When the Rules Change, Leaders Pivot. Is Your Healthtech Ready?
By: Karen Johnston
Healthtech in a Time of Change
The healthtech sector — from early-stage innovators to established device makers — continues to be one of the most dynamic corners of the industry. Investment interest remains high, but new waves of federal regulatory change and policy shifts are shaping the environment in which companies operate.
PACT members and partners need to be asking how healthtech leaders can keep momentum, protect value and position their organizations for long-term success in an unpredictable environment.
Every moment of change is an opportunity to reset and reorient around business, mission and customer outcomes. Instead of letting uncertainty stall progress, forward-thinking companies use it as a moment to fine-tune their approach and act with precision.
Three Critical Areas for Healthtech Leaders to Watch
1. Rising Expectations for Data Security and Risk Management
In late 2024, the U.S. Department of Health and Human Services (HHS) proposed updates to the HIPAA Security Rule that would require more formal risk management and enhanced data protection, including:
- Mandatory encryption of all electronic protected health information (ePHI), both in transit and at rest.
- Multifactor authentication for system access to prevent unauthorized breaches.
- Annual risk assessments and vulnerability scans to identify and mitigate threats.
- Network segmentation to isolate sensitive systems and reduce exposure during cyberattacks.
- Elimination of “addressable” safeguards — all security controls would be required.
Even though the final form of the rule is still in question, these updates point to a broader trend of stricter security requirements for handling health data.
Action steps for healthtech leaders:
- Conduct a gap analysis against the proposed requirements.
- Update risk assessments and documentation practices.
- Inventory all technology assets and create data maps for ePHI flows.
- Review vendor contracts for security compliance.
- Budget for potential upgrades and staff training.
2. Shifts in FDA Structure and Policy Direction
Changes in FDA leadership have set the stage for policy and administrative reforms. The agency is restructuring internally, and the incoming commissioner has highlighted a commitment to streamlining internal processes and reducing administrative delays.
FDA developments include:
- Staff reduction announced in April 2025, across a range of administrative and policy roles.
- Shift of policy development to HHS, reducing FDA autonomy in issuing guidance.
- A temporary freeze on pending FDA rules until the new commissioner takes seat.
- Anticipated deregulation, creating uncertainty about which rules apply moving forward.
Action steps for healthtech leaders:
- Build longer regulatory timelines into product roadmaps.
- Strengthen internal compliance expertise.
- Maintain open lines of communication with FDA staff.
- Keep thorough internal documentation for every stage of development.
For companies in digital therapeutics, AI diagnostics, and novel devices, staying engaged with regulators and actively contributing to policy discussions can help shape a clearer path to market.
3. Cascading Effects of New Medicaid Requirements
Recent Medicaid policy changes could lead to millions losing coverage over the next decade, which, in turn, reduces demand for reimbursable digital health services. This is a call to diversify for companies serving Medicaid or ACA exchange populations.
The cascading effects of Medicaid requirements include:
- More frequent tracking of work hours, exemptions, and renewals.
- Stricter documentation rules increasing data exchange and verification burdens.
- Higher patient copays and new rules reducing patient access, engagement, and adherence.
In today’s cost-conscious environment, healthtech leaders should focus on digital solutions that create measurable value and outcomes.
Action steps for healthtech leaders:
- Reassess payer mix and evaluate how cuts will affect margins.
- Demonstrate ROI to show customers how solutions reduce cost, improve outcomes or support care coordination.
- Support alternative payment models by aligning with ACOs, bundled payments or home-based care initiatives.
- Invest in interoperability to integrate tools into existing workflows.
Financial Levers to Fuel Growth
Amid the policy noise, there are also real financial advantages available to healthtech firms:
- 100% bonus depreciation on qualifying capital investments, retroactive to January 2025.
- Expanded Section 179 expensing for qualifying assets, helping small and midsized firms free up capital.
- Full R&D expensing restored, reclaiming deductions for software development, AI training, and clinical trials.
Adaptability as a Competitive Advantage
For PACT’s Healthtech community, adaptability is a competitive advantage. The companies that thrive will be those that can pivot quickly, deepen relationships across the healthcare ecosystem and remain laser-focused on delivering value to providers, payers and patients. Let Wipfli help. Learn more about our services for Healthtech companies.
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