In December 2024, the overwhelming majority of providers shared in a field survey that their organization will likely be involved in an investment or transaction related to AI (84%) and cybersecurity (88%) in 2025, according to a new survey report from BRG.
Despite economic and regulatory uncertainty at the start of 2025, these findings still ring true. Providers continue to face labor shortages and tightening budgets, and AI-driven technologies can fill sorely needed gaps and drive new cost savings. Meanwhile, cybersecurity protections and infrastructure have come to the fore in the wake of high-profile attacks like the one inflicted on Change Healthcare last year. The rapid-fire adoption of new AI technologies will only exacerbate those risks.
While not the only option, mergers, joint ventures, and strategic partnerships can be an effective avenue for providers to attain these new AI and cybersecurity capabilities, especially for resource-strained organizations that may not have the time, funds, or expertise to build them on their own.
In what follows, we’ll dig into the key opportunities and challenges for providers considering a technology transaction in today’s business landscape.
Opportunities
The biggest opportunities for tech-oriented deals stem from the provider’s greatest challenges. BRG’s survey results shared that labor costs, operational efficiencies, and shifting patient demands ranked as top transaction drivers.
We expect to see providers looking for technology to help address these challenges in 2025; from electronic health record integration and predictive analytics to patient engagement platforms and revenue cycle management (RCM) technology.
Deals that can alleviate these challenges and deliver these capabilities have the potential to create significant cost savings and increase efficiency. RCM technology is an area we see continued interest because of the immediate cost savings it can provide by reducing reimbursement claims denials and cutting collection costs via intelligent automation. Yet despite these benefits—not to mention ongoing technological advancements— data indicates that many healthcare organizations have not improved their revenue cycles since 2019.
Challenges
Integrating new technologies via a transaction comes with its own set of obstacles, many of which can create additional costs, risks, and workplace management issues. For instance:
- Data privacy and security. Teams must ensure new tools comply not only with evolving Federal regulations and changing state and local laws, but also their own internal privacy and legal standards. BRG’s 2024 AI and the Future of Healthcare Report found that most providers weren’t prepared to navigate regulation surrounding AI, though the right strategic partner can help.
- Integration challenges. A key challenge in organizational mergers lies in the technical and workforce issues arising from the integration of existing, and often obsolete legacy systems. This can be costly and time consuming if not done thoughtfully.
- Cost and resource allocation. Large hospital systems might have the resources to adopt new technologies, but implementation is often a slow and cumbersome process. For smaller providers, cost and resources are typically the most significant reason they may be unable to meet digitization needs.
- Staff training and adoption. Training staff can be a complex process, and investing in change management alongside training, coupled with securing leadership support is crucial for maximizing return on investment.
- Supply chain. The evolving tariff landscape may impact a wide range of healthcare costs, making it even more difficult for providers to plan strategic investments and/or transactions related to technological capabilities.
Preparing for the road ahead
Despite an initially optimistic outlook for mergers and acquisitions among healthcare executives at the start of 2025, tariff policies and stock market losses have created uncertainty, which is unlikely to go away, and could mitigate dealmaking. Looking ahead, providers should place a premium on strategically prioritizing their technology-related investments and transactions by taking the following steps:
Evaluate Current Technology: Providers should conduct a thorough assessment of their existing AI and automation tools and capabilities to identify gaps and/or overlap in technology siloed within departments.
Develop an Enterprise Plan: Create a roadmap for technology adoption at the enterprise level that creates efficiencies and scale with a clearly articulated budget, resource allocation, and benefit measurement model.
Invest in IT: IT departments need to be the hub for investments in automation and AI to best support enterprise deployment of technology. Cost reductions and revenue enhancements should be measured and monitored and shared with IT to support the infrastructure created to drive future savings and innovation.
Partner Deliberately: Look for potential partners with expertise in healthcare compliance and operations in addition to AI capabilities to facilitate a smooth integration and compliance with regulations.
As we continue to navigate this turbulent year, the integration of AI and cybersecurity within healthcare isn’t just a trend but a necessity. Providers are increasingly recognizing the potential of these technologies to address critical challenges such as labor costs and shortages, operational inefficiencies, and heightened security risks. Despite economic uncertainties and regulatory complexities, strategic investments and partnerships remain pivotal. Successful collaborations have shown significant cost savings and improve security.
James McHugh
James McHugh is managing director at global consulting firm BRG.
