AI Dominates HLTH Conference: Startups Face Rising Pressure

URGENT UPDATE: The HLTH conference in Las Vegas has become the epicenter of healthcare innovation, with AI technology dominating discussions and exhibits. From March 25-27, 2025, a plethora of AI startups, including Innovaccer and SoundHound, showcased their products, but rising fears of an AI bubble and intense competition from tech giants loom large.

As healthcare executives navigate the bustling conference floor, many express AI fatigue. “The sameness is exhausting,” remarked a health system executive who chose to remain anonymous. “I need to know what your company actually delivers, today, in the real world.” This sentiment reflects a growing concern that many startups are merely riding the AI wave without delivering tangible outcomes.

Despite the apparent hype, the numbers tell a mixed story. According to Rock Health, digital health startups amassed $6.4 billion in venture capital funding in the first half of 2025, with a staggering 62% of that funding directed toward AI initiatives. However, critics warn that this influx may not translate into sustainable growth.

The competition is heating up, with industry titans like OpenAI and Epic entering the fray. Epic, a major player in medical records, plans to launch its own AI tools, including an AI scribe, to rival emerging startups. Their absence from the exhibit floor was felt, raising questions about how smaller companies can compete.

On the main stage, Nate Gross, OpenAI’s new healthcare lead, joined other tech luminaries but provided few specifics about OpenAI’s healthcare direction. “In my portfolio, people view OpenAI and Anthropic as significant threats,” said Blake Wu, a partner at NEA. The rapid expansion of these companies raises alarms among investors who worry about sustainability in the healthcare landscape.

The conference atmosphere, characterized by extravagant displays and networking opportunities, felt like a “Dreamforce of healthcare,” according to Karen Knudsen, CEO of the Parker Institute for Cancer Immunotherapy. Attendees mingled at lavish booths offering everything from AI voice assistance to interactive experiences, but many questioned the authenticity of the offerings.

Amid the glitz, some startups are making notable strides. For instance, medical AI search startup OpenEvidence announced a groundbreaking $200 million funding round at a valuation of $6 billion. Another startup, Hyro, secured $45 million to advance its AI agent platform. These developments highlight that while the market is saturated, opportunities still exist for innovation.

Concerns about the AI bubble are warranted, yet many argue for the potential of healthcare AI to revolutionize patient care. “Smart money is focusing on startups that prioritize responsible AI development,” said Milad Alucozai, cofounder of Pamir Ventures. This sentiment echoes the need for ethical considerations in AI deployment, especially in sensitive areas like healthcare.

As the conference continues, industry stakeholders are keenly aware of the challenges ahead. The pervasive presence of AI across booths and discussions raises critical questions about the future of healthcare technology. With Big Tech giants pushing into healthcare, startups must differentiate themselves to survive and thrive.

The next few days at HLTH will be crucial as investors and entrepreneurs alike assess the landscape. With the stakes higher than ever, the spotlight is on startups to deliver real, impactful solutions that go beyond the AI buzzwords that have saturated this year’s conference.

As we await further developments from HLTH, one thing is clear: the landscape of healthcare AI is rapidly evolving, and only the most innovative—and responsible—players will succeed in this transforming industry.