Artificial intelligence could save healthcare industry $360B a year
Artificial intelligence could save the U.S. up to $360 billion annually if adopted more widely in healthcare, according to a new report from McKinsey and Harvard researchers.
That’s a big “if,” as AI uptake has been limited in the industry due to a lack of trust among patients and doctors, heterogeneous data and misaligned incentives, the researchers said.
But broader adoption of AI is likely in the near future, and should also have a slew of non-financial benefits like better healthcare quality, increased care access and better patient and doctor satisfaction, according to the paper.
The buzz around AI has increased as the ChatGPT model takes the internet by storm. It’s no different in healthcare. The ChatGPT AI tool has passed the U.S. medical licensing exam, authored a number of scientific papers and is being used to appeal insurance denials, hinting at real-world applications for the algorithms.
However, actual adoption of AI-based tools in the healthcare industry is low, despite research suggesting benefits of the tech.
In the new paper, researchers estimate that broader adoption of AI could lead to savings between 5% and 10% in healthcare spending, or roughly $200 billion to $360 billion a year. The estimates are based on AI use cases employing current technologies that are attainable within the next five years, without sacrificing quality or access.
For hospitals, the cost savings come mostly from improved clinical operations, quality and safety — like optimizing operating rooms, or detecting adverse events. The benefits are similar for physician groups, which could leverage AI for continuity of care, like referral management.
Health insurers would see savings from use cases that improve claims management, like automating prior authorization, along with healthcare and provider relationship management, including preventing readmissions and provider directory management.
Based on the AI-driven use cases, private payers could save roughly 7% to 9% of their total costs, amounting to $80 billion to $110 billion in annual savings within the next five years. Physician groups could save 3% to 8% of costs, amounting to between $20 billion and $60 billion in savings.
Meanwhile, hospitals could see savings between 4% to 11%, or between $60 billion and $120 billion each year, the report estimates.
Despite the potential benefits of AI in healthcare and rising funding in the space, the use of AI by doctors for clinical cases is still hit-or-miss. A recent study published in JAMA found a “paucity of robust evidence” to support claims that AI could enhance clinical outcomes.
Despite that, the Food and Drug Administration has been accelerating approvals of medical artificial intelligence tools, authorizing more than 520 devices as of November. And, experts believe 2023 could be an inflection point for adoption as more evidence around AI’s efficacy in real-world settings emerge.