For many Health companies, engagement used to carry a lot of weight. If patients used the product, clinicians liked it and the pilot produced a credible story, the company could often keep moving.Buyers are now asking what changed because the product was used. Did outcomes improve? Did cost fall? Did the workflow become easier? Did the intervention reduce avoidable care, improve adherence, speed diagnosis, support staff or create a measurable economic case?

PHTI has pointed to a broad evidence gap in digital health, with many products having little or no published clinical evidence. The UK NHS anchors digital health procurement around NICE’s Evidence Standards Framework, while Germany’s DiGA pathway has shown that market access can be revisited when evidence does not hold up.

The direction is clear. Employers, hospitals and payers are less willing to pay for engagement alone. Performance-based contracts and evidence-backed renewals are becoming more important, especially when budgets are under pressure and vendor lists are being cut.

For scale-ups, this changes the work. Evidence is not something added after product-market fit. It becomes part of product design, customer success, commercial strategy and renewal. The strongest companies are not simply the ones with high usage. They are the ones that can connect usage to outcomes the buyer already has to defend.

AI has pulled capital, attention and urgency into Health. But it has also made some moats weaker. A company that built its wedge around an AI feature may find itself competing with foundation models, EHR incumbents, large platforms or free tools moving into the same workflow. The ambient scribe market shows the speed of that shift. Adoption rose quickly, but buyers are already treating parts of the category as switchable.

That does not mean AI-enabled Health companies have no defensibility. It means the defensibility has moved. The moat is less likely to be the model itself. It is more likely to sit in proprietary clinical data, workflow depth, regulatory trust, integration into the system of record, outcomes evidence, implementation quality and the ability to improve a real operational or clinical process.

Regulation is also raising the bar. In Europe, the EU AI Act and medical-device rules create additional obligations for many clinical AI systems, especially where AI is part of regulated healthcare decision-making or device functionality.

For leadership teams, the question is no longer whether the product uses AI. It is whether the company has built something the next model release, EHR feature or platform bundle cannot easily replace. The strongest companies are moving from AI as a feature to AI as a product system: embedded, evidenced, compliant and difficult to remove from the workflow.

The demand side of healthcare has consolidated faster than many Health companies were built for. In practice, the addressable patient market can look enormous while the actual customer count is much smaller. Hospitals, employers, payers, GPOs, procurement committees, value-analysis teams, EHR vendors and care-navigation platforms all sit between the product and the people it helps.

That changes the commercial reality. A product can be loved by clinicians or patients and still struggle if the buyer asks for a different proof case, a lower price, better integration, a broader contract or a reason not to choose the incumbent.

The market is moving toward fewer, larger and more powerful access points. Employer-health platforms are consolidating. Hospital procurement is increasingly formalised. Diagnostics companies face coverage and reimbursement decisions that can make or break the revenue model. Medtech companies face regulatory and notified-body bottlenecks in Europe, while commercial leaders keep pulling further ahead.

For scale-ups, the question is not only how to reach the patient or clinician. It is what position the company is building in the healthcare system. Is it a standalone platform? A partner to incumbents? A workflow layer inside another system? A product that needs coverage before it can scale? Or a company that should become strategically acquirable? The answer affects the way the company tells its story to investors.