The AI Arms Race: Fueling the Fire, Not Dousing It

The promise of artificial intelligence is clear: efficiency, productivity, and ultimately, deflation – meaning it costs less to get the same goods or services going forward than in the past. In countless industries, AI is streamlining operations, cutting costs, and making goods and services more accessible. Yet, healthcare seems to operate in its own economic orbit. Despite waves of technological innovation, from electronic health records to advanced diagnostics, healthcare costs continue their relentless climb, outpacing inflation year after year.

Why is this? And as AI increasingly infiltrates every corner of medicine, from predictive analytics to automated diagnostics, are we destined to simply accelerate this inflationary trend?

The AI Arms Race: Fueling the Fire, Not Dousing It

One might expect AI’s analytical prowess to naturally lead to smarter, more cost-effective care. But what we’re witnessing, in many respects, is an AI arms race between the two primary titans of the healthcare system: providers and payors.

  • Providers are leveraging AI to optimize billing, identify lucrative service lines, automate administrative tasks, and even enhance clinical decision-making. The goal? To maximize revenue, streamline operations, and perhaps, justify higher charges through “advanced” care.
  • Payors are deploying AI to detect fraud, predict high-cost claimants, automate claims processing, and refine risk adjustment models. Their aim? To minimize payouts, manage populations more efficiently, and protect their bottom line.

Each side, in its pursuit of individual optimization, often uses AI to gain an advantage over the other. This dynamic, while individually rational, collectively pushes the overall system’s costs higher. Instead of AI becoming a shared tool for systemic efficiency, it risks becoming another accelerant in the perpetual tug-of-war over healthcare dollars. It’s a zero-sum game, and the patient ultimately pays the price through higher premiums and out-of-pocket costs.

Value-Based Care: The Only Path to Deflationary AI in Healthcare

This doesn’t have to be our future. The true potential of AI in healthcare isn’t just about making existing models faster or “smarter”; it’s about fundamentally changing the game. And the key to unlocking AI’s deflationary power lies squarely with Value-Based Care (VBC).

VBC shifts the focus from the volume of services rendered (fee-for-service) to the outcomes achieved and the overall cost of care. In a VBC model, payors and providers are no longer adversaries; they become partners with a shared financial incentive: to deliver high-quality, efficient care that reduces total healthcare spending.

When providers are rewarded for keeping patients healthy, and payors benefit from a healthier, less expensive population, AI transforms from an arms-race weapon into a shared diagnostic and optimization engine for the entire ecosystem. It becomes the intelligence that helps both sides collaboratively identify waste, improve quality, and drive down costs – making healthcare deflationary, finally.

An Invitation: Let’s Build a Deflationary Future Together

Our number one job, right now, is to make healthcare easier and cheaper for every single patient. We need to forget the old ‘arms race’ mentality and focus on one clear mission: Value-Based Care delivery that simplifies providers’ lives and financially sustains insurers.

The real hang-up hasn’t been the technology; it’s been the broken connection. AI isn’t the magic answer—it’s the bridge built upon VBC. It’s the single most powerful tool we have to get providers and payers finally working from the same playbook. When we use AI to create seamless, low-friction systems where both parties win—the doctor gets paid for quality, and the insurer saves money by cutting out waste—that’s when the patient finally wins, too.

So, to every innovator and leader out there: Stop wasting AI on tweaking the old, inflationary system. Start building those new connections. Let’s use AI to enforce collaboration, drive real value, and make the future of healthcare human-centric, affordable, and finally deflationary.