Hospital C-suites are entering a period of financial constraint—but rather than slowing innovation, they are sharply redirecting investment toward technologies that can directly drive growth, with artificial intelligence emerging as the clear frontrunner.
According to Sage Growth Partners’ Health IT Purchasing Forecast 2026–2027, based on a survey of 101 hospital and health system executives, 41% expect capital investment to decline over the next two years. At the same time, only 5% anticipate significant budget increases—marking a notable shift from more expansionary years.
Yet within this tightening environment, spending priorities are being fundamentally reshaped. Rather than focusing on cost centres or incremental improvements, leadership teams are doubling down on revenue-generating initiatives. Nearly half (46%) of executives now prioritise investments that open new markets or revenue streams, up from 34% in 2023, while 40% are explicitly focused on patient acquisition.
This shift is most visible in the rapid rise of AI. For the first time, AI-based clinical solutions have overtaken electronic medical record (EMR) optimisation as the top technology priority, with 57% of C-suites ranking it as their leading initiative—up from just 19% three years ago. Administrative AI is also gaining traction, with 29% placing it among their top five priorities, compared to just 6% in 2023.
The apparent contradiction—shrinking budgets alongside rising AI investment—is being resolved through far stricter financial discipline. Health systems are reallocating spend away from traditional overhead and “nice-to-have” technologies, concentrating capital on tools that can demonstrably impact top-line performance.
“As health systems and hospitals grapple with declining capital investments, C-suite leaders are likely to apply greater degrees of scrutiny to health IT purchasing decisions,” said Dan D’Orazio, CEO of Sage Growth Partners. “Overall, capital planning is shifting toward initiatives that drive growth, such as acquiring and retaining patients, expanding into new markets, and diversifying revenue streams to increase top line revenue”.
Return on investment has become the defining metric. A substantial 77% of executives now rank anticipated ROI as the most critical factor in purchasing decisions, up from 50% in 2023. More notably, 39% expect a 2–3x return on their investments—raising the bar for vendors across the board.
“Ultimately, C-suites are looking to health IT companies to demonstrate cost-savings to CFOs focused on driving ROI, and to help CIOs align digital strategies with organizational performance and financial goals,” said Stephanie Kovalick, Chief Strategy Officer at Sage Growth Partners.
In this environment, the margin for ambiguity is disappearing. Technologies that cannot clearly demonstrate revenue impact or cost reduction risk being sidelined, as health systems reposition digital investment as a core lever for financial sustainability.
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