A new report from PwC challenges the expectation that artificial intelligence (AI) will lower healthcare expenses by streamlining processes such as reducing paperwork or automating documentation. Instead, the 60-page analysis indicates that AI's current prominent role in healthcare is, paradoxically, driving up medical costs. This trend exemplifies how AI not only enhances operational efficiency but also adeptly uncovers new methods for boosting profit margins in the industry.
According to the PwC report, AI is among five factors that could contribute to health costs rising as much as 9% by 2027, matching the highest rates recorded since 2010-11. The primary culprit identified is the use of AI-driven note-taking tools, which capture more detailed information about patient diagnoses and complications than a hurried human clinician might typically document. This additional specificity allows for billing under higher severity codes, which, although the level of care remains unchanged, leads to increased reimbursements from insurance providers.
The nuances of billing illustrate this phenomenon clearly. A study by Blue Cross Blue Shield (BCBS) revealed that the coding for acute posthemorrhagic anemia in new mothers surged from 4% to 12.3% of maternity admissions within a span of three years. Notably, there was no corresponding increase in the number of blood transfusions, a standard treatment for this condition. An examination of the hospital network that exhibited the highest uptick in these codes revealed that fewer than 20% actually met the clinical guidelines for diagnosis. This spike in coding intensity aligns with a greater implementation of AI in billing practices, which, according to BCBS, added an extra $22 million in maternity expenses across the hospitals examined.
While AI is highlighted as a leading new factor influencing costs, it is essential to note that traditional elements such as labor and supply expenses still represent a larger portion of the cost increases, as pointed out by one author of the report during an interview with Healthcare Dive. There remains the potential for AI to eventually exert downward pressure on costs by automating administrative tasks or facilitating earlier diagnoses.
In conclusion, while AI is frequently marketed as a tool for optimizing various industries—reducing waste and enhancing speed and affordability—the healthcare sector's early experiences show that it has primarily optimized the mechanisms by which hospitals can increase charges. As noted by a health insurance executive, companies often leverage AI to further their financial interests, rather than focusing solely on efficiency.
