In October, venture capital firm Menlo Ventures published a report on AI adoption in healthcare. The research indicated that 22 percent of healthcare organizations are using domain-specific AI tools, a sevenfold increase from 2024 and a tenfold increase from 2023. Health systems have the highest adoption rate at 27 percent, with outpatient providers at 18 percent and payers at 14 percent.
According to Menlo Ventures, the $4.9 trillion healthcare industry, which accounts for one-fifth of the U.S. economy but only 12 percent of software spending, is now adopting AI at more than twice the rate of the overall economy (2.2x). “Healthcare AI spending hit $1.4 billion this year, nearly tripling 2024’s investment.”
Large-scale investments and adoption by leading players show how the industry has transformed through AI over the past 12 months:
- Kaiser Permanente deployed Abridge’s ambient documentation solution across 40 hospitals and 600+ medical offices.
- Advocate Health evaluated over 225 AI solutions to select 40 use cases to go live with. The initiatives are projected to reduce documentation time by more than 50 percent, while automating prior authorizations, referrals, and coding workflows.
- Mayo Clinic is investing more than $1 billion in AI over the next few years across more than 200 projects that go beyond administrative automation to include diagnostics and patient care.
- SimonMed has scaled its partnerships from co-building with fewer than 10 vendors to piloting solutions from more than 50, including AI systems for intake, ambient scribing, and revenue cycle management.
- Grow Therapy is building an AI care companion that bridges in-session therapy with 24/7 support and pioneering continuous measurement through voice and language analysis to replace static assessment tools.
According to the research, two categories that address urgent operational pain points and deliver measurable ROI are ambient clinical documentation ($600 million) and coding and billing automation ($450 million). Other fast-growing categories include patient engagement (+20x year over year) and prior authorization (+10x year over year).
The report data is based on comprehensive surveys of more than 700 healthcare executives across the U.S.
