S02.11 · Healthcare & Life Sciences
The sector's fastest-growing segment, 15-20% forward, as ambient AI scribes create a new sub-segment beyond legacy EHR software.
Healthcare IT and digital health is the fastest-growing and fastest-changing segment in the sector — $200-350B in 2025, though estimates diverge materially (Grand View Research puts the figure near $250B, while Precedence Research/Towards Healthcare imply a larger scope that includes remote monitoring hardware and telehealth, and no single consensus figure is defensible) — growing 15-20% forward. The line to watch is ambient AI clinical documentation, which is moving fast enough to form a distinct sub-segment of its own, separate from the legacy EHR software the sector has run on for two decades.
Historical growth ran 15-18%, with 15-20% projected forward — a pace with no comparable elsewhere in the sector, driven by value-based-care analytics, AI clinical documentation tools and remote-monitoring adoption. The US takes the majority of revenue, propelled by EHR and interoperability regulatory mandates from ONC and CMS; EU adoption lags, slowed by fragmented national health systems. At the core, concentration is high — Epic and Oracle Health/Cerner hold an estimated 60%+ of the large US hospital market — while the broader digital health long tail beneath them is deep and largely venture-funded.
Cloud and AI infrastructure providers sit upstream; health systems, payers and consumers downstream. The economics are SaaS-native: subscription recurring revenue dominates and gross margins run 65-80%. Interoperability and certification requirements under ONC and HIPAA do double duty as regulatory gating, protecting incumbents with existing certifications from low-cost new entrants.
Nowhere in the sector is agentic AI's effect less ambiguous or further along. Clinical documentation, prior-authorization submission and care coordination are being automated, compressing clinical and administrative labor cost directly rather than at one remove. The threat to incumbents runs through the workflow-integration moat itself. Being the system of record every other tool has to plug into is what has locked health systems into a single EHR vendor; AI agents that interoperate across EHR platforms natively are cutting that switching cost down.
Ambient AI scribes are the proof. They are building a sub-segment distinct from legacy EHR software — their own vendors, their own economics, their own adoption curve — rather than becoming a feature bolted onto it. EHR-adjacent analytics bolt-ons remain the defensive move, protecting installed base; AI-scribe and clinical-decision-support platforms are the expansionary bet, new revenue rather than retention of existing contracts. Adjacencies into payer analytics, provider workflow automation and consumer health/wearables push the segment well beyond its EHR origins. The horizon language here is short: already underway, and moving faster than anywhere else in the sector.