Finance leaders balance AI investment to expected ROI

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Three-quarters of U.S. healthcare providers and payers increased their IT spending this past year, with artificial intelligence (AI), cybersecurity, and IT infrastructure among the chief areas of investment, according to a study by Bain & Company and KLAS Research.

Adoption of AI is gaining traction, with 15% of providers and 25% of payers reporting an established AI strategy in 2024.

Providers and payers are investing in different areas.

But all organizations are balancing financial pressure with the promise of return on investment (ROI), said Aaron Feinberg, an author of the report and a partner in Bain's Healthcare and Life Sciences and Technology practices.

"They are rigorously evaluating business cases around new spend, expecting new solutions to drive compelling ROI on a short payback period," he told Healthcare Finance News.  

There's growing enthusiasm for AI technology, but regulatory concerns, costs, and accuracy issues remain obstacles to broader AI implementation.

WHY THIS MATTERS

Despite significant investments, challenges such as cost management and electronic health record (EHR) integration remain persistent issues for healthcare providers.

"For providers, we have seen the most excitement and early adoption around clinical documentation solutions," Feinberg said. "GenAI pilots are driving a very significant reduction in documentation burden, easing clinician burnout."

Feinberg noted key factors driving the adoption of AI in healthcare are the maturation of use cases that drive meaningful ROI. Providers are directing IT budgets toward clinical workflow optimization, data platforms and revenue cycle management, according to the survey results.

Payers, on the other hand, are focused on modernizing core administrative systems and improving care coordination.

Roughly two-thirds of payers cited legacy technology as a major barrier. This is driving efforts to replace outdated infrastructure, with many investing in payment integrity solutions to streamline claims processing.

Legacy technology remains a major issue for payers and there is "no panacea" to this pervasive challenge for large payers, according to Feinberg.

"Most payers are continuing to modernize on a piecemeal basis, piloting solutions with smaller lines of business or regions before taking the step of migrating more significant portions of the enterprise," Feinberg said.

Payers see the most opportunity in applications around contact centers and other forms of member support, enabling them to improve member satisfaction via greater responsiveness and customization.

THE LARGER TREND

The report also highlighted the impact of the recent cyberattack on Change Healthcare. Seventy percent of organizations reported being directly affected, spurring a shift to bolster cybersecurity.

Among the best practices healthcare organizations can adopt to strengthen their cybersecurity measures are auditing their systems and that of their vendors for potential vulnerability, Feinberg said. They also need to ensure  they have the right technical talent and expertise in cybersecurity on-call.

"There is a risk that smaller organizations treat these audits as performative and perfunctory," he said. "As a result, many will not meaningfully strengthen their defenses."

The HIMSS Healthcare Cybersecurity Forum is scheduled to take place October 31-November 1 in Washington, D.C. Learn more and register.