Provider organizations and payers are boosting their investment in AI, cybersecurity, and other IT areas, according to a study released by Bain & Co. and KLAS Research.
The survey of some 150 U.S. healthcare provider and payer executives finds 75% have increased IT investments over the past year.
The study finds providers are focusing IT spending on IT infrastructure and services, such as cybersecurity, clinical workflow optimization, data platforms and interoperability, and revenue cycle management (RCM). IT infrastructure and services emerged as a top priority as providers seek to strengthen cybersecurity to mitigate the risk and impact of attacks and improve the integration of current IT applications. These efforts have been amplified by the Change Healthcare incident, which highlighted the importance of robust cybersecurity measures. Cost management and EHR integration and systems interoperability remain provider IT pain points.
Payer organizations are prioritizing IT investments in care coordination and utilization management as well as in claims processing and payments. The study found payers are investing in provider payment tools, modernizing their core administrative processing system infrastructure, and purchasing more payment integrity solutions.
More than 65% of payers cite legacy technology as a key problem. Aging infrastructure limits scalability and flexibility; maintaining these systems imposes significant cost. While legacy tech has been a long-standing issue for payers, significant system modernization entails a multiyear effort and poses operational risk that many chief information officers are loath to assume.
Cybersecurity has emerged as an imperative for payers as well, with IT leaders citing cybersecurity as a reason for increased technology investment.
“Payers and providers are continuing to place a premium on technology, a sentiment that has become increasingly true in the aftermath of the COVID-19 pandemic,” said Eric Berger, partner in Bain & Co.’s Healthcare & Life Sciences and Private Equity practice, in a statement. “While the focus on ROI has increased, we’re also finding these organizations are more inclined to experiment with technology, especially with advanced solutions, such as AI and natural language processing, to improve outcomes.”
“The need is there,” added Adam Gale, CEO of KLAS Research, in a statement. “Providers and payers are making it clear that there are tremendous opportunities for vendors who are committed to providing innovative, secure, and reliable solutions that drive real outcomes and can show a real ROI.”
About 15% of providers in the survey say they have an AI strategy today, up from just 5% in 2023. Roughly 25% of payers say they have an established AI strategy in 2024. A healthy majority of both types of organizations are optimistic about implementing generative AI. However, despite its potential, several barriers hinder more widespread adoption of AI. Providers and payers cite regulatory and legal considerations, cost, and accuracy as main hurdles to implementation.