The ABIG Update by Santiago O’Neil

TL;DR - Healthcare's spring paradox is in full swing: billions in M&A deals and millions in AI funding, while regulators launch coordinated enforcement across antitrust, consumer protection, and AI transparency. Private capital is doubling down on enterprise AI and cancer diagnostics just as states prep well over half a trillion in budget cuts…oh yeah, and federal government is eyeing healthcare spending cuts for war funding.

AI in Medtech

👁️‍🗨️ The Austerity Paradox

The venture capital math is almost too good to be true. Qualified Health just closed a $125 million Series B led by NEA to build AI infrastructure across health systems, with early deployments already generating the kind of ROI that makes CFOs take notice. At UT Medical Branch alone, the platform delivered $15 million in measurable impact within six months by automating workflows and connecting fragmented data sources. The company now supports 400,000 users representing 5% of U.S. hospital revenue, positioning itself as the foundational layer for enterprise healthcare AI.

But the funding frenzy is happening against a backdrop that should give everyone pause. State budgets are about to shrink by $664 billion over the next decade from last year's GOP budget cuts, while medical costs keep rising and state tax collections are lagging. The immediate impact is already visible: Idaho legislators just approved $22 million in cuts to Medicaid disability services, while Iowa is imposing new taxes on health insurers to cover existing Medicaid shortfalls and prepare for federal reductions. Nearly two-thirds of states now consider Medicaid budget shortfalls in fiscal 2026 "likely" or "almost certain."

Meanwhile, consumers are voting with their smartphones in ways that sidestep the entire healthcare delivery system. About a third of adults now turn to AI chatbots for health information, matching social media usage rates and creating a parallel healthcare advice ecosystem. The behavior goes beyond casual browsing: more than 40% are uploading personal medical data (test results, doctor's notes) directly into these tools, even as they express concerns about privacy. Their top motivations are telling: quick advice, research before provider visits, and notably for younger adults, affordability and access barriers to traditional care.

The takeaway: the collision is becoming impossible to ignore.
Health systems are investing hundreds of millions in enterprise AI platforms designed to make their workflows more efficient and capture more value from existing patient relationships. But this assumes patients will continue flowing through traditional care pathways long enough for those efficiency gains to matter. As state Medicaid funding shrinks and consumer AI adoption accelerates, that's starting to look like a much bigger assumption than anyone wants to admit.

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Government Affairs

⚖️ Enforcement Season

The FTC just launched a Healthcare Task Force that combines antitrust and consumer protection enforcement under one roof—bringing together the Bureaus of Competition, Consumer Protection, and Economics with plans to expand to HHS and DOJ. Chairman Andrew Ferguson's memo notes healthcare represents 18% of GDP, but "too many Americans struggle to get the care they need at prices they can afford." The task force will meet monthly and conduct "horizon-scanning" for emerging enforcement areas, marking a shift from episodic to institutionalized healthcare oversight. The timing coincides with growing transparency battles over government AI programs. The Electronic Frontier Foundation is suing CMS over the Medicare WISeR pilot, demanding records about AI algorithms that assess prior authorization requests for 6.4 million beneficiaries across six states. CMS has reportedly ignored FOIA requests about vendor agreements and bias testing, while early data shows Texas approving only 62% of requests initially (rising to 84% after human review). Vendors get paid partly based on denials they generate.

Meanwhile, GOP leadership is considering reductions in federal health spending to help pay for as much as $200 billion in Iran war and immigration enforcement funding. House Majority Leader Steve Scalise told Axios they're looking at "fraud and waste and abuse" offsets, while Budget Committee Chairman Jodey Arrington is reviving ideas to cut ACA cost-sharing reduction payments. Moderate Republicans may resist healthcare cuts during an election year.

On the legal front, DOJ is accelerating hospital antitrust cases. The Justice Department sued New York-Presbyterian for allegedly using its 30% Manhattan market share to force insurers into "all-or-nothing" contracts that prevent budget-conscious health plans. It's the second such case this year after OhioHealth. The hospital called the lawsuit "without merit."

The policy effects are becoming measurable. A new Urban Institute study estimates 5 to 10 million people could lose Medicaid coverage by 2028 due to work requirements and six-month eligibility checks from last year's Big Beautiful Bill. The study projects 3 to 7 million losses from work requirements alone, with another 2 to 3.1 million lost through more frequent paperwork. Between 19% and 37% of people who already work will lose coverage due to compliance burdens rather than actual ineligibility.

Market Movements

🚲 Market Roundup: What’s Happening?

Faith-based investors are suing UnitedHealth to force the company to include shareholder votes on its decade-long acquisition spree in annual proxy materials. The Interfaith Center on Corporate Responsibility wants UnitedHealth to publish a report on how its vertical integration affects patients, but UnitedHealth declined to include the proposal and the SEC allowed the company's decision to stand. The investors argue UnitedHealth's vertical integration "creates risks for the healthcare system, which are amplified by the company's status as the nation's largest health insurer." The lawsuit follows multiple shareholder actions targeting UnitedHealth's transparency around its $170 billion market cap and growing physician employment.

CommonSpirit Health and Humana reached a three-year nationwide Medicare Advantage contract after nearly a year of negotiations, restoring network access in Colorado and Texas where contracts had lapsed in January 2025. The deal gives CommonSpirit access to Humana's 7 million MA members while allowing Humana members to receive care at almost 140 hospitals and over 2,300 outpatient sites across 24 states. Contract disputes between payers and providers are ramping up as providers seek generous rate updates citing inflation while insurers try to control skyrocketing costs.

Thermo Fisher Scientific completed its $8.9 billion acquisition of Clario this week, expanding its clinical trial endpoint data capabilities. The deal gives Thermo Fisher a platform for capturing and managing safety data, efficacy results and patient-reported outcomes in clinical trials. Thermo Fisher is targeting $0.45 adjusted EPS accretion in year one and $175 million in synergies by year five. The acquisition comes as CRO consolidation accelerates amid growing demand for clinical trial technology.

Abbott closed its $21 billion acquisition of Exact Sciences on March 23, adding the Cologuard colorectal cancer screening test to its portfolio. The deal represents the largest Medtech acquisition announced in 2025 and marks Abbott's strategic pivot toward personalized and preventative healthcare following post-pandemic declines in traditional testing revenue.

GuardDog Telehealth admitted to improperly accessing patient records to provide them to law firms while falsely claiming the data was for patient treatment. Beginning in 2024, GuardDog used Health Gorilla's network to access patient records under the guise of providing chronic care management and remote patient monitoring, but instead focused on requesting, reviewing and summarizing medical records for law firms. The admission is part of Epic's broader lawsuit alleging that Health Gorilla enabled companies to improperly access nearly 300,000 patient records through interoperability frameworks designed for legitimate care coordination.

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