Health care organizations are navigating a new era marked by shifts in interest rates, inflation, political dynamics, competitive pressures and labor shortages. Additionally, recent years have brought regulatory changes such as drug pricing controls, price transparency for services and supply chain disruptions. These challenges necessitate innovative solutions to maintain efficiency and profitability. With rising labor costs, workforce shortages, physician burnout, and an increasing aging population, many organizations are increasingly turning to technology solutions to address ongoing operational challenges.
Health care organizations, once accustomed to operating in a low-cost capital environment due to zero-interest rates, are now facing a new reality. Previously, more health care organizations could afford to experiment with technology investments, as the cost of mistakes was less severe. However, with higher interest rates, the cost of deploying capital has increased significantly. This shift means providers can no longer switch as easily between technology solutions or allocate capital without long-term returns. Higher financing costs have reduced executives’ margin for error when allocating scarce capital to new projects. Consequently, investments, whether in people or technology, must now deliver high organizational returns and require more rigorous due diligence upfront.
A survey conducted by Klas Research and Bain & Company indicated approximately 75% of provider and payer respondents cite increased IT investments over the past year, including investments in IT infrastructure and services such as cybersecurity, clinical workflow optimization, data platforms and interoperability, and revenue cycle management. In addition, nearly 15% of providers said they have an AI strategy today compared with 5% in 2023.
The promise of AI
AI has been hailed as a key solution for boosting operational efficiency and enhancing patient care and support. By automating routine administrative tasks, AI frees up health care providers’ time for more critical tasks, thereby reducing physician and clinician burnout.
The effectiveness of AI technology in patient care, however, hinges on the quality and diversity of the data used to train generative AI systems. Broad and diverse datasets help mitigate biases that can arise from homogenous data, leading to more reliable outputs. Diverse data sources enable the identification of trends and risk factors, allowing for personalized patient care. To ensure comprehensive AI assessments and minimize unintentional biases, data must be drawn from a larger population than what is available within a single health system network, country or continent.
Providers will also need to navigate regulatory challenges associated with implementing AI. Lawmakers are particularly concerned about data privacy and the potential for cyberattacks, especially with generative AI. AI products classified as medical devices, which includes devices that impact decision-making or patient care, fall under the U.S. Food and Drug Administration’s jurisdiction.
Collaboration is key
Health care organizations should embrace AI to meet future demands. To achieve this, they need to collaborate with other providers or partners to reduce the capital required for effective AI utilization and address regulatory concerns.
For the benefit of the broader population, providers should develop methodologies to work together, generating solutions that enhance the effectiveness of AI. Sharing data and best practices for integration and implementation are crucial and increase the effectiveness of AI solutions.
Additionally, working with government agencies to establish regulatory compliance that supports technological advancement while ensuring patient safety is essential. The collaborative approach will help health care organizations navigate the complexities of AI adoption and help with the delivery of high-quality care.
Michael Haas
Michael Haas is a technology management consulting manager in RSM US LLP’s health care industry practice. In 2022, he was selected for the firm’s Industry Eminence Program as a senior analyst covering the health care industry, working alongside the firm’s chief economist and other program participants to analyze the trends and themes affecting the nonprofit and education industry and shaping middle market businesses. Michael is based out of RSM’s New York City office.
Rebekuh Eley
Rebekuh Eley is a health care senior analyst with RSM US LLP.
