The old playbook — consolidate, standardize, exit at a higher multiple — is losing altitude. Sponsors are betting that embedded artificial intelligence is the next engine of value creation.
For most of the past two decades, private equity in healthcare operated on a simple formula: buy fragmented provider groups, extract operational efficiencies through scale, leverage up and flip.
That model is under strain.
Regulatory scrutiny of physician roll-ups has intensified, higher interest rates have compressed leverage-driven returns and limited partners are growing impatient with financial engineering dressed up as value creation.
The industry’s response, increasingly, is AI.
Healthcare PE hit a record $191 billion in global deal value in 2025, with health IT alone doubling to roughly $32 billion, according to Bain & Company. But the more telling signal is how sponsors are framing their investment theses: not as consolidation plays, but as technology transformation stories in which artificial intelligence is the operative variable.
Nowhere is that clearer than in revenue cycle management (RCM), where labor shortages, reimbursement complexity and relentless administrative cost pressure have made automation an imperative rather than an option.
TowerBrook Capital Partners and Clayton, Dubilier & Rice took R1 RCM private in an $8.9 billion deal in late 2024, then moved quickly to partner with Palantir Technologies on an AI-driven initiative targeting coding, billing and denials management — the most labor-intensive, error-prone corners of the revenue cycle.
New Mountain Capital has been applying a similar logic more aggressively than almost anyone else. The firm assembled what amounts to a payment integrity stack from scratch by combining The Rawlings Group, Apixio’s payment integrity unit and Varis before putting them all under the AI-native platform Machinify, acquired in early 2025. Performant Healthcare was added for $670 million in October.
The resulting entity, operating under the Machinify name, handles hundreds of millions of claims annually and covers more than 170 million patients.
Separately, New Mountain combined Access Healthcare with AI vendors SmarterDx and Thoughtful.ai to create Smarter Technologies, an AI-powered revenue cycle management platform processing over $200 billion in annual revenue across 60-plus hospital clients.
Welsh, Carson, Anderson & Stowe is threading a related narrative into its Fund XV fundraising, targeting at least $5 billion. The firm is pointing to portfolio companies like Argos Health — which applies machine learning to complex claims recovery — and Lumexa Imaging, which went public on Nasdaq in December at a $1.9 billion valuation on the back of AI-assisted diagnostic tools for radiology. WCAS argues that 47 years of investing across both healthcare and technology gives it a structural advantage in identifying platforms where AI can be embedded, rather than acquired at a premium.
Veritas Capital, already a co-sponsor of analytics giant Cotiviti in an $11 billion recapitalization alongside KKR (NYSE: KKR), extended its health IT footprint further in early 2026 with a majority stake acquisition of Global Healthcare Exchange, a supply chain and decision-support platform whose AI automation has reportedly delivered more than $27 billion in savings to customers over three years.
KKR and Patient Square Capital are also circling. Patient Square took Premier — a data analytics and group purchasing platform serving large health systems — private for $2.6 billion in late 2025, signaling continued PE appetite for healthcare infrastructure assets with embedded data and AI capability.
The through-line across all of these transactions is the same bet: that AI embedded inside operating healthcare platforms will prove a more durable source of exit multiple expansion than operational consolidation alone.
The firms that can operationalize that capability — rather than paying venture-style premiums for standalone AI startups — may end up writing the next chapter of healthcare private equity.
