U.S. healthcare continues to pour money into health tech, especially anything with “AI-powered” stamped on the label. Yet, a recent State of AI in Business 2025 report from Massachusetts Institute of Technology (MIT) suggests that 95% of these projects, mostly AI pilots, fail to deliver meaningful value.
A few recent examples support this case.
- Forward Health, founded by a former Google executive and valued at $650 million, made strong early progress with its AI-powered “doctor-in-a-box” CarePods. However, it shut down operations in late 2024 due to real-world operational complexity and the difficulty of keeping the model running at scale.
- Olive AI, once viewed as a $4 billion healthcare automation unicorn with technology deployed across almost 900 hospitals, eventually sold off its core businesses in 2023 because of unfocused expansion and mounting operational issues.
In health tech, this pattern is familiar. AI pilots perform well in demos but struggle in the complex, risk-aware, and change-heavy reality of U.S. health systems. This is why the success of any pilot depends heavily on the teams behind it, people who are willing to sit through governance, workflow fit, and organizational alignment from day one.
What it takes to move beyond a pilot
Over the past decade, health systems have been flooded with promising pilots that make early noise but fade as soon as the vendor team steps away. These “pilotware” products are built to capture attention and spark conversations, but they rarely survive hospital IT backlogs, staffing shortages, or governance requirements.
Companies can avoid this trap by treating future growth as a foundation, not a later stage. Decision makers need to work backwards from scale, building software architecture and commercial architecture together. This shift alone helps teams make smarter choices within the first 90 days of a product’s launch.
The governance roadblock no one likes to talk about
Health tech is often built to impress value-seeking stakeholders and delight end users, while overlooking the actual gatekeepers. As a result, a configuration may succeed in a pilot but fall apart when it reaches governance and security checks for full deployment.
Over time, products accumulate sign-off debt, with opaque models, undocumented changes, ad hoc integrations, and weak monitoring. This makes it almost impossible for legal, quality, and risk teams to approve them.
From a hospital’s point of view, governance is simple and concrete. Their executives should seek answers from their vendors on: If they have SOC 2? How do they handle PHI access? Where do they sit in our architecture? Can they sustain this for five years? If a product vendor is unable to address those questions confidently, it is better to pause the pilot.
The real path forward is to run pilots that are designed not just to impress internal stakeholders but to meet governance expectations from the start.
Frictions that wear clinicians down
By the time a pilot goes live, teams are already pushing against change-resistant staff. A typical U.S. health system juggles EHR upgrades, new quality programs, staffing issues, reimbursement changes, and facility projects all at once. The very people who try to support a new pilot and test it are already stretched.
In this environment, tools that add extra clicks, duplicate work, or force context switching create silent friction. No single issue is the cause, but together they form a time tax that clinicians pay every shift, long after project teams have moved on.
To avoid this, founders need to treat time and attention as clinical safety constraints, not optional UX preferences. Pilots gain adoption when they give a nurse back 20 minutes per shift or let a nephrologist see two more complex patients a day. When your staff meet healthtech vendors less like software companies and more like change partners, who back them up for anything or everything, they engage better.
Why mid-size hospitals need a different approach
Another reason many health tech products fail to scale is that they are designed for the capabilities of large medical centers, while most U.S. care happens in mid-sized community hospitals. These hospitals run on thinner margins, smaller analytics teams, and limited bandwidth for long projects.
What they need is a genuine mid-market deployment strategy, which means lighter integration, smaller implementation footprints, and rollouts that a 250-bed hospital can handle without disrupting operations. When a product can go live in months instead of years, and stay stable without constant vendor support, its chances of long-term adoption improve significantly.
At that point, clinical deployment stops feeling unrealistic. It becomes the natural outcome for products built around the realities of American healthcare, not just the promise shown in their pilots.
Picture: Mykyta Dolmatov, Getty Images
Sanket Patel is the co-founder of Digicorp with more than 20 years of experience in the Healthtech space. He brings together business insight, product thinking, and strategy to build strong partnerships across the Healthcare spectrum. He has contributed to products like EHR, QCare+, Exercise Buddy, and MePreg, and has supported the growth of ventures such as TechSoup, Cricheroes, and Rejig. Outside work, Sanket is a road tripper, a regular on trekking trails, a tech enthusiast, and a film buff.
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