How Can We Justify AI’s Cost?

At HealthLeaders’ recent Chief Digital Executive Exchange (CDEX), top healthcare execs wrestled with defining the true value of an expensive – but potentially transformational – technology.

Healthcare’s digital health executives have a value problem.

The industry’s struggle to control rampant costs is forcing executives to dig more deeply into their technology spending habits – especially where and how much they want to invest in AI. And that’s forcing them to confront different definitions of ROI.

During the recent HealthLeaders Chief Digital Executive Exchange (CDEX) in Washington D.C., leaders from several health systems and hospitals came together to discuss how they’re managing technology strategy and budgets, particularly around AI. Some even floated the idea of creating separate budgets for new tech and AI.

The prevailing opinion is that while AI has the potential to upend and transform healthcare, real change is hard. And that makes it hard to qualify investments.

“We have to create some discipline to ensure we focus on the most impactful things,” said Abby Kral, Chair of Revenue Strategy and Innovation at the Mayo Clinic. “We might have a really great or novel business solution … but if it’s not being used or has limited scale, its impact is harder to measure”.

Much of the conversation during the two-day event centered on ROI. Indeed, healthcare organizations across the country are trying to justify their AI costs by defining the technology’s value – from reduced clinician stress and burnout to less time on the computer to more efficient revenue cycle operations. Praveen Chopra, Chief Digital and Information Officer at Emplify Health, even noted that his health system has redefined ROI, or return on investment, to ROV, or return on value.

In other words, healthcare leaders need to better understand how AI adds value, and for that they need a better take on value. The cost of a new technology certainly figures heavily into the equation, but at a time when administrative inefficiency, revenue leakage, poor clinical outcomes and a declining and demoralized workforce are plaguing the industry, it’s clear this isn’t all about cost.

For instance: Stress and burnout. Long thought of as a “soft ROI,” it’s affecting a growing number of healthcare workers, from IT and support staff on up through nurses and doctors. And with healthcare organizations struggling to maintain a strong workforce, any tool or program that aims to improve the clinician’s work-life balance will gain added value.

“We cannot ignore and we cannot undervalue the importance of clinician wellness,” said Vinh Nguyen, MD, CMIO at California-based MemorialCare.

For sure, CFOs want to know exactly how much money is being spent, but it’s up to digital health executives to define just what that money is going to buy. They need to balance the cost of buying tech with the cost of hiring three new doctors or making sure the current workforce isn’t leaving, or perhaps the costs of losing patients who opt to try out another hospital with better patient experience scores (because they use AI tools).

The executives at CDEX were also clear in pointing out that change for the sake of change isn’t what healthcare needs. New technology and innovative ideas need to actually work – they need to solve specific problems.

“How do we really reimagine care delivery?” asked Robbie Freeman, Chief Digital Transformation Officer at the Mount Sinai Health System, adding that new tools like AI should be used to “automate the things that make sense.”

Which leads us to one of the biggest misconceptions: That AI will take away jobs that could be filled by clinicians. While the inference is that AI would deprive people of employment, executives at CDEX were quick to point out they need the technology to fill in where no clinicians are available or able to fill those duties. When faced with a choice between talking to an AI bot who can coordinate care and waiting weeks or months to see a doctor, many consumers would gladly choose the bot.

In this case, the value in AI isn’t in replacing a clinician, but in performing tasks that a clinician doesn’t need to do or shouldn’t be doing, such as administrative work. Yes, AI will take away FTEs, but the value to healthcare is in eliminating those tasks assigned to clinicians that take them away from patient care.

For digital health leaders, the value proposition for AI revolves around giving clinicians and others more time to do what they should be doing. At the end of the day, the goal in using new technology is, quite simply, to improve healthcare. These leaders need to be asking the right questions and giving the right answers to convince their CEOs, CFOs and the public that they know the true value of investing in AI.

In some cases, noted Dave Lehr, Chief Strategy Officer at Meritus Health, AI will be able to handle certain tasks without that oft-noted ‘human in the lop.’

“Our patients may eventually demand that, if AI does something consistently better than the doctor, that we cannot slow down access by waiting for a human to look over AI’s shoulder,” he said.