Healthcare VCs predict more AI transparency investment, private equity M&A, and a quiet year for IPOs in 2026 (www.businessinsider.com)

In a strategic shift for healthcare funding, venture capitalists (VCs) are predicting a rise in investments focused on AI startups that emphasize decision transparency and cost-efficiency in 2026. After a booming year in 2025, characterized by major funding for AI scribe platforms like Abridge and Ambience Healthcare, investors are now looking towards startups that can help reduce costs and enhance trust between patients and providers. The entrance of major competitors, such as Epic Systems, emphasizes the need for startups to pivot and develop robust AI governance that promotes transparency—an approach termed "glass box" AI. This transition aims to foster trust in AI-assisted decisions in high-stakes healthcare environments. While the outlook for initial public offerings (IPOs) remains subdued, with no new venture-backed healthcare companies expected to file soon, private equity firms are anticipated to drive a flurry of mergers and acquisitions (M&A) as they seek out AI-driven assets. Experts project a wealth of activity as major players in the insurance sector, like Palantir, explore partnerships with specialized AI platforms to enhance clinical decision-making. The sector's shift towards scalable and transparent business models is seen as crucial for accommodating the evolving landscape of healthcare, which increasingly relies on AI to deliver value while managing operational inefficiencies.