Health-E Law Podcast Ep. 21
J.P. Morgan Healthcare 2026 and Beyond: Technology Adoption and Strategic Transformation Under Cost Pressure
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Listen to the podcast released February 20, 2026, here:
https://www.sheppard.com/insights/podcasts/health-e-law-episode-21-jp-morgan-healthcare-2026-and-beyond-technology-adoption-and-strategic-transformation-under-cost-pressure
Welcome to Health-e Law, Sheppard’s podcast exploring the fascinating health tech topics and trends of the day. In this episode, partner and host Michael Orlando welcomes Eric Newsom, partner and Transactions lead of Sheppard’s national Healthcare industry team, to discuss key takeaways from the 2026 J.P. Morgan Healthcare Conference and explore what growing AI adoption, shifting reimbursement models and evolving macroeconomics mean for M&A and strategic partnerships.
About Eric Newsom
Eric Newsom is a partner in the Corporate practice group in Sheppard’s San Francisco office and serves as Transactions lead of the firm’s national Healthcare industry team.
Eric’s nationwide practice focuses on mergers and acquisitions, strategic joint ventures, corporate reorganizations, private equity and venture capital transactions, and corporate governance and compliance matters. Eric has represented buyers, sellers, investors and intermediaries in numerous business combinations, buyouts and investment transactions, with particular emphasis on the healthcare industry.
In his healthcare and health technology practice, Eric advises on mergers, acquisitions, affiliations, comprehensive corporate reorganizations, multi-channel joint ventures, and private equity investment and disposition transactions. His experience spans for-profit, nonprofit, and government-owned hospital and provider systems; academic medical centers; health plans; physician groups; ambulatory and specialty service providers; and startup and growth-stage companies in the healthcare information technology sector.
About Michael Orlando
Michael Orlando is a partner in Sheppard’s San Diego (Del Mar) office. He is team leader of the firm’s Technology Transactions team, a member of the Life Sciences, Healthcare and Artificial Intelligence teams, and co-leader of the firm’s Digital Health & Innovation team. Michael has more than 20 years of experience advising health technology companies, insurers, healthcare systems and providers, academic medical centers and research institutions, medical device manufacturers, and pharmaceutical and wellness companies on intellectual property and business transactions in key strategic areas, including EHR systems procurement and integration, telehealth, mobile health applications, clinical decision support technologies, artificial intelligence, data use, wearable devices, remote patient monitoring, and other medical devices, research and collaborations, patent licenses, software licenses, joint ventures, mergers and acquisitions, revenue cycle management, and other outsourcing transactions.
Michael founded a software-as-a-service company before entering private practice and completed an in-house secondment at a publicly traded biotechnology company, an experience that informs his practical and business-focused approach to client engagements.
Transcript:
Mike Orlando:
From hospital boardrooms to startup war rooms, this is Health-e Law, powered by Sheppard’s Digital Health and Innovation team. We bring you quick and candid conversations with industry leaders, bringing sharp analysis and critical insights into what’s next.
Hi, welcome to Health-e Law. I’m Mike Orlando, a partner on Sheppard’s Digital Health and Innovation team, and your host for today. Today’s guest is Eric Newsom, who is the transactions lead of Sheppard’s National Healthcare industry team, which was recently named “Healthcare Practice Group of the Year” by Law360 for the fifth time. Eric is based in San Francisco, but his practice is national. His focus is on mergers and acquisitions, strategic joint ventures and private capital investment transactions, as well as corporate governance and compliance matters involving health systems, health plans and physician practices nationwide. Eric has ear-to-ground leadership and offers clients a broad perspective on their experience in this complex industry. Welcome, Eric.
Eric Newsom:
Thanks, Mike. Look forward to chatting with you.
Mike Orlando:
There’s a growing focus on AI platforms for healthcare among both investors and operators. How were these trends addressed at the recent J.P. Morgan Healthcare Conference?
Eric Newsom:
My focus is generally on trends that influenced change in the healthcare industry, seen through the lens of what I do, which is mergers and acquisitions, affiliation transactions and joint venture transactions. So, when I comment on AI, it’s not that I’m in the weeds with on the ground looking at AI as it rolls out into hospital systems and physician practices, more how I see it affecting larger transactions that health systems, payers and physician practices enter into. As it relates to AI, what I’m seeing generally is that we’re getting to a place, finally, where most of the larger systems, provider systems, payers, physician practices do actually have an AI strategy and a process in place. By which I mean, a comprehensive, well thought through strategy, written AI policies, dedicated personnel and an internal structure by which they review, adapt AI technologies within their ecosystems, whether it’s a hospital system or a physician practice or some other healthcare platform.
And I do think that the promise of AI in healthcare really can’t be underestimated. We’re in early days, but what we are seeing, again, in transactions, is the potential for really transformational change, and we heard a lot about this at the J.P. Morgan conference. We heard a lot of rosy stories about uptake and innovations and what it can mean to reduce costs, increase efficiencies in the healthcare system and ultimately reduce costs for patients as well. But, we also heard at JPM, and in the events surrounding JPM—it’s a whole ecosystem of presentations, round tables, cocktail parties, and the like—was that a lot of people are still lagging behind even the large systems, some of which are catching up sort of antiquated hospital systems that are coming around to understanding what AI means in the new world. An example is what we call shadow AI, which is sort of a new term of art that we’re hearing a lot about, referring to the unauthorized use of AI tools and applications by employees or end users without any sort of approval or oversight from an IT’s department, a security department within an organization.
And without getting into this boring legal details, it presents significant risk, financial risk, legal risk, regulatory risk to an organization that finds its using AI when it’s not even understanding that it’s using AI. By which I mean, an example, we have incredible regulatory and healthcare technology colleagues that help us conduct transactions and undertake due diligence, or even outside the context of a transaction, conduct an AI audit for, say, a hospital. And whereas oftentimes you’ll talk to the CFO, the COO, the CTO, the CIO, the chief officers of the system, who will express confidence that they’re not using AI much in their practice. When we go in and actually conduct an audit of their personnel, more often than not find that their personnel, whether it’s physicians, PAs, nurses or administrators, are using AI in an unauthorized, unstructured manner. They’ll find a public gen AI tool like ChatGPT and use it to draft patient notes and brainstorm diagnoses.
And so, in many ways, the people in healthcare are outpacing the institutions. And that’s a real risk that we see in larger systems and especially in smaller systems, where honestly most of us see our care. What we’re seeing on the ground is kind of a slow-growing chaos in the context of a lot of personnel using AI without any necessary oversight. And I think this will get better as systems catch up, invest more in AI, and work more with their physicians and other professionals to integrate systems and make them really work well throughout the organization for patients and the systems themselves.
Mike Orlando:
So you mentioned investment and adoption, and so what factors do you see when working with clients that are practically driving that adoption or investment in these technologies?
Eric Newsom:
Well, I think there’s an exorable move towards adoption of technologies. You can’t help but hear, you look at what’s going on in the world, you look at the inevitability of AI in the legal profession, as well as in the healthcare profession, really in any profession. And you can’t stop the progress of technology, especially when it’s available to everybody that works for you on their phone. So, it’s something that you either need to get on board with or watch it pass you by. So I think that’s really what’s pushing systems, and even independent hospitals that are public entities that really don’t have a lot of money, they’re faced with the prospect of their entire staff using AI unless they get ahold of it themselves and adopt their own technology or bring a technology into play in the ecosystem in which they operate. So, it’s happening whether you like it or not. And if you close your eyes and cover your ears, you’re going to wake up well behind the curve, and you’re not going to be able to sell your services and enter into strategic transactions with other people. If you want to sell or merge with somebody else, and in 2026, you can’t demonstrate any AI adoption strategies or platforms, healthcare is going to pass you by.
Mike Orlando:
All right. Let’s talk about a different aspect of technology reimbursement and macroeconomic factors that are affecting these reimbursement models. So, as these models change and macroeconomic factors such as the expiration of ACA subsidies evolve, what adjustments are you seeing with payers and providers in the M&A context and with joint venture strategies?
Eric Newsom:
Sure. So, just to sort of set the stage to what healthcare is looking at right now, we’re at a real inflection point, both because of the technology we just discussed and the inexorable move towards adoption of AI and other technologies. But also, there are many macroeconomic factors at play, driven in some cases by politics, in some cases by the economy outside of politics, that are resulting in some very strong headwinds that the healthcare industry, in particular, is facing. The expiration of the Affordable Care Act subsidies, which were enacted with the ACA and served to lower premium costs for people covered through a state or federal marketplace, has expired. That was the focus of the government shutdown last year. We do not have a long-term fix in place for it, and it is a big deal. Without these ACA subsidies, we’re going to see a steep reduction in health plan enrollment.
We’re going to see, no exaggeration, millions of people lose coverage. Those people largely being low-income and high-need populations. And it’s going to, in turn, result in an increase of people seeking emergent care, showing up at the hospital when symptoms become acute, and they have to walk into the emergency room, which is the most expensive place to get care at the most expensive time and place to seek care. In terms of numbers, the Congressional budget office is projecting something like a trillion dollars in Medicaid cuts over the next decade. The system is going to lose $30 to $40 billion in revenues and see a massive spike in uncompensated care. A lot of Americans, they say, are going to lose coverage. And what this means is that whether you’re a payer, a provider, an institutional investor that invests in payers and providers, you’re going to need to be resilient and really think about how to adapt to a new world that’s a lot less certain how to think outside the box, both in terms of how you operate, who you partner with, and what technologies and other innovations you use to provide those services.
So, for the most part, I think the industry is in fact meeting the moment here. What we’re seeing in the industry is a rush towards technology innovation, as we talked about before. Basically, an aggressive move towards adopting technologies that make the delivery of healthcare and the implementation of those systems more efficient and more affordable for patients and the institutions that serve those patients. Eventually, this will make healthcare easier to access, more accurate, and, I think, more affordable for consumers. So that’s one thing that’s happening that I think is going to help respond to these macroeconomic headwinds. Another is a sort of a transformation in care delivery that we’re seeing through all of our clients and the healthcare world more generally, which is a move away from traditional care delivery at traditional care delivery centers, i.e., hospitals, where spiraling healthcare costs are most evident. You look in the news, and you see stories about $60 band-aids and $3,000 a night hospital rooms. Hospitals are the most expensive place to provide care, and as a result, people on a macro level are acknowledging that and moving away from that ecosystem.
So, hospital systems, as an example, are looking into investing in the environment, the ecosystem around the hospital. Moving to urgent care centers, ambulatory surgery centers, where minor outpatient surgeries can be done outside of the hospital context. And then, of course, home care. Home care itself, especially for the elderly, has become the darling of private equity investment and other outside investment. And then, telemedicine, of course, we all know. This transformation of the care delivery environment is where all healthcare players are moving to reduce costs, increase efficiency, and meet this moment in healthcare. One other macro environment that we see is related to both of the two points that I just made, but it is that traditional healthcare players are looking to generate revenues from places they’ve never generated them before. So if a hospital system realizes it’s going to be faced with a lot more emergent care from people who don’t have insurance, it needs to think about how else to generate revenues.
And it’s really the same for insurance companies and others as well. And there are a lot of ways in which these players are developing what we call revenue diversification strategies that you can see it played out in many ways, expanding lines of business. Whereas a health lab might traditionally just provide commercial offerings. They’re looking to expand into self-pay, Medicare, Medicaid to sort of diversify their sources of revenue. Healthcare providers are expanding services, as we discussed through urgent care centers, telemedicine, specialty clinics to reach different markets that they don’t already market. The big ones, the big players like CVS and others, are getting into non-clinical offerings, providing non-medical services like wellness programs and pharmacy. And then lastly, again, going back to what we see in the market and the transactions that we undertake, a lot of players in healthcare are looking to partner with players with which they would never have partnered in the past.
So it used to be, when I was a baby healthcare lawyer, that if you represented hospital systems, you really never would ever represent a payer, an insurance company or a physician group. They always operated in their own sort of verticals. Increasingly, inevitably, what’s happening now is all the players—and this includes healthcare investors like private equity funds and venture capital funds as well—all players are realizing that they have to operate with one another in order to increase efficiencies and sort of address the spiraling healthcare costs.
Mike Orlando:
So, last question for you, Eric. If you were to advise healthcare CEOs, CISOs, or GCs, what are the top three priorities they should focus on regarding structuring strategic partnerships and meeting the AI moment in today’s healthcare landscape?
Eric Newsom:
Good question, Mike. We’ve already spoken a lot about some of the ways that we’re advising the C-suite now. Of course they’re driving their own strategies, but when they come to us and offer us the opportunity to participate in their thinking, we talk a lot about, again, some of the things we’ve already spoken about: strategic AI integration and digital transformation, that they should be trying to drive value by prioritizing automation and AI to improve patient outcomes and streamline operations, fostering partnerships and collaborations across ecosystems to accelerate that innovation and to upskill their teams, by which I mean to really train their organizations up to invest in that transformational initiatives that are really going to help define the future of healthcare in America. Again, revenue diversification, which I mentioned before, is really essential these days. Again, the C-suite really needs to double down on efforts and strategies to generate income from a variety of sources rather than just relying on a single revenue stream as their predecessors may have done.
This is the only way, big picture, they’re going to be able to reduce financial risk, increase stability. This is the only way, really, that they’re going to be able to reduce financial risk, increase stability and support long-term growth into the future. And then the last thing, I think you asked for three priorities, is something I haven’t touched on before, and that’s generally speaking, the move towards value-based care, the move away from the fee-for-service model, and it has a lot to do with what I spoke about before. It really has to do with partnerships. It has to do with health plans and health providers from ambulatory care centers to hospital systems to physician groups working with one another to create a system of value-based care, by which I mean not just fee-for-service, fee-for-service, fee-for-service, which is basically the way we grew up in healthcare. You show up to your physician or hospital, they treat you, they provide a code, they get paid X dollars based on that treatment.
A value-based care model is really an effort by systems and payers and providers to redesign care delivery around aligned incentives, providing you resources and training, fostering a culture that’s focused on clinical outcomes, collaboration and continuous improvement in the way that these various players work together. What we’re seeing is the C-suite in all of our clients and all of the investors in their clients looking to see how they can bring value-based care to bear on their environment, and how they can work with, not against, the other verticals in healthcare, in this space that they are, in the area that they’re serving, whether it’s the geographic area or a service line. So that transformational, outside-the-box thinking is something that’s really hard to get your head around, again, if you are a traditional CEO of a smaller hospital system or an independent district hospital, but it’s really essential, and it really requires looking at the payers with whom you contract and the physicians with whom you contract as partners and not as competitors necessarily.
Mike Orlando:
So, Eric, is there one thing that you didn’t hear at J.P. Morgan this year that you think should have been discussed? This is a time for you to get up on your soapbox and give your thoughts about if there’s something you thought should have been a more priority at that conference.
Eric Newsom:
What I most remarked about stepping back and taking into account all that we saw and did at the conference was, despite all of the challenges, the headwinds that we just talked about, there is a real level of optimism around the future of healthcare and the ability of different players to partner with others in discussing these incredibly challenging issues and digging in as to how various actors are addressing them in their particular context. What we felt was, what I saw was a real optimistic view towards the future of healthcare in America. And I think that’s somewhat counterintuitive given all the negative messaging and the risks and the pitfalls and the headwinds that we’re facing. But the people that are operating in healthcare are obviously profit-driven, but most of them are mission-driven as well. And so, I think if you look around and talk to the players that you see coming out to a conference like JPM, you’re going to hear a lot more optimism than you are pessimism. And what I took away gave me hope that we’re all moving in the right direction.
Mike Orlando:
That’s great to hear. Thanks, Eric. I really appreciate the insights you gave today. It was really a great time to talk about those headwinds, the strategies, the technology and hear how things are progressing in that world. So, really appreciate you coming on today.
Eric Newsom:
Thanks for having me, Mike.
Mike Orlando:
That’s a wrap on this episode of Health-e Law, powered by Sheppard’s Digital Health and Innovation team, where health innovation meets legal expertise. Until next time, stay healthy and stay informed.
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