The state of digital health: Key trends shaping 2025

Anish Sebastian: ©Babyscripts

The digital health landscape continues to evolve at a breakneck pace. Emerging technologies, regulatory shifts, and changing consumer expectations are redefining how care is delivered, accessed, and paid for. AI, once the new kid on the block, is now ubiquitous, transforming operations and care workflows across the industry. Digital therapeutics are entering a new era of growth, fueled by regulatory advancements and mounting clinical evidence. Meanwhile, the surge in demand for virtual health care, including remote patient monitoring, underscores the urgent need for sustainable reimbursement models.

At the same time, the push for data interoperability—a foundational goal of digital health—has reached a critical juncture, exposing challenges that demand immediate attention. With these trends shaping the future of health care, 2025 promises to be a big year for addressing longstanding barriers and unlocking the full potential of digital health innovations.

Every company is an AI company now

Artificial intelligence has become a standard feature across nearly every technology platform in the digital health ecosystem. Health-tech companies are embedding AI into various aspects of their operations, from automating administrative tasks and streamlining patient care workflows to enhancing clinical decision-making and personalizing patient engagement (yes, it’s ironic). This widespread enthusiasm is reshaping the venture capital landscape, as AI is powering increased efficiency, reduced operational costs, and potential scalability. But AI’s growing influence demands clear governance frameworks, which we’re still lacking. Expect 2025 to bring more questions around data privacy, algorithmic bias, accountability, and transparency.

Digital therapeutics are gaining traction

The digital therapeutics market has blown hot and cold since its inception, but right now, it’s hot. This year, the FDA approved 50% more digital therapeutics products than in 2023, as a result of growing clinical evidence that is also boosting adoption among payers and health care providers. In October, the FDA's creation of a Digital Health Advisory Committee, which includes digital therapeutics in its scope, added further momentum to the market, along with new draft regulatory guidance for prescription drug use-related software. These moves are opening the door for digital therapeutics to be included on drug labels. With these developments, expect massive growth in the digital therapeutics market next year.

Demand for virtual health care is increasing, but who’s paying for it?

The boom in digital therapeutics is just one sign that virtual health care is here to stay. Consumers now expect to have the option of virtual care, and many practitioners have integrated it into their care delivery models. But even as these tools gain traction, the big question remains: who’s footing the bill?

Take remote patient monitoring (RPM), for example. In 2024, the Centers for Medicare & Medicaid Services (CMS) made it possible for Federally Qualified Health Centers (FQHCs) and Rural Health Clinics (RHCs) to bill for RPM with new global codes. State Medicaid programs also expanded coverage for RPM for conditions like hypertension and diabetes. However, these rates often don’t cover the real costs of setting up and running these programs. On top of that, burdensome reporting requirements—like requiring patients to transmit 16 days’ worth of data before providers could bill for RPM—made it tough for practitioners to get paid. While the AMA has revoked that 16-day rule effective January 2026, the low rates are still a hurdle, keeping RPM from reaching its full potential.

With more physicians retiring and the health care workforce shrinking, the demand for virtual solutions like RPM is only going to grow. That means we’ll also see more pressure to fix reimbursement policies so they actually work for providers and patients. Employers and health plans are stepping into the conversation, too, trying to figure out how to pay for virtual care in a way that makes sense while weighing the evidence of what works. These conversations will be key to making virtual care more sustainable in the long run.

Interoperability is being pushed to its limits

Data interoperability has been central to the digital health conversation from the start. What began as an ambitious goal with the 2016 Cures Act—to empower consumers with access to their health data—has now matured into a robust interoperability framework supported by the necessary infrastructure. In 2024, the publication of the final rules for HTI-2 and HTI-3 marked significant strides toward achieving true nationwide interoperability. Last year also witnessed further alignment with TEFCA (the Trusted Exchange Framework and Common Agreement), a federally backed health information exchange initiative. However, as interoperability becomes more mainstream and data exchange more widespread, the system’s limitations and vulnerabilities have come under scrutiny. High-profile disputes, such as that involving Particle Health and Epic Systems, have highlighted ongoing concerns around gatekeeping and transparency. As the push for nationwide interoperability progresses, we can anticipate heightened regulatory and industry attention to address these challenges and ensure a more equitable and transparent future.

The next chapter for digital health will be about refining these innovations to ensure they’re practical, scalable, and accessible for all stakeholders. While the questions of “who pays,” “who governs,” and “who benefits” remain, one thing is clear—digital health is no longer just a disruptor: it’s an integral part of the health care system. The work ahead is to make it sustainable for the long term.

Anish Sebastian co-founded Babyscripts in 2014 with the vision that internet-enabled medical devices and big data would transform the delivery of pregnancy care. Since the company’s inception, they have raised over $40M. As the CEO of BabyScripts, Anish has focused his efforts on product and software development, as well as research validation of their product.