AI deployment may actually increase healthcare costs
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AI deployment may actually increase healthcare costs AI is accelerating the volume of transactions without increasing efficiency, report finds.
Artificial Intelligence By Susan Morse , Executive Editor | April 27, 2026 | 11:08 AM Photo: Reza Estakhrian/Getty Images AI is reducing administrative burden for hospitals and providers but it is not always leading to lower costs.That’s the conclusion of a Peterson Health Technology Institute (PHTI) report based on findings from health system executives, insurers, federal agencies and technology companies.The report looked at how AI is being deployed and found it may increase costs.This is because AI is accelerating the volume of transactions without increasing efficiency. WHY THIS MATTERSAI tools allow providers and payers to process more transactions.There are more prior authorization submissions, more billing activity and more back-and-forth between providers and payers, without addressing underlying structural inefficiencies.AI-driven billing is already increasing healthcare spending because more complete documentation and coding are driving higher reimbursement levels and contributing to medical cost inflation.THE LARGER TRENDHealthcare has a $350 billion annual administrative waste problem that executives are looking to AI to solve, according to the report. Of that, $266 billion is attributed to administrative complexity and $59 to $84 billion is the result of fraud and abuse. Billing and transaction costs are a significant driver of administrative complexity, with the cost per healthcare bill in the United States far exceeding that of peer nations, the report said. This is a result of unique payment rules, documentation requirements, and compliance standards that vary across health plans.In prior authorization, providers are using AI tools to automate submissions, while plans use AI to evaluate prior authorization requests. In medical billing, providers use ambient scribing and AI-assisted coding tools to capture increasing clinical complexity and automate billing, while health plans use AI to assist reviewing and processing claims.The report adds to the findings given by executives during the HIMSS26 Global Conference & Exhibition in March. AI may not be returning hard ROI, but is invaluable at lessening clinical burden and burnout."The new cost of doing business is what we're running into a lot," said panelist Joe Longo, senior vice president and chief digital information officer of Parkland Health. There's a lot of skepticism when it comes to drawing a hard line on ROI, Longo said. But ambient AI gets doctors out of pajama time."That's a hard ROI miss," Longo said. "But is it worth it? Yes." Email the writer: [email protected] Topic: Accounting & Financial Management, Artificial Intelligence, Operations, Workforce