EHR giants have entered the AI arena. What does it mean for startups?

Do AI startups still have a competitive advantage?

Though the introduction of AI-native EHR capabilities changes the health AI landscape, startup leaders believe their competitive advantage is alive and well.

According to Matt Troup, clinical strategy principal at Abridge, the newly launched in-EHR capabilities underscore the demand for what Abridge has built. The company provides a generative AI-based clinical documentation solution that summarizes and structures clinical notes from patient-provider interactions in real time. Troup noted that what differentiates Abridge, even amid the new competition, is the fact that the company has been AI-focused since its inception in 2018.

"I think what we've proven is we can do this as well as anybody and really target specific needs for clinicians," he said. "We know the problems innately, and we are trying to apply AI to those specific problems and those specific workflows in a way that I think is really unique and then, of course, validated by the market with our size and scale."

Troup added that the company has been able to demonstrate value at scale. And given the change management challenges associated with technology implementation, health systems may find it hard to switch tools, giving Abridge a leg up with its existing customers compared to the AI-native EHR capabilities.   

Not only that, but Abridge is available through multiple EHRs, including Epic, allowing clinicians to access the tool regardless of the EHR their practice is tied to.

"We still have a deep relationship and a great relationship with Epic, and it's our privilege to co-design and co-develop across many different opportunities and new features coming out," Troup said. "But we still believe that we can be this system of intelligence across all different platforms and really support clinicians wherever they interact or wherever they practice."

Kevin Wang, chief medical officer at Suki, echoed Troup's view that health AI startups have had a head start in the AI landscape compared to the EHR incumbents. Suki offers ambient clinical intelligence technology that supports clinical documentation, clinical reasoning and the revenue cycle.

"[EHR companies will] start the path of learning and enhancement that Suki's probably seen," he said in an interview. "I think EHRs will begin to develop a lot of capabilities where I would say soundly Suki has a very large head start."

Additionally, he highlighted that EHRs can vary across a health system, and in those cases, companies like Suki could provide integration capabilities. For example, a health system's hospitals may use Epic, but its purchased provider groups use PointClickCare. A solution like Suki can work across these disparate systems, Wang noted, providing a layer of integration that EHR-specific AI tools cannot.

"Integration is the piece where it's not a Suki pivot, but I would say it's a Suki emphasis," said Wang.

Navigating the evolving health AI arena   

Health AI companies, particularly those focused on easing administrative burdens, have experienced exponential growth in recent years. Kumar said that, even though there have been questions about the sky-high valuations of health AI companies, they were not entirely unfounded.

"There were fundamentals behind them," he said. "These companies were delivering value. Their customers were satisfied that there was product market fit, and they were growing very quickly."

However, the market has changed with the introduction of both in-EHR capabilities and newer AI companies offering lower prices. In this highly competitive market, Kumar expects greater fragmentation in the coming years. So, the question becomes: how do established AI startups continue to grow?  

"We know healthcare is a massive market, but how do you maintain that growth rate?" Kumar said. "I think that's going to be a big challenge."

AI startups are creating value by optimizing back-end administrative functions and supporting clinical decision-making, but these companies are now flooding the market and competing for the same set of funds, he added.

One approach AI startups can take is to ensure they keep zeroing in on their product. Kumar noted that large EHR companies have numerous priorities, whereas an Abridge, Suki or Nabla can focus on its niche and deliver the most cutting-edge solution possible.

"EHRs can only do so many things," he said. "They only have so much bandwidth. And I think it's very helpful to say, what lane are we going to pick that we can win and do better than someone else? Any of these big companies -- they have a hundred different priorities."

This type of laser focus will also benefit AI startups exploring agentic AI workflows. Moving beyond automating some fragments of the clinical workflow to creating end-to-end agentic workflows could help set them apart from health IT incumbents, Kumar suggested.

According to Troup, Abridge has already taken steps to move beyond offering an AI point solution.

"We believe if you go as upstream as possible and focus on the clinical conversation that happens between a clinician and patient, and you really are able to use AI to extract all different types of information and accomplish different tasks from that conversation, you can really impact so much of other parts of the healthcare system that happened downstream of that conversation, whether it's documentation, orders, codes, all types of billing needs, prior authorization," he explained.

Wang also sees partnership opportunities in the market for ambient AI scribing tools outside of clinical documentation. For instance, specialty pharma companies need help identifying patients for clinical trials. Tools like Suki can help them find the appropriate patients.

"We don't have to compete feature-for-feature…These kinds of opportunities come up all the time, and they're not just in the EHR," he said. "They're actually in a wide variety of areas."

According to Kumar, AI startups that can deliver cutting-edge tools and provide integrated services across the care continuum will continue to interest investors, helping them bolster their businesses' sustainability and defend against headwinds from legacy EHR companies.

"When we look at the space, we ask the question, is there some ability to derive defensibility in the medium to long-term?" Kumar said. "And honestly, it's challenging in this space because it changes so, so fast. This is probably, especially in healthcare tech, the most innovation and the fastest rate of change that we've ever seen, but it also creates opportunities."

"So, whether that means bringing in some degree of service components, forward deployed engineers, doing something that is more difficult for a legacy company to keep up with, that's what we're looking for," he stated.

Anuja Vaidya has covered the healthcare industry since 2012. She currently covers the virtual healthcare landscape, including telehealth, remote patient monitoring and digital therapeutics.