleration: Building capabilities takes 3-5 years; acquisition provides immediate market presence (though integrating new capabilities still requires time)
• Regulatory shortcuts: Acquiring existing FDA approvals or HIPAA-compliant infrastructure can save years
• Customer relationships: Healthcare buyers are risk-averse and sticky—existing relationships provide instant credibility and growth opportunities
• Scale economics: Healthcare has high fixed costs; M&A can spread these across larger revenue bases more efficiently
• Defensive positioning: When competitors consolidate, staying independent often becomes unsustainable

At NeuroFlow, our primary motivation was acquiring customer relationships, but we also dramatically increased roadmap speed and scale across four target company acquisitions. Some brought new algorithms, IP, and analytics capabilities; others contributed technical infrastructure; and some added complementary services to our technical offerings.

Getting It Right

Having successfully completed four M&A transactions at NeuroFlow, I've learned quite a bit about sourcing, transacting, and integrating. Here are the essential elements:

Strategic sourcing: Find acquisition targets through continuous relationship building. The best deals happen through existing networks—several of our acquisitions were nurtured at industry conferences.

Rigorous selection: When evaluating fit, we focused on customer overlap, technology compatibility, HIPAA compliance, service quality, and cultural alignment—especially critical in mission-driven healthcare environments.

Careful integration: Starting during due diligence (not after closing), we built go-to-market plans, roadmaps, and organizational charts. Healthcare integrations take 50-100% longer than typical software M&A due to regulatory requirements and customer sensitivity.

I'm extremely proud of NeuroFlow's M&A strategy, especially our CSD acquisition. After only a few years as a combined entity, contracts have grown exponentially due to sales alignment, complementary technology and security capabilities, team scaling, and strategic roadmap integration.

The Bottom Line

Healthcare M&A isn't just about growth—it's often about survival in an increasingly consolidated market. The key is treating it as a specialized discipline aligned with your company's core growth and R&D strategies, requiring deep domain expertise and extended timelines.

What stage is your company at, and what strategic challenges are you facing? Have you considered M&A yet? We'd love to hear from you.

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