Some thoughts on admin-cost & AI in healthcare.
Healthcare is largely unaffordable for non-ultra-wealthy US residents. A large percentage (30%) of the spend goes to healthcare administration (I’m in that bucket!) [1].
With the boom of Claude/GPT, there is a lot of talk about “AI
automating admin/back-office work”, with the implied panacea being “freeing up dollars for higher quality, more accessible, care”.
Healthcare has a way of framing political, operational, and behavioral problems through the lens of technology. The framing implies that the underlying decisions + operations are working, but if we could “just automate it” then the big problems would be solved.
I have found that framing to be largely inaccurate. As anyone who
works in health-tech knows, ambiguity is often built into the operations intentionally. How many of us have read contracts about service-line level payments that don’t even define the list of CPT codes and the payment amounts explicitly? Large orgs are often not financially motivated to simplify and automate ops because the ambiguity can generate & protect $$.
There should be two financial incentives in creating a simple, low-admin, healthcare system. First, orgs with a more straightforward patient experience should capture more patient volume and increase revenue. Second, automation should let orgs cut OpEx (I know this means people lose jobs, which sucks, that’s a post for a different day). These aren’t innovative ideas, smoothness of CX and reducing OpEx apply to almost every business.
But our industry does not operate the way other industries operate.
First, healthcare organizations capture patient volume using tactics that have nothing to do w/ the patient experience. Changing & narrowing provider networks, vertical consolidation, designing broker incentive packages to route patients in specific ways, "within closed walls" referrals, etc.
Second, there are many capabilities that would create a better patient experience and lose organizations money, such as:
a. Standardized, digital & analog, opt-out, patient education on health system financial assistance policies.
b. Proactive digital communication, directly to patient, on status of a prior-authorization including clear next step w/ named owner + ETA.
c. Pre-visit, self-service, digital quote generation for bundles of services so patients can plan financially for care before they receive it.
Changing incentives & structures requires a decision manifested in a contract. Winning patients requires building a long term, integrated, trusting relationship w/ the patient. You can tell me which option seems easier to implement.
So if you’re a new-to-healthcare tech founder “using AI to lower administrative costs”, I would make sure that the problem you're trying to solve is actually a tech problem.
[1]
