The forces that may slow hospital AI growth

Artificial intelligence is transforming healthcare. From clinical decision-making to administrative efficiencies, AI and generative AI have made drastic improvements in care delivery and hospital operations. Forecasters reported hospitals incorporating AI are in a better financial position and more likely to thrive in the future as a result.

The change has been swift and striking, but one thing could bring the AI momentum to a halt.

"As important as AI is in shaping the future of healthcare, the industry faces a significant challenge," Stephen DelRossi, CEO of Northern Inyo Healthcare District in Bishop, Calif., told Becker's. "It is well understood that the new administration is seeking to reduce spending on government-sponsored healthcare. Cuts to Medicare funding can have serious consequences across the industry."

Republican lawmakers unveiled a plan in mid-January to reduce the ACA's Medicaid expansion match and lower the Federal Medical Assistance Percentage floor below 50%. While the move is expected to save $2.3 trillion, safety-net hospitals and those serving large Medicaid populations are concerned the cuts will further stress their organizations already at the brink of financial insolvency. Medicaid has been among the lowest reimbursing payers for years and facing potential cuts, hospital executives are turning to philanthropy and creative partnerships to avoid closure.

"For hospitals like mine, where approximately 70% of patients rely on some form of government-provided healthcare, these reductions in reimbursement could potentially lead to the closure of our facility, devastating the Eastern Sierra community for hundreds of miles around."

New technology platforms are significant investments for health systems on a limited budget. Despite the challenges, Mr. DelRossi sees AI as being the "most significant investment" for operational improvement in the next two years. The hospital has already seen big improvements based on AI incorporated over the last two years.

"AI has made remarkable strides by streamlining menial, non-value-added services and increasing accuracy," he said. "It has demonstrated substantial positive effects on non-clinical operations, including registration, authorizations, coding, billing, denial management and cash posting, among others."

The hospital also incorporated AI into clinical diagnostic imaging, early disease identification and detection, as well as drug discovery. He sees further advancement in this area on the horizon, as long as the hospital can keep its doors open.

Possible regulatory changes and policy updates around AI in healthcare could affect hospitals as well. State and federal government policies are evolving, and any new guardrails on AI may affect the ease of incorporating the technology into clinical and operational workflows.

"One major concern is the growing focus on AI by state and federal regulatory agencies, which could significantly impact how AI is utilized in patient care and IT environments," Nick Sturgeon, vice president and CISO for Community Health Network in Indianapolis. "For example, the recent guidance from HHS/OCR on web tracking technologies has already created considerable challenges for healthcare organizations. If similar restrictive measures are applied to AI technologies, the consequences could be far more severe."

President Donald Trump revoked former President Joe Biden's executive order for an AI roadmap in healthcare. But the potential for hallucinations and bias within AI models looms large and could require swiftly tightening oversight in the future.

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