Provider Ops: The New Face of Healthtech

It wasn’t that long ago that alternative care — clinical tools like virtual primary care, remote specialties or asynchronous prescribing — was the central pillar of healthtech. Venture capital investment in alternative care peaked in 2021 at 42% of all healthtech dollars. 

Now we’re seeing the tables turn. Alternative care investment is down to 9% of healthtech dollars and provider operations — software for revenue cycle management, patient outreach, scheduling, analytics and other front- or back-office tasks — has taken almost half (44%) of all healthtech investment. 

The new low for alternative care deals is a result of products that couldn’t scale and technology that rapidly became table stakes in most clinical platforms. Payments are complicated in alternative care and margins are thin, especially when compared to outwardly similar software-as-a-service (SaaS) companies. Expansion is limited by clinician hiring, state licensing and payer enrollments. Provider ops software, on the other hand, has clearer business cases, faster return on investment and benefits more from the rapid growth of AI, especially GenAI. 

The AI Arms Race

Healthcare providers are increasingly willing to use AI. Overwork and manual tasks in electronic health records (EHRs) have been a burden on health care providers and other healthcare workers for decades. AI companies promise tools to help in difficult areas like documentation, billing, care plans, messaging and pre-visit planning. Workflows that are still overwhelmingly — and sometimes painfully — manual need tools that can bring efficiency, let clinicians focus on patients, and even help staff complete work without bringing it home.

The biggest opportunities for AI in healthcare right now are solving business problems, not medical care problems. Using AI to alleviate inefficiencies and business friction is freeing up time for more critical things, like caring for patients. When AI can’t be relied on or trusted, however, it won’t make inroads. Patient safety is non-negotiable in healthcare, so large language models (LLMs) that struggle to provide consistent, accurate advice won’t find clinical adopters. Patient privacy and data security are almost as important.

Clinicians and administrators aren’t the only people who need to be convinced. Most patients are happy to provide consent for providers to use AI scribes and documentation tools — until corporate partners and data policies are explained. Then willingness to give consent drops by 33%. Earning trust is going to be more important for AI healthcare companies than any technical challenge.

Take a Note: AI Scribes

Ambient documentation has taken off as the new hottest tool in the healthcare kit, at least as far as venture capital investing goes. Money has flowed into the space, reliably doubling annually since 2023. With that much coming in, you’d expect a bustling competitive space. You’d be wrong. Of the $2.75B that's been invested since 2022, more than half has gone to just five companies. Of the nearly $1.5B already invested in 2025, 40% went to just a single company, Abridge.

This capital has concentrated while an existential threat looms. Microsoft’s Nuance partnered with leading EHR vendor Epic in 2017. While Abridge partnered with Epic in 2023, the EHR giant has reportedly divested its shares while announcing a suite of integrated AI tools. Competition emerging from within an EHR is the single biggest worry of most healthcare startups. To compete with behemoths like Microsoft, Google or OpenAI, startups need to showcase the agility and domain expertise larger companies struggle with. Companies like Eleos and Rad AI that have specialty niches may end up with an easier competitive path than anyone trying to compete as a generalist solution.

What’s Next?

There’s nothing inevitable about AI in healthcare. When it’s prospering, it’s because AI tools are offering real value, addressing long-standing issues and helping solve significant problems. It’s encouraging to see AI being used to solve these problems. But healthcare can’t lose sight of the transformative potential of technology in clinical care. As AI is better understood and innovators continue to focus on reliability, transparency and trust, we expect a resurgence of clinical investment.

To learn more about the changes in healthtech, AI in revenue cycle and the state of healthtech investment, read our new report, The Future of Healthtech 2025.

All statistics and data referenced in this article are sourced from SVB’s The Future of Healthtech 2025 report.

The views expressed in this report are solely those of the authors and do not necessarily reflect the views of SVB.

All non-SVB named companies listed throughout this document, as represented with the various statistical, thoughts, analysis and insights shared in this document, are independent third parties and are not affiliated with Silicon Valley Bank, division of First-Citizens Bank & Trust Company. Any predictions are based on subjective assessments and assumptions. Accordingly, any predictions, projections or analysis should not be viewed as factual and should not be relied upon as an accurate prediction of future results.

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