On the Horizon: The Key Trends Impacting Healthcare in 2025

By Navin Nagiah, co-founder and CEO, Daffodil Health.

At the end of the year, it is both natural and vital to spend time reflecting on the highs and lows of the past 365 days (or, in the case of 2024, 366 days). Much like its predecessors, 2024 was full of rapid change, incredible innovation, and persistent challenges. As we brace for another transformational year ahead, it’s clear that technological and political tailwinds will drive big shifts across the industry.

From AI-driven innovations to sweeping government reforms, opportunities and risks abound – which makes it even more critical for healthcare executives and leaders to have practical insights for navigating the uncertain times ahead. This Q&A dives into some of the biggest factors expected to impact healthcare in 2025 and offers advice to ensure that businesses and policies can drive meaningful progress for the healthcare industry and the people it serves.

What are the events or trends that are bound to have the biggest impact on healthcare in 2025? There are two key areas I am closely monitoring. The first is the slow deflation of the generative AI (Gen AI) hype in healthcare—how quickly and to what extent will this trend unfold? The second is the actions of the new administration in the Department of Health and Human Services (HHS). This will hinge on the President-elect’s past statements, the philosophy of the incoming HHS Secretary, and the direction set and actions taken by the Department of Government Efficiency (DOGE).

Do you believe there is hype in Gen AI today? Absolutely. Just look at two clear indicators: the sheer number of companies branding themselves as AI-focused and the sky-high valuations they’ve recently received. Both are glaring outliers and are not sustainable. The real question isn’t whether hype exists but how long it will last. I believe there are strong signs that the bubble will start deflating in 2025. It only takes one major domino to fall, and others will likely follow suit.

How should company builders navigate the upcoming uncertainty around Gen AI in 2025? The key is to stay grounded and focus on the fundamentals. Are you solving a real, acute problem? Is your solution distinct? Is Gen AI critical to addressing that problem? Businesses built on sound problem-solution principles—and using tools like AI solely to add genuine value—will be far better equipped to weather uncertainty and thrive amidst turbulence.

Do you agree that most government agencies, including HHS, need to be gutted? Here’s what I do agree with: Over the past 40 to 50 years, government bureaucracy has become bloated and increasingly expensive, both directly and indirectly, for everyday Americans. The Democrats had multiple opportunities—12 of the past 16 years—to modernize our government and make it more agile, responsive to people’s needs, and productive in delivering value. They failed to read the mood of the working class and address their challenges, leading voters to choose an administration willing to take a sledgehammer to the problem. Who is to blame here? Most definitely not the voters.

Will the sledgehammer approach work? It might work to some extent, simply because both companies and institutions are often more resilient than people assume. Look at Twitter: before Elon Musk’s takeover, if you polled 1,000 people about the impact of laying off 75% of its workforce, almost all would have predicted its collapse. Yet, while Twitter struggled, it didn’t die.

That said, private companies and federal institutions are vastly different. Federal agencies employ hundreds of thousands of people, and a sledgehammer approach risks significant collateral damage. While it could drive change, it might also create chaos, confusion, and social unrest.

Ideally, a balanced approach is preferable, though finding that balance—and executing it effectively—is incredibly challenging.

If the sledgehammer approach works, will it benefit the healthcare sector and the average American? If the sledgehammer works within the first 6 to 9 months, and deregulation happens as aggressively as promised, conventional thinking suggests increased competition would improve the system over time. However, healthcare is unlike any other sector. It’s riddled with regional monopolies—markets dominated by one or two hospitals or payors—which can lead to price gouging.

The healthcare ecosystem requires a nuanced, data-driven approach to reform. Sweeping deregulation without addressing these monopolies could exacerbate existing issues. What’s missing is a comprehensive, workable plan. While some advocate for “Medicare for All” and others for “gutting agencies,” neither approach tackles the sector’s complex, micro-level dynamics. In healthcare, more than anywhere else, success depends on sweating the details, understanding regional variations, and implementing precise, surgical reforms.