Artificial intelligence is more likely to serve as a productivity-enhancing tool for the healthcare industry rather than a disruptive force that replaces entire sub-industries, financial services firm William Blair said in a report on Tuesday.
While much of the market’s attention has centered on AI’s potential in drug discovery, the firm noted that the technology’s most immediate impact is being felt in improving system efficiency and reducing administrative waste.
“Right now, AI is a more effective cost-savings tool rather than a revenue-generation tool, though we expect this to evolve over time,” the report stated, highlighting that U.S. healthcare administrative waste currently totals an estimated $250 billion to $300 billion annually.
William Blair identified four key areas where AI is currently delivering the most significant near-term results: prediction, diagnosis, treatment, and system efficiency.
Prediction:
Consumer technology, including wearables and smart glasses, is increasingly able to detect biomarker changes before the onset of disease.
Diagnosis:
In radiology and cardiology, AI is being used to recognize patterns in medical images to detect abnormalities like lung nodules and strokes. This includes “AI inside the scanner” to optimize image quality and “AI inside the workflow” to integrate results into cloud-based platforms.
Treatment:
AI is enhancing precision in surgical procedures and radiation planning. Systems like Intuitive Surgical’s da Vinci are moving toward real-time guidance and semi-automated tasks such as suturing.
Efficiency:
AI is streamlining “mundane” tasks such as billing, coding, and patient recruitment for clinical trials.
Despite the optimism, the firm cautioned that the healthcare industry’s unique regulatory environment and paramount need for safety create significant barriers for new tech entrants. Historically, tech companies have preferred to partner with established healthcare players rather than compete directly due to these complexities.
The report also noted a biological bottleneck in AI-driven drug discovery. Because humans currently only understand about 10% to 15% of human biology, AI’s role in developing new treatments will remains limited until the underlying models can better reflect the complexity of the human body. “Until humans better understand biology, AI’s role in drug discovery and development will likely be limited,” the firm said.
William Blair believes large pharmaceutical companies and healthcare leaders are best positioned to benefit from the AI shift. These organizations possess the scale, proprietary datasets, and scientific expertise necessary to leverage AI for research and development acceleration.
Early successes in “lab-in-the-loop” systems—where computer models and wet lab experiments continuously refine each other—suggest that biopharma companies could eventually shorten development timelines and expand profit margins.
The firm’s global equity team indicated it is positioning portfolios toward healthcare companies capable of rapidly adopting AI into their workflows to create tangible benefits for both patients and the bottom line.