Redesign Health, Sheba's ARC Global Merge in $2 Billion Bet on In-House AI Innovation

Redesign Health has struck a deal that reframes how it wants to make money in healthcare technology: not by selling products to hospitals, but by building those products from inside them.

The venture and applied technology firm is merging with ARC Global, the innovation arm of Israel's Sheba Medical Center, in a combination valued at approximately $2 billion, according to a source with knowledge of the deal. Alongside the merger, the combined entity is acquiring AVIA, a digital health advisory and intelligence firm that has spent more than a decade helping U.S. health systems evaluate and implement new technology. All three transactions were announced Thursday and are pending final approvals.

Brett Shaheen will run the combined company as CEO. Stephen Klasko, the former Jefferson Health chief executive who took that system from a regional operator to a nearly $10 billion academic enterprise, becomes chairman. Eyal Zimlichman, ARC Global's founder, moves into the vice chairman role at Redesign Health. Sheba will remain ARC's flagship site even as its network, programs and team fold into the new structure.

The Scale Being Assembled

The combined footprint is substantial by health tech standards. Together, the organizations claim relationships with more than 100 health systems across five continents, with products and spinout companies reaching over 100 million patients. ARC contributes a network of 31 health systems and more than 300 hospitals in 12 countries, built on a clinician-led innovation model it has run since 2019. That model has backed more than 130 startups, including three unicorns, all of which continue operating independently under their existing investors.

Redesign brings the infrastructure side: company-building capital, engineering talent and a proprietary AI operating system. Launched in 2018, the firm has raised more than $1.5 billion from institutional, sovereign and strategic investors and has launched over 60 companies touching more than 15 million patients. It has already piloted the health-system-embedded model through partnerships with Mayo Clinic, UPMC Enterprises and Cedars-Sinai, and expanded internationally with venture studio hubs in Saudi Arabia and India last year.

AVIA rounds out the stack with distribution and credibility among buyers. Its intelligence platform is used by more than 90,000 health system leaders and staff to evaluate over 7,000 digital solutions, giving the combined company a built-in channel to the people who actually decide what technology gets adopted at the hospital level.

Why it matters

The thesis here is straightforward: health systems are being squeezed by rising costs, workforce shortages and rising demand for care, yet most lack the engineering bench to turn AI pilots into scaled deployments. Redesign's answer is to embed AI engineers directly inside hospitals so frontline clinicians, not outside vendors, identify the problems worth solving.

"Take a nurse manager who notices avoidable delays in patient discharge," said Aron Szanto, Redesign's head of technology. "They know the workflow and have an idea for improving it, but the hospital's IT team has to balance that request against many competing priorities, and an existing vendor's product may not fit." The combined company's pitch is to close that gap, then use its network to replicate anything that works across other member systems.

Financially, the model tries to turn hospitals into equity holders rather than just customers. Through ARC, health systems take ownership stakes in the companies their clinicians help create. "This is inherent to our vision of turning hospitals from cost centers to economic engines of growth," Zimlichman said. Szanto added that systems "can reinvest those returns in further innovation," positioning the model as a flywheel rather than a one-time technology sale.

Key risks

The valuation and the vision both carry execution risk that shouldn't be glossed over. Embedding engineers inside dozens of health systems is operationally heavier than running a traditional venture studio, and the track record of healthcare innovation labs translating into durable, scalable businesses is mixed at best across the industry. Three unicorns out of 130-plus ARC-backed startups is a respectable hit rate for early-stage innovation, but it also underscores how much of this portfolio remains unproven at scale.

There's also concentration risk in leadership continuity. The combined entity is betting heavily on Shaheen, Klasko and Zimlichman to align three distinct organizational cultures, Redesign's venture-capital DNA, ARC's clinician-led model, and AVIA's advisory business, into one coherent operating company. Integration risk is real whenever three entities with different incentive structures and geographic footprints merge simultaneously rather than sequentially.

Regulatory and competitive dynamics matter too. AVIA's acquisition still requires final approvals, and the broader healthcare AI market is crowded with well-capitalized vendors, consultancies and health-system-backed venture arms all chasing the same pilot-to-scale problem. Klasko's framing, that "healthcare has consultants who diagnose, vendors who sell and investors who fund, but there has never been one player inside the hospital that can pinpoint the problem, build the solution and share in the result," is a strong differentiation claim, but it will need to hold up against incumbents with deep pockets of their own.

What Investors Should Watch

The company has not yet named its founding health systems, a disclosure expected in the coming months that will serve as an early signal of how much institutional buy-in this model can command. Investors and industry watchers should also track measurable adoption metrics once named: clinical and operational outcomes, financial impact, and how equity value gets distributed back to participating hospitals.

Shaheen has framed success as repeatability, the ability for an AI tool built at one hospital to be adopted at the next "rather than start from scratch." That's a testable claim. If the combined company can show even a handful of cross-network deployments within the next 12 to 18 months, it will validate the $2 billion valuation. If scaling proves as slow and fragmented as it has for most healthcare innovation efforts, the premium attached to this merger will look optimistic. For now, the deal represents a credible, well-capitalized attempt to solve a real problem. Whether it becomes the exception to healthcare innovation's historically poor scaling record remains the open question.