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by the developers of AI software, but they are ultimately passed on to Ronald Rodriguez, MD, PhD, is an Ashbel Smith Professor of
healthcare providers and patients through software licensing fees and Urologic Sciences, Professor of Medical Education and Urology,
increased costs for medical services. Assistant Dean for Undergraduate Medical Education and
The Dragon Ambient eXperience (DAX) is an AI-powered tool Program Director, MS in AI at UT Health San Antonio.
developed by software giant Nuance, that automates clinical documen- Dr. Rodriguez is an experienced urologic oncologist, research scientist
tation. It uses voice recognition and natural language processing to and medical educator. His research has varied substantially over time,
transcribe patient encounters, summarize key findings, and generate and he has made significant contributions to the development of oncolytic
portions of clinical notes. DAX is being adopted by practices to reduce adenoviral gene therapy, immunotherapy, targeted ablative therapy and
administrative burden, improve documentation accuracy, and enhance surgical management of advanced kidney cancers. He also help establish
patient interaction. However, the cost of DAX and similar AI tools the first Dual Degree program, MD/MS in AI, in the country and is an
is substantial though it can vary depending on the final vendor and expert in medical education focusing on the use of AI. Dr. Rodriguez is a
the specific features included. These costs are typically incurred on a member of the Bexar County Medical Society.
subscription basis or per-user basis, adding to the ongoing expenses of
healthcare practices. Parin Chanana is a high school sophomore and a mentee of
The costs of AI in healthcare are incurred incrementally. Each Dr. Ronald Rodriguez, with a strong interest in health economics.
new AI tool or application adds to the overall expense of healthcare He is passionate about research, is working on publishing a
delivery. While individual tools may offer cost savings in specific areas, finance book, and recently earned first place nationally in
the cumulative effect of adopting multiple AI solutions could lead to Business Professionals of America’s Health Insurance and Medical Billing
increased healthcare costs in the short and long run. The profit motive competition. Parin plans to pursue a career in health economics to drive
behind developing AI tools means that healthcare providers are not innovation in the healthcare field.
the only entities looking to benefit from these technologies. Third-par-
ty payors, electronic medical record companies, hospitals, healthcare
systems, nursing home administrators, home health organizations,
durable medical device developers and commercial sales organizations
like Amazon are all seeking ways to derive additional profit through
the use of AI. Undoubtedly, they will find methods to extract more
The Impact of AI on revenue with these tools. However, the expenses associated with these
profit-driven initiatives are likely to be passed on to patients, increasing
Healthcare Costs the overall cost of healthcare.
The future of healthcare has never been so exciting, as our current
technologies are advancing at a rate never before seen in human his-
tory. The advent of AI has precipitated much of these rapid advances.
By Ronald Rodriguez, MD, PhD, with Parin Chanana AI has the potential to revolutionize healthcare and improve patient
outcomes, but its impact on healthcare costs is complex and multi-
.S. healthcare spending is estimated to exceed $6 trillion zation and scheduling, freeing up staff and reducing administrative faceted. While there are opportunities for cost savings, there are also
by 2027,1 which translates to an average cost of more than overhead. AI algorithms can analyze medical images and patient potential challenges and ethical concerns that must be addressed. As
U$19,000 per person each year. With the advent of generative data to detect diseases like cancer and heart disease at earlier stages, AI continues to evolve and become more integrated into healthcare,
AI, the healthcare landscape is rapidly transforming, promising to rev- when treatment is often less expensive. AI can help tailor treatments it will be crucial to carefully evaluate its costs and benefits to ensure
olutionize patient care, streamline operations, and potentially reduce to individual patients based on their genetic makeup and lifestyle that it is used in a way that is transparent, safe, effective and equitable.
costs. However, the financial implications of AI in healthcare are factors, potentially leading to better outcomes and lower long-term
2,3
complex and multifaceted, presenting both opportunities for savings costs. References:
and potential challenges. While AI offers significant potential for cost savings, there are also 1. Staff M. U.S. Health Expenditure Expected to Reach $6.07 Tril-
Tech giants and startups alike are pouring billions into healthcare concerns that it could drive up healthcare expenditures. Developing lion by 2027. Managed Healthcare Executive 2024; Available
AI. While many predict substantial healthcare savings from the use and implementing AI systems can be expensive, requiring significant from: https://www.managedhealthcareexecutive.com/view/u-s-
of AI, a McKinsey report identified many obstacles and real-world upfront investments in software, hardware and training. AI algorithms health-expenditure-expected-to-reach-6-07-trillion-by-2027
problems in the actual implementation of AI, which have not permit- may identify patients who require additional testing or treatment, 2. Kasyanau A., Council Post: Balancing The Cost Of AI In Health-
ted realization of those savings.4 Microsoft invested $19.7 billion in potentially leading to increased utilization of healthcare resources. care: Future Savings Vs. Current Spending, in Forbes. 2024
OpenAI, the creators of ChatGPT, which has applications in medical Furthermore, ethical concerns about how insurance companies might 3. Khanna N.N., et al., Economics of Artificial Intelligence in
chatbots and patient education. Google is pioneering AI-driven drug use AI to identify at-risk populations and charge higher premiums or Healthcare: Diagnosis vs. Treatment. Healthcare (Basel), 2022.
discovery through its subsidiary, DeepMind. Amazon acquired Pill- deny coverage based on predicted future health problems could lead to 10(12)
Pack and launched Amazon Care, leveraging AI for prescription fulfill- increased costs for patients and exacerbate existing health disparities. 4. Company M. Reimagining healthcare industry service operations
ment and telehealth services. These investments are driven by the belief The FDA considers AI software used in healthcare to be a medical in the age of AI. Healthcare, Sept 19, 2024
that AI can address some of healthcare’s most pressing challenges. device, subject to regulatory oversight and approval.5 This process can 5. FDA, Artificial intelligence and machine learning (AI/ML)-en-
AI offers several avenues for cost reduction in healthcare. It can be costly and time-consuming, adding to the overall expense of imple- abled medical devicesAI MedTech Insights: Empowering Deci-
automate administrative tasks like claims processing, prior authori- menting AI in healthcare. Currently, these costs are typically borne sions with AI in Healthcare & Wellness. 2021

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