Connected Health 2025 – 12 Signals That Will Shape Strategy in 2026

Digital Health Economy & Reimbursement: What Fundamentally Changed in 2025

The defining shift of 2025 was not technological, but economic. Digital health finally moved from experimentation to reimbursement-constrained reality. After years of pilot programs, venture-funded expansion, and loosely defined “innovation budgets,” the market entered a phase where payment mechanisms became the primary determinant of survival and scale.

Across the U.S. healthcare system, reimbursement pathways for connected and software-enabled care grew more explicit, but also more selective. Digital mental health became the most visible testing ground. New and evolving payment approaches began to distinguish between consumer wellness tools, clinician-supported digital interventions, and regulated therapeutic software. This distinction matters because it determines whether a product can move beyond employer contracts or grant-funded pilots into sustained clinical deployment.

Industry analyses summarized by IQVIA show a clear pattern: funding did not disappear in 2025, but it concentrated around solutions with a credible reimbursement narrative. Products without a defined billing pathway, whether through remote therapeutic monitoring, care management codes, or value-based contracts, struggled to convert interest into revenue. As a result, many digital health companies exited quietly or pivoted away from direct care delivery. At the same time, payers became more sophisticated buyers. Rather than asking whether a digital solution “improves engagement,” they increasingly asked whether it reduces downstream utilization, substitutes for reimbursed clinical services, or measurably improves outcomes within a defined population. Mental health platforms, in particular, faced growing pressure to demonstrate not only symptom improvement but also reduced emergency visits, fewer hospitalizations, or improved medication adherence.

Another important change was the decline of one-size-fits-all payment models. Per-member-per-month pricing, once the default for digital health, lost favor unless paired with utilization caps or outcome-linked adjustments (Read: Personalized Weight Loss with ZOE). In its place, hybrid approaches emerged: base access fees combined with performance thresholds, episodic payments tied to clinical milestones, or risk-sharing arrangements aligned with value-based care contracts.

These developments produced several strategic signals for 2026. First, reimbursement is no longer an optimization problem addressed after launch; it is a gating requirement at the design stage. Second, digital mental health has effectively become the proving ground for how software-based care will be paid across other therapeutic areas. Third, the market is rewarding companies that treat health economics and outcomes evidence as core product features, not auxiliary documentation.

In short, 2025 marked the end of digital health as a broadly permissive growth category. What replaced it is a narrower, more disciplined market, one that favors solutions designed to function inside real payment systems rather than alongside them.

AI Medical Devices in 2025: From Experimentation to Regulated Infrastructure

In 2025, artificial intelligence in healthcare crossed a decisive threshold. AI stopped being framed primarily as an innovation story and started being treated as regulated clinical infrastructure. This shift was not driven by hype cycles or model performance benchmarks, but by the steady accumulation of authorized and approved AI-enabled medical devices within formal regulatory frameworks.

Publicly available listings maintained by the U.S. Food and Drug Administration illustrate this maturation clearly. By the end of 2025, AI-based devices were no longer concentrated solely in radiology and image recognition. While imaging remains dominant, the portfolio expanded into cardiology diagnostics, ophthalmology screening, oncology workflows, weight management, pathology support, and hospital triage systems. Importantly, many of these tools are now embedded directly into clinical workflows rather than operating as standalone decision aids. This matters strategically because regulatory status has become a proxy for operational readiness. Health systems increasingly treat FDA authorization or clearance not as a “nice to have,” but as a baseline requirement for procurement, especially for enterprise-wide deployments. AI tools without formal regulatory positioning face growing resistance from compliance teams, risk managers, and legal departments, even when clinical teams express interest.

Another signal of maturity is the changing conversation around algorithm updates. In earlier years, frequent model retraining was framed as a strength. In 2025, it became a governance challenge. Buyers now ask how adaptive algorithms are monitored, validated, and documented over time. Post-market surveillance, auditability, and version control are no longer abstract regulatory concepts; they are operational questions raised during partnership negotiations.

Equally important is the declining tolerance for “black box” positioning. While full explainability is not always required, stakeholders increasingly expect clear documentation of intended use, performance boundaries, and failure modes. This expectation reflects a broader shift: AI is no longer judged only by accuracy metrics, but by how safely it can be embedded into accountable clinical decision-making. Several signals emerge from this transition. First, AI-enabled medical devices are becoming infrastructure components, not pilot projects. Second, compliance-first development strategies are turning into competitive advantages rather than constraints. Third, regulatory listings are increasingly shaping partnership eligibility, investor confidence, and long-term platform strategy.

For 2026 planning, the implication is straightforward: organizations that still treat AI regulation as a downstream hurdle risk being excluded from serious clinical and commercial ecosystems. Those that design for regulatory durability from the outset are better positioned to scale, not despite regulation, but because of it.

The Partnering Reality in 2026: What Health Systems, Tech Firms, and Payers Now Expect

By the end of 2025, partnerships in connected health became less about innovation signaling and more about operational fit. Health systems, technology vendors, and payers entered 2026 with clearer expectations and lower tolerance for ambiguity about what constitutes a viable partner.

For health systems, the primary shift is toward integration-first thinking. Digital tools are no longer evaluated as isolated solutions but as components of complex clinical and administrative ecosystems. Decision-makers now expect interoperability with electronic health records, clarity around data ownership, and defined clinical accountability. Products that require extensive customization or manual workarounds are increasingly deprioritized, regardless of their standalone performance. Technology firms, in turn, are adapting to longer sales cycles and more rigorous due diligence. Procurement teams routinely involve compliance, legal, IT security, and clinical leadership early in the process. This has elevated the importance of documentation, governance structures, and deployment experience. Startups that previously relied on rapid pilots now face requests for references, real-world utilization data, and evidence of sustained use beyond proof-of-concept phases.

Payers have also sharpened their criteria. Interest alone is no longer sufficient; solutions must align with a clear cost-offset or risk-management logic. Payers increasingly ask how a digital intervention substitutes for existing reimbursed services, reduces avoidable utilization, or supports value-based care contracts. Willingness to engage in shared-risk or performance-linked arrangements is often viewed as a signal of confidence in real-world effectiveness.

Across all stakeholders, one theme dominates: partnership readiness now outweighs novelty. Speed to market matters less than the ability to integrate, comply, and scale responsibly. For 2026, successful partnerships will be built not on aspirational roadmaps, but on demonstrable operational maturity and aligned incentives across the care continuum.

Practical Checklist: 5 Takeaways for 2026 Strategy
(For device manufacturers, providers, and payers)

1. Map reimbursement before building or scaling

   Applicable to: manufacturers, digital health vendors, providers

   In 2026, reimbursement logic is no longer something to “solve later.” Products entering clinical environments are expected to align with existing billing pathways or clearly articulated value-based mechanisms from the outset. This includes understanding which components are billable, who submits the claim, and how utilization is documented.

   What changed in 2025: payers and providers reduced tolerance for non-billable tools, even if clinically interesting.

   Common failure mode: launching with strong clinical interest but no sustainable payment model, leading to stalled deployments.

2. Design AI for regulatory longevity, not just clearance

   Applicable to: AI device manufacturers, platform vendors

   Beyond initial authorization, organizations must plan for post-market obligations: model updates, performance drift monitoring, audit readiness, and documentation. Regulatory durability increasingly influences procurement decisions and long-term partnerships.

   What changed in 2025: buyers began evaluating how AI systems are maintained over time, not just how they perform at launch.

   Common failure mode: treating regulatory approval as a one-time milestone rather than an ongoing operational commitment.

3. Prove value with deployment-grade evidence

   Applicable to: all stakeholders

   Pilot data is no longer sufficient. Decision-makers expect real-world evidence tied to clinical workflows, including adoption rates, utilization patterns, and outcome consistency across sites. Evidence must reflect sustained use, not ideal conditions.

   What changed in 2025: pilots lost their signaling power as health systems focused on scale and durability.

   Common failure mode: relying on small, short-term studies that do not translate to system-wide performance.

4. Treat interoperability as a core product feature

   Applicable to: manufacturers, software vendors, providers

   Interoperability is now a baseline expectation. Products must integrate cleanly with electronic health records, reporting systems, and analytics platforms. Manual data transfer or custom interfaces are increasingly viewed as operational risks.

   What changed in 2025: integration costs and workflow friction became decisive factors in purchasing decisions.

   Common failure mode: postponing interoperability development until after initial contracts are signed.

5. Prepare for payer scrutiny, not just provider interest

   Applicable to: manufacturers, providers

   Even provider-initiated adoption increasingly depends on payer alignment. Vendors should be prepared to answer utilization, cost-effectiveness, and substitution questions and to engage in outcome-linked or risk-sharing discussions.

   What changed in 2025: payers became active gatekeepers rather than passive reimbursers.

   Common failure mode: optimizing messaging for clinicians while ignoring payer evaluation criteria.

Together, these five points reflect a broader reality: in 2026, success in connected health will depend less on novelty and more on operational discipline, economic alignment, and regulatory preparedness.