The trend: Healthcare organizations are implementing commercial AI solutions at more than twice the rate (2.2x) of the broader US economy, according to a recent report from Menlo Ventures. Morning Consult and Menlo Ventures surveyed over 700 executives involved in AI decision-making across three healthcare sectors: provider organizations, insurance companies, and pharma/biotech firms.

• Over one in five (22%) of healthcare organizations have deployed domain-specific AI tools via paid commercial licences in 2025—a 7x YoY increase and 10x increase from 2023.
• That compares with 9% of US firms broadly, per a recent US Census Bureau Survey cited by Menlo Ventures.
• Healthcare AI spending reached $1.4 billion this year, nearly tripling 2024’s investment.

Zooming in: Provider organizations, particularly hospitals and health systems, dominate AI adoption in healthcare, accounting for 75% of the $1.4 billion spending total.

• Health systems have spent a combined $475 million on ambient scribe tools that transcribe doctors’ notes during patient visits.
• Health systems have poured another $400 million into AI-powered coding and billing tech that helps ensure providers get appropriately paid for the care they deliver.

How about pharma? Big Pharma firms with deep pockets are investing in AI applications to accelerate drug discovery and development, but some of those deals may not apply to Menlo’s definition of “paid commercial licenses.” The survey also notes that about two-thirds of pharma companies want to build or fine-tune proprietary models.

Why healthcare is so hot for AI: Over $5 trillion will be spent this year on US healthcare, per government estimates, but that outlay has not resulted in greater patient outcomes compared with other wealthy nations. Meanwhile, clinicians are overburdened, and billions of dollars are wasted each year on healthcare administration.

Healthcare executives believe that AI can improve these inefficiencies. Just 2% of health system C-suite leaders said they’re not interested in implementing AI solutions, per an August 2025 Sage Growth Partners survey. And the complexity of health and medicine makes domain-specific AI tools more valuable than general-purpose platforms like ChatGPT in many instances.

What it means for the healthcare AI market: The greatest current demand for AI in healthcare is among provider organizations that must improve doctors’ workflows and cut admin waste. AI startups and incumbents will compete by delivering revenue-driving capabilities that go beyond note transcription and earning physician trust through models that enhance diagnostic accuracy.

Comparatively, tech and AI companies building applications for pharma need to prove to potential buyers that their products shorten lengthy timelines for making a drug and bringing it to market, considering the billions pharma players pour into R&D—either by quickly identifying novel targets or by improving clinical study design to reduce trial failure rates.