Healthcare CEOs boost AI spending, but want quicker returns

The leaders of healthcare organizations say they see the potential of artificial intelligence, and they are boosting spending on AI.

KPMG surveyed more than 1,300 CEOs, including healthcare leaders, about their business priorities and concerns in the coming years.

Four out of five healthcare CEOs (80%) said they see AI as a top priority, even in the face of economic uncertainty, according to the KPMG survey.

And they aren’t just looking at pilot programs or small investments. Three out of four healthcare leaders said they anticipate spending 10–20% of their budget on AI in the next 12 months.

Drew Corrigan, KPMG’s U.S. healthcare sector leader for healthcare, tells Chief Healthcare Executive® that it’s clear health organizations are poised to spend more heavily on AI.

“The amount of money that they're willing to put towards something that isn't necessarily a guarantee … that caught my attention,” Corrigan says. “They are going in lock, stock, and barrel."

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Corrigan says he wasn’t necessarily shocked by the fact that healthcare organizations are investing in AI, but he said it is surprising that so many leaders have quickly moved beyond just interesting concepts and are planning to pour significant resources into AI tools.

In health systems, about half of the spending is on labor. Still, for larger health systems, investments of 10-20% of their budgets into AI would potentially represent billions of dollars.

For larger health systems, “Even a 10% number is a massive number,” Corrigan says.

Many healthcare CEOs say they’re spending significantly on AI, but they are also indicating that they want to see the dividends from those investments.

“Not only do they put their money there, but they're also coming with big expectations,” Corrigan says.

Increasingly, healthcare leaders say they are expecting to see a return on AI investments in a shorter timeframe than other spending. Among healthcare CEOs, 70% said they expect to see a return within one to three years.

In the past, health systems have waited several years to see returns on some technology investments, but Corrigan says organizations are less willing to wait for long periods before getting some dividends.

“The one- to three-year fuse is quick,” he says.

“Your people are going to want to see something fast, a lot faster than maybe we're all used to,” Corrigan continues. “I think that the proof is in the pudding, how fast they can actually do that, and how do they quantify it, which will be something I think will kind of evolve as this kind of rolls out.”

Most healthcare leaders said they are changing their workforce strategy over the next two to five years in response to AI, with 71% saying they are focusing on efforts to retain talent. Health systems say they are investing more in AI tools, such as ambient documentation, to reduce stress on workers and help boost retention.

Healthcare organizations are likely to face growing financial pressures in the coming years, and Corrigan says that’s likely driving their larger investments in AI. With significant cuts projected in Medicaid programs over the next decade, millions of Americans are expected to lose coverage. Health systems face the prospect of less funding and an increase in patients without insurance and no way to pay for care.

Health systems are looking at AI solutions to streamline operations and automate some tasks, especially as they look at a more difficult financial landscape. And AI offers some potential for health systems to do more with fewer resources, Corrigan says.

“If you look at the macro situation, with the Medicaid cuts and all the other things that are happening, these are such big fundamental changes that to be able to address it from a cost standpoint, there needs to be a fundamental change in how the business runs,” he says.

Even with that potential for AI tools to boost healthcare organizations’ productivity and efficiency, Corrigan says AI companies are going to have to deliver on those hopes.

“Over the next couple of years, we should be having some real results, or there's going to be some disappointment, I think,” Corrigan says.

Healthcare leaders expressed plenty of optimism about AI in health care at the HLTH conference in Las Vegas last month. Tom Mihaljevic, MD, president and CEO of the Cleveland Clinic, said he is very enthusiastic about AI applications in health care during a discussion on the main stage at HLTH.

Noting challenges with affordability and access to high quality care, Mihaljevic said, “They cannot be solved unless we embrace artificial intelligence.”

Other surveys have shown that healthcare leaders show growing enthusiasm for AI. In a Sage Growth Partners survey, most healthcare leaders said they see the potential for AI to improve clinical decision making, but most said they don’t have a clear strategy for AI.