| The money is flowing
Everybody wants to be “AI-first” because the market is telling them they need to be. But what is AI-first? Is it AI-native? Is it software that has successfully threaded AI across its business? I’m not sure anyone can confidently answer the question, and it’s creating a lot of confusion in the market among founders, buyers, and investors. The money is still flowing regardless – especially in healthcare. Rock Health reported that AI-enabled companies took 54% of digital health funding in 2025. At the same time, KLAS found healthcare organizations using AI increased from under half of respondents to more than two-thirds over the course of 2025. Menlo Ventures, among many others, have reported seeing the same thing in practice. That’s the market right now: plenty of capital, real urgency, and a wave of founders trying to determine whether they’re building something durable or just something timely. Two categories
There are two distinct categories of companies trying to persevere through this moment: AI-native companies that will need to become defensible software companies quickly, and software companies that need to figure out how to bolster their defensibility with AI almost as fast. Neither are safe, per se. But if you’re a software company, I believe you have more time than the market is telling you. It’s not a lot of time, but it’s a head start. Software companies likely already own workflows. They sit squarely within their clients’ daily processes, have proprietary data, and key integrations, all of which are necessary moats in any market. Workflow depth, the data that lives inside that workflow, and the integrations that make you a pain to remove or replace – these are all the factors that vertical SaaS companies strive to attain because they elevate you to a system of record. AI-native companies are facing a distinctly different challenge. Their bar for success is higher than the market makes it seem, as investors rush in to bet on their “horse.” Companies built on AI models have momentum, but it is just a head start; they need to build those moats quickly before they end up either as a useful feature inside somebody else’s stack, or as a point solution in an era of point solution fatigue. The future
There is no doubt that AI will fundamentally change digital health, but the hype cycle is reminiscent of previous “revolutionary tech” waves like mobile-first and web3. A decade ago, the entire market of MacPractice was just an EHR that could work on Apple products. DrChrono was the mobile-friendly EHR. The legacy EHRs cannibalized those “differentiators” quickly, but it didn’t mean there wasn’t an opportunity to capture market share with them for some time. AI is a tool, a Swiss Army knife. Founders need to ask themselves: do you want to be a company that makes screwdrivers or DeWalt? — By MedCity Influencer Blake Walker |
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