The ABIG Update by Santiago O’Neil

TL;DR - Money is pouring into AI, rules are nowhere to be found, and Washington spent the week tripping over itself. At JPM, Dr. Oz called trillion-dollar Medicaid cuts "catastrophizing," health systems swapped growth talk for survival mode, and Boston Scientific broke the megadeal drought with a bet on blood clots. The vibes? Chaotic. But nowadays, that’s par for the course.

AI in Medtech

🤖Growing Pains: Money In, Rules Out, Threats Up

The numbers tell a clear story: AI is where the money is going, and where the risk is accumulating. U.S. digital health startups raised $14.2 billion in 2025, the highest total since 2022, with AI-focused companies capturing 54% of all funding and commanding a 19% premium on deal size. Five companies broke the three-year IPO drought. But the capital is concentrating: deal count dropped 5% even as mega-rounds over $100M accounted for 42% of funding: a market bifurcating into haves and have-nots.

Health systems are deploying AI aggressively for administrative workflows (think ambient scribes, revenue cycle, prior authorization, etc.) but operating in regulatory limbo. The Trump administration's executive order paving the way for a “minimally burdensome national policy framework for AI” conditions forms of state funding with the removal of “onerous” state AI laws: with some states already signalling non-compliance, this will only serve to create friction, not clarity.
Into this vacuum, the Healthcare Leadership Council released a policy roadmap calling for a "Goldilocks" approach: risk-based federal oversight, a temporary moratorium on state laws, HIPAA modernization, and AI validation pathways modeled on assurance labs at Vanderbilt and UCSF.

Meanwhile, the security picture is getting worse before it gets better. Healthcare breach frequency more than doubled in 2025, even as total records exposed declined: a shift from catastrophic mega-breaches to relentless, smaller-scale disruption. Email-based intrusions more than doubled; ransomware and third-party vulnerabilities drove the surge. And a new threat is emerging: shadow AI, with tool adoption outpacing policy development across the sector. Only 4% of leaders surveyed by Fortified Health Security said they were confident their vendor risk assessments matched actual exposure.

The pattern is familiar: investment is racing ahead, governance is catching up, and records security is struggling to keep pace.

US Healthcare Toplines

• U.S. healthcare spending rose 7.2% to $5.3 trillion in 2024—now 18% of GDP and averaging $15,474 per person, marking the fastest back-to-back growth since 1991-1992, driven by utilization intensity rather than price increases alone.

• Against that backdrop, the expiration of ACA enhanced premium tax credits threatens to more than double average annual premium payments for the 22 million subsidized Marketplace enrollees (from $888 to $1,904 on average), with older enrollees facing the steepest cliffs; a 60-year-old couple earning just over 400% FPL could see costs jump by over $22,000 annually.

• A KFF survey of Marketplace enrollees finds that while 84% want Congress to extend the credits (including seven in ten Republicans), one in four say they would "very likely" go uninsured if premiums doubled, and nearly six in ten say they couldn't absorb even a $300 annual increase without significant financial disruption
  

Government Affairs

🎢 Whiplash in the Executive

The week opened with chaos: late Tuesday, HHS terminated roughly 2,000 SAMHSA grants totaling nearly $2 billion in addiction treatment, mental health services, and overdose prevention funding: effective immediately, no prior notice. By Wednesday evening, following bipartisan backlash and what Sen. Tammy Baldwin described as "an intervention at the White House," the cuts were reversed. Then on Thursday, President Trump unveiled "The Great Healthcare Plan"…without much of a plan. This one-page framework calling for direct-to-consumer subsidies, MFN drug pricing, and PBM reform, but stopping short of extending lapsed ACA subsidies or touching Medicare and Medicaid. Analysts panned the announcement as "largely a political exercise"; Congressional action would be required to implement any of it.

⚖️ Mifepristone in the Crosshairs

The Senate HELP Committee convened its first pro-life hearing of the Congress, with Chair Bill Cassidy (R-LA) pressing HHS and FDA to complete a promised safety review of mifepristone, the drug now used in more than 60% of U.S. abortions. Louisiana AG Liz Murrill testified on mail-order risks and coercion concerns; Democrats pushed back sharply, with Sen. Bernie Sanders calling the session "an ongoing effort to deny women the basic right to control their own body." Reproductive health groups characterized the hearing as a platform for debunked science ahead of what they expect will be renewed regulatory pressure on medication abortion access.

🔧 Regulatory Machinery Grinds On

On the arbitration front, a new AHIP/BCBSA survey found health plans flagged 39% of No Surprises Act disputes as ineligible in 2024, more than double the rate identified by arbiters, with private equity-backed providers blamed for flooding the system and driving an estimated $5 billion in wasteful spending since 2022. Meanwhile, the FDA and medtech industry are negotiating MDUFA VI, the user fee agreement funding device reviews from 2028-2032; stakeholders expect a commitment letter could reach Congress as early as Q1. In short?Industry wants to "fine-tune" rather than expand; the FDA says holding steady "leads to mediocrity."

Market Movements

🏙️ JPM 2026: The 44th Annual Healthcare Conference Highlights

🎤 The Oz Show

CMS Administrator Mehmet Oz made history by bringing nearly his entire senior leadership team to JPM—part policy preview, part recruitment pitch. At a yacht club event for 200 executives, Oz dismissed $1 trillion in projected Medicaid cuts as "catastrophizing," called state directed payments "legalized money laundering," and declared Trump "saved the Medicaid program." Former Obama-era CMS Administrator Andy Slavitt offered a surprising compliment: "You've accomplished as much in a year as it took a number of us several years to accomplish." Major payers skipped the conference for a second straight year.

🤖 Pilots Are Over

A movement forecasted by the ABIG team in 2025, the conference also signaled a decisive shift from AI experimentation to enterprise deployment. AdventHealth showcased 80+ AI use cases and is converting 13,000 rooms into "smart rooms"; Intermountain processed 70,000+ IT tickets through AI; and UCSF now runs "enterprise pilots", turning tools on system-wide rather than clinic-by-clinic over years. Waystar, Tempus, and Anthropic’s Claude for Healthcare all made splashes as well. The message was clear, and echoes ABIG’s expectation for 2026: healthcare organizations still running AI pilots are falling behind.

📉 Cautious Optimism

Nonprofit systems struck a notably subdued tone, with less market share expansion and more focus on staying solvent. Providence disclosed 5,000 headcount cuts; Advocate touted $1.5B in merger savings; and many emphasized outpatient growth over bed expansion. The conference produced no blockbuster M&A mid-week, leading analysts to question whether JPM's role is evolving from deal showcase to industry pulse-check.

Then, on Thursday, medtech delivered.

🩺 Boston Scientific Bets Big on Blood Clots

Boston Scientific agreed to acquire Penumbra for approximately $14.5 billion—its largest deal since the troubled Guidant acquisition in 2006. Penumbra makes mechanical thrombectomy devices for pulmonary embolism, stroke, and DVT, plus embolization systems for bleeding control; it posted $1.4B in 2025 revenue (up 17%+). At $374/share (19% premium), J.P. Morgan analysts called it access to "best-in-class products" in fast-growing markets. The deal broke JPM's megadeal drought and follows Stryker's $4.9B Inari acquisition last year, cementing thrombectomy as medtech's hot M&A category. Expected to close H2 2026.

last but CERTAINLY not least: This is AWESOME.

Thanks for reading!

Let’s keep the conversation going…
Click on our social media icons below for questions and comments!