Health Enterprise Partners  ·  Sixth Annual Executive Survey  ·  March 2026

Break Stuff: Ten Things the Healthcare Market Is Telling Us in 2026

We share first-party signal from six years of executive surveying, 150+ LP touchpoints, and a closed-door offsite now in its thirteenth year.

Ezra Mehlman, Jessie Gentil,
Michelle Kauffman & Culver Duquette
Health Enterprise Partners
March 2026
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We anchor our research in an annual survey, now in its sixth year, to capture forward-looking strategic priorities, capital allocation intent, and structural healthcare shifts across payers, providers, vendors, and investors. This data informs our quarterly dialogue with 150+ LP touchpoints throughout the year, and serves as the foundation for our annual closed-door executive offsite, now in its thirteenth year.
154Annual Survey Responses
30+Executives at Our Offsite
150+LP Touchpoints Per Year
Annual Survey: Who Responded
25%HCIT Vendors
21%Healthcare Services
17%Providers
13%Payers
12%Financial Investors
12%Other
What Follows & How to Navigate It

Our Ten Reflections & Predictions for 2026

What follows draws on our annual survey alongside insights from our executive offsite and LP conversations throughout the year. Each reflection is anchored in data; each prediction reflects our point of view on what it means.

Innovation Without Integration
Reflections 1–3
1AI Pilots Are Everywhere. Workflow Redesign Is Not. 2Falling Build Barriers Are Accelerating Vendor Consolidation 3Payers and Providers Are Modernizing, But Alignment Still Lags
Structural Cost Pressure
Reflections 4–7
4Workforce Economics Will Be Reshaped by Labor Model Redesign 5Supply Chain Is Healthcare's Next Margin Frontier 6Margin Strain Is Making Organizations Willing to Break Things 7MA Payers Are Shrinking Networks to Protect Unit Economics
Beyond the Four Walls & Now or Never
Reflections 8–10
8Deal Activity Is Concentrating in Ambulatory & Distributed Settings 9Virtual Care's Next Wave Will Be Operationally Embedded 10Periods of Dislocation Like This One Produce Decade-Defining Returns
I

Innovation Without Integration

1
Innovation Without Integration

AI Pilots Are Everywhere. Workflow Redesign Is Not.

Three in four organizations have active GenAI programs, but most remain layered onto existing processes rather than embedded into redesigned workflows.

52% rank administrative automation as their top strategic initiative — yet organizational readiness scores across five dimensions reveal a significant gap between adoption ambition and enterprise readiness.

The risk is not that AI fails to deliver value in isolated use cases. The risk is that organizations mistake efficiency within a broken process for structural progress — and the performance gap between leaders and laggards quietly widens.

76%
Report GenAI pilots or deployments delivering measurable ROI
52%
Rank admin automation as a top 5 strategic initiative
AI Organizational Readiness (1–5 scale)
Scalable data infrastructure
3.1
Dedicated leadership & capital
3.0
Focused, repeatable execution
2.8
Integrated AI governance
2.7
Enterprise-wide upskilling
2.7
Adoption is outpacing enterprise redesign.
"When implementing AI across use cases, we've found that the process of implementation has led to important conversations about standardization and care model redesign that are about people and workflow, rather than technology. This is especially true across facilities and sites. This begs the question — are we spending enough time truly rethinking the way we do things, rather than just applying AI to make a bad process more efficient?"
Charlotte Piper
Assistant Vice President, Ochsner Ventures
Prediction
AI will widen performance gaps, and platforms that redesign workflows will compound advantage, whereas platforms layered onto fragmented workflows will amplify complexity.
2
Innovation Without Integration

Falling Build Barriers Are Accelerating Vendor Consolidation

As technical differentiation compresses, vendors competing on features alone are the first to be cut. 73% of payers and providers intend to reduce vendor count in 2026.

Cuts are concentrating in categories with parallel workflows, limited control of core economics, and high vendor density:

Patient Engagement Workforce Management Population Health Analytics

Why now: AI and modern tooling have compressed build cycles. Technical team scale is no longer a barrier. Differentiation is transient as competitive moats shrink.

Vendor Reduction Intent
73%
of payers and providers intend to reduce vendor count in 2026
Prediction
As technical capabilities become more broadly accessible, pricing pressure will intensify at the feature layer, accelerating consolidation and concentrating durable advantage in platforms embedded in core economic workflows.
3
Innovation Without Integration

Payers and Providers Are Modernizing, But Alignment Still Lags

Both payers and providers are investing in analytics and AI, but workflows and incentives have not fully aligned. Interoperability and data management are funded priorities — the technical rails for data exchange are largely in place.

Top Payer Levers for VBC & Star Performance
73%Guiding patients to high-performing providers
67%Data sharing between payers and at-risk providers
50%Readmissions / care transitions support
45%Point-of-care access to VBC tools
36%Digital gap identification tools
What This Signals
→Payers are investing in tools that direct behavior, not just measure it
→Capital is flowing to levers that influence utilization and risk
→Modernization is increasingly operational, shifting from analytics to execution
→Technical rails for data exchange are largely in place — yet economic alignment lags
"Alternative coverage models are critically important for affordability. Centivo is a great example — in return for accepting a narrowly curated network, the plan offers predictable costs, zero-dollar deductibles, low copays, free primary care, and enhanced care navigation. Centivo partners with high-quality health systems with a target goal of saving 15-30% on health insurance. JPMorganChase is piloting a Centivo plan in Dallas with Baylor Scott and White, and for the second year enrollment has exceeded expectations."
Dan Mendelson
CEO, Morgan Health
Prediction
Decision rights, incentives, and workflows remain misaligned between payers and providers — data exchange ≠ economic alignment. The next wave of VBC gains requires payers and providers to share decision rights over care navigation and utilization, not just dashboards.
II

Structural Cost Pressure

4
Structural Cost Pressure

Workforce Economics Will Be Reshaped by Labor Model Redesign

Labor costs continue to rise despite modest market improvement, forcing a shift from recruitment-led strategies to structural workforce redesign. 88% of providers expect labor cost per discharge to increase in 2026.

The widespread assumption that task-level automation will translate into staffing reductions continues to prove false. Health system leaders are only seeing labor cost decline when staffing models actually change.

Market Expectation
  • Faster documentation reduces clinician burden
  • Automation reduces admin workload
  • Productivity gains lower staffing needs
Structural Reality
  • Staffing ratios rarely shift automatically
  • Scope of practice slow to expand
  • Capacity gains absorbed, not eliminated
Expected Change in Labor Cost Per Discharge
2026
31%
44%
13%
Increase 1–5%
Increase 5–10%
Increase >10%
Flat / Decline
88%
of providers expect labor cost increases
"Over the two days, it was striking how omnipresent AI has become in our conversations, yet there is still a clear imbalance between the promise we all see and the degree to which it is actually embedded, governed, and delivering repeatable value in care delivery. Our challenge now is to close that gap by shifting from talking about AI to hard-wiring it into standardized workflows, so that the rhetoric and the realized impact finally match."
Richard D. Zane, MD
Chief Medical Officer & Chief Innovation Officer, UCHealth
Prediction
Margin durability will depend on organizations and platforms that influence staffing configuration, scope of practice, and role allocation, not just task efficiency. Automation will be widespread; structural labor redesign will not.
5
Structural Cost Pressure

Supply Chain Is Healthcare's Next Margin Frontier

Supply costs have risen every year we've surveyed — yet the industry has responded with incremental fixes, not structural solutions.

  • 100% of providers have expected rising supply costs four years running, with severity accelerating
  • Investment has concentrated on labor; supply chain workflows remain manual and fragmented
  • Margin gains require procurement redesign, utilization discipline, and pricing transparency — areas most systems have barely touched
Expected Change in Medical Supply Cost
2022
63%
32%
2023
42%
32%
16%
2024
50%
43%
2025
44%
31%
25%
Flat
+1–5%
+5–10%
>10% (5× growth since 2022)
Prediction
Supply chain will emerge as one of healthcare's highest-ROI automation frontiers. Organizations pairing technology with process redesign will outperform; those treating it as a back-office function will remain exposed to structural cost acceleration.
6
Structural Cost Pressure

Margin Strain Is Making Organizations Willing to Break Things

Administrative automation drove early cost optimization, but persistent margin pressure is pushing healthcare organizations toward structural redesign. Admin automation as a strategic priority has declined from its 2023 peak — not because the problem is solved, but because organizations are moving upstream.

% Selecting Structural Moves as Top 5 Priority
55% of providers are diversifying revenue streams
45% of payers are reinvigorating VBC contracting and investments
41% of providers are exiting underperforming business lines
Admin Automation as Strategic Priority — Over Time
2021
67%
2022
65%
2023
83%
2024
56%
2025
69%
2026
52%
"Over the last decade, employer-sponsored medical plan costs have increased nearly 65% — driven largely by pharmaceutical advances. Pharmacy now represents nearly a third of total medical plan cost, with just 2% of members accounting for half of pharmacy spend. Cancer diagnoses are the single greatest cost driver. This trajectory is unsustainable, and employers are actively restructuring how they buy and direct care."
Robert Allday
Senior Vice President, Lockton
Prediction
Persistent cost pressure will increase willingness across the healthcare ecosystem to pursue structural redesign rather than incremental optimization.
7
Structural Cost Pressure

MA Payers Are Shrinking Networks to Protect Unit Economics

Medicare Advantage (MA) payers are intentionally recalibrating portfolios through benefit adjustments, narrower networks, and disciplined growth. The strategic posture has fully inverted since 2024.

Payer Expectations for MA Open Enrollment
2024
17%
42%
33%
2026
50%
30%
Decline (desired)
Remain flat
Growth (desired)
Growth (excess)
Actions Payers Are Taking
Removing plan options with generous benefits
46%
Removing supplemental benefits
38%
Implementing narrower networks
31%
Exiting challenged counties
31%
Increasing premiums
23%
Adjusting broker commissions
15%
"Narrow networks are one of the key levers MCOs have to assure quality of care while controlling costs."
Cameron Black
CFO & Treasurer, Blue Cross Blue Shield of Arizona
Prediction
Network architecture will compress. Benefit design will favor margin stability. Risk transfer will tighten. MA networks will get smaller and more performance-linked; broad-access strategies are a luxury payers can no longer subsidize.
III

Beyond the Four Walls

8
Beyond the Four Walls

Deal Activity Is Concentrating in Ambulatory & Distributed Settings

Provider M&A expectations remain elevated, with capital expected to concentrate in ASCs, specialty practices, and ambulatory assets. Capital is underwriting flexibility over fixed cost, control over scale, distributed platforms over inpatient dependence, and margin durability over growth alone. 71% of respondents expect provider deal activity to increase in 2026.

Top Provider Asset Types for Investment
Ambulatory surgical centers
41%
Specialty physician offices
37%
Virtual care support hubs
35%
Home health services / agency
33%
Freestanding outpatient centers
33%
Specialty pharmacy
31%
Urgent care centers
18%
Freestanding / satellite ED
14%
Hospital
14%
"Retail pharmacies often serve as a front door to health care in rural communities, helping extend the reach of primary care and ensuring access to essential services. By expanding services, they can make care more convenient and connected while supporting prevention, chronic disease management, and overall health."
Katie Pohlson
Vice President, Innovations, Sanford Health
Prediction
Capital allocation will favor assets with controllable unit economics and operational flexibility, widening the valuation gap between distributed care models and fixed-cost inpatient platforms.
9
Beyond the Four Walls

Virtual Care's Next Wave Will Be Operationally Embedded

Virtual visit volume is returning to pandemic peaks — but this time driven by targeted, high-value modalities rather than broad substitution. Both payers and providers are converging on the same durable use cases.

Modality
Payers
Providers
Behavioral Health
73%
58%
Care Coordination
45%
63%
Chronic Disease Mgmt.
36%
—
Virtual Primary Care
—
37%
Shared priorities across payers and providers — both sectors gravitating to high-frequency, high-impact workflows.
What This Signals
  • Telehealth returns to pandemic peaks, with strategic purpose rather than crisis-driven utilization
  • Virtual care is clustering around behavioral health, care transitions, and coordination as durable use cases
  • Winners will integrate virtual modalities directly into care pathways, not offer them as standalone alternatives
  • Point solutions without pathway integration will face the same consolidation pressure hitting the broader vendor landscape
Prediction
Virtual care will cluster around high-frequency, high-impact workflows rather than generalized telehealth expansion. Winners will integrate virtual modalities directly into care pathways, not offer them as standalone alternatives.
IV

Now or Never

10
Now or Never

Periods of Dislocation Like This One Produce Decade-Defining Returns

Market optimism and innovation capital remain resilient despite persistent structural pressure across the ecosystem. 86% of executives expect the pace of HCIT company creation to accelerate — and 75% expect more digital health capital in 2026 than in 2025.

Innovation priorities are sharpening around ROI, licensing, and company formation. Corporate VC, innovation labs, and platform formation remain active. And platform creation is accelerating in a more selective market — which means the bar is higher, but so is the upside for those who clear it.

What This Signals
Innovation priorities are focused on ROI, licensing, and company creation — not experimentation for its own sake
Corporate VC, innovation labs, and platform formation remain active even as the overall market has rationalized
Platform formation is accelerating in a more selective market — the window is open, but it will not stay that way
Market Optimism — Despite Everything
86%
expect the pace of HCIT company creation to accelerate in the next two years
75%
expect more capital invested in digital health in 2026 than in 2025
Among providers pursuing active innovation strategies in 2026, priorities concentrate on ROI-driven deployment, licensing of proven solutions, and new company formation — not greenfield experimentation.
Prediction
The best healthcare investments of the next decade will be sourced in the next 18–24 months. Outsized challenges create outsized returns.

What the Signal Tells Us

These ten data points describe a sector that has run out of patience for half-measures. The easy phase of digital health — adding technology to existing workflows and growing through market tailwinds — is behind us. What comes next requires organizations and platforms willing to redesign labor models, consolidate vendor relationships, restructure care settings, and align incentives in ways that actually change behavior. The data is clear about the direction. What remains to be seen is who moves fast enough to matter.

Ezra Mehlman is Managing Partner, Jessie Gentil is a Principal, Michelle Kauffman is a Senior Associate, and Culver Duquette is an Associate at Health Enterprise Partners.

To engage with HEP's sector work: [email protected]  ·  [email protected]

About Health Enterprise Partners: Health Enterprise Partners provides expansion capital to the most innovative healthcare services and healthcare information technology companies. Central to HEP's strategy is its unique and extensive strategic healthcare network, 41 members of which are investors in HEP's funds. HEP seeks to invest in companies that improve the quality of the patient experience, expand access, and reduce the cost of healthcare. For more information, please visit www.hepfund.com.

Methodology: HEP's 2026 Healthcare Executive Survey comprised 25 questions fielded in early 2026 across providers, payers and integrated payer-providers, health IT vendors, healthcare services companies, financial investors, and other healthcare stakeholders. Survey findings are supplemented by quarterly strategic LP dialogues and HEP's annual closed-door executive offsite, now in its thirteenth year.