Five insights healthcare leaders want early-stage founders to know

Healthcare leaders share five lessons every early-stage healthcare startup founder should know about AI, health system partnerships, compliance and growth.

Healthcare is changing quickly — and so are the expectations for startups building solutions to improve it.

At a recent private gathering hosted by MATTER, healthcare investors, health system leaders, payers and policy experts discussed the forces shaping healthcare’s future. While the conversation was held under Chatham House Rule, five themes consistently emerged that every early-stage healthcare founder should understand.

1. What do health systems look for in AI startups?

Healthcare leaders are no longer asking whether AI has potential. They’re asking whether it can solve a meaningful problem within existing clinical and operational workflows.

As AI capabilities continue to advance, the technology itself is becoming less of a competitive advantage. Instead, the differentiator is how startups apply AI to create measurable value. The strongest opportunities today aren’t necessarily flashy new applications — they’re solving persistent operational challenges like documentation, revenue cycle management, supply chain optimization and administrative workflows that create friction across healthcare.

Founders should also expect buyers to ask tough questions about governance, safety and implementation. Health systems are increasingly evaluating AI solutions through structured review processes, balancing innovation with responsible adoption.

Takeaway:
Don’t lead with your model. Lead with the problem you’re solving, how it fits into existing workflows and the measurable outcomes you can deliver.

2. How do healthcare startups win their first health system customer?

A compelling product may open the door, but it won’t close the deal.

Enterprise healthcare buyers evaluate far more than product capabilities. Security, compliance, procurement readiness and implementation planning all play a significant role in purchasing decisions. Those expectations have only grown as AI adoption has accelerated. While health systems have always conducted rigorous vendor reviews, many are expanding those processes to ask detailed questions about AI governance, model transparency, clinical safety, human oversight and how AI-driven decisions can be monitored and explained. Founders who anticipate these conversations will be better positioned to earn trust.

Healthcare organizations also value founders who are transparent about where their product is today, what has been validated and where they’re still learning. Overselling capabilities or overstating experience with specific patient populations can erode trust before a partnership even begins.

Several leaders suggested building alongside physicians and other healthcare professionals to help ensure solutions address real-world challenges while strengthening adoptability.

Takeaway:
Trust begins long before implementation. The startups that earn early partnerships are often the ones that have a great product, but also demonstrate operational readiness and understand their own limitations.

3. Design for the healthcare system that exists today

Healthcare organizations are balancing innovation with operational realities. That means startups need to fit into existing workflows rather than expecting providers to redesign them.

Electronic medical records remain central to how clinicians deliver care, making integration a critical consideration for new technologies. Even when newer solutions offer stronger functionality, health systems often prioritize products that integrate seamlessly into the tools clinicians already use.

Several participants also noted that many organizations remain cautious following a wave of digital health investments that failed to meet expectations. As a result, buyers increasingly favor collaborative partnerships where startups work alongside health systems to refine solutions rather than simply selling off-the-shelf technology.

Takeaway:
The best technology doesn’t always win. The solution that integrates smoothly, minimizes disruption and helps providers succeed within existing workflows often has the strongest path to adoption.

4. Founders need to prove ROI faster than ever

Healthcare organizations continue to face financial and workforce planning pressures, raising the bar for every new technology investment.

Leaders emphasized that startups should be prepared to demonstrate measurable value quickly, whether that’s reducing administrative burden, increasing operational capacity or lowering costs. Buyers increasingly expect founders to quantify how their solution creates tangible results and how quickly those benefits can be realized.

Many expect a clear return on investment within a six-month period. Another important distinction emerged between “soft” savings, such as time saved, and “hard” savings that directly affect an organization’s financial performance. While both can be valuable, organizations are placing greater emphasis on measurable business outcomes that support investment decisions.

Takeaway:
Build your value proposition around outcomes. If you can clearly explain how your solution creates measurable operational or financial value within months, you’ll have a stronger story to tell.

5. What healthcare founders should know about evolving regulations

At the national level, healthcare leaders are closely watching the implementation of H.R. 1, particularly its new Medicaid work requirements and more frequent eligibility reviews. Beginning in 2027, many adults covered through Medicaid expansion will need to document qualifying work or related activities, while eligibility redeterminations will occur at least every six months rather than annually.

Providers and health systems are concerned that these requirements will create additional paperwork, confusion and administrative hurdles for people seeking to maintain coverage. For founders, the policy shift is important context: healthcare organizations may increasingly look towards innovative solutions that will help address these anticipated issues.

National policy isn’t the only area founders should watch. States also continue to update regulations that affect how healthcare companies are structured and operate. One area receiving increased attention is the corporate practice of medicine (CPOM), particularly as states continue to refine laws governing management services organizations, physician relationships and healthcare transactions. Recent developments in states, such as California and Oregon, underscore that regulatory expectations continue to evolve for companies operating across multiple markets.

Takeaway:
Regulations do more than create compliance obligations — they reshape how healthcare organizations deliver care and where they invest. Founders who understand both the policy environment and the evolving regulatory landscape will be better positioned to build solutions that address emerging needs and scale successfully.

Looking ahead

The conversations reinforced an important reality: success in healthcare requires more than a strong product. Founders who understand how health systems evaluate new technologies, build trust, demonstrate measurable value and navigate a changing policy landscape will be better positioned to grow.

That’s why MATTER brings together innovators, providers, payers, investors and policy leaders — to help founders better understand the realities of bringing new healthcare solutions to market.