Hospital administrators and health insurers are quietly acknowledging that AI tools, once touted as a cure for rising medical expenses, are actually making care more costly. According to healthcare publication Stat, the promise of AI-driven savings has not materialized; instead, the technology is contributing to higher bills.
The initial optimism was loud. Mario Schlosser, co-founder and chief technical officer of insurer Oscar Health, called AI the “only way” to reduce the cost of doctor visits in the U.S. within three to five years. A 2024 McKinsey analysis projected potential savings of up to $360 billion annually. But those forecasts have not come to pass, and insiders now point to a specific culprit: AI “scribes” that transcribe patient-clinician conversations into clinical notes.
“Right now, ambient scribes are inflationary, and that’s a problem,” said Caroline Pearson, executive director of the Peterson Health Technology Institute, in an interview with Stat. “We need technology to help us lower health care costs.”
Three Drivers of Rising Costs
Industry insiders identify three main reasons why AI scribes are inflating expenses. First, the notes themselves have become more detailed. Previously, overworked doctors often wrote minimal notes, leading to billing at lower complexity levels. With AI capturing every detail, visits are now frequently rated as more complex, which justifies higher charges.
Second, the software often prompts doctors to add diagnoses they mentioned but did not formally record. Bobby DuPre, chief medical information officer at FMOL Health, described the scenario to Stat: “Now you have a tool that’s saying, ‘hey, you talking about their UTI, but you didn’t add it to your visit diagnosis. Do you want to add it now?'”
Third, AI scribes free up doctors’ time, allowing them to see more patients. At FMOL, clinicians using the technology saw 22 percent more patients overall. As DuPre noted, “the more people they see, the more payment they get.”
The cumulative effect is a system where tools designed to streamline care have instead amplified billing. This serves as a reminder that technology alone cannot resolve the inherent conflict between profit-driven healthcare and the need for affordable access.
Despite industry claims that AI would cut healthcare expenses, hospital administrators and insurers report that AI scribes are driving up costs. The tools lead to more detailed notes, more diagnoses, and more patient visits, all of which increase billing. Experts say the technology is currently inflationary, not cost-saving.
Leave a Comment