Hospital mergers and acquisitions are a bad deal for patients. Why aren’t they being stopped?

Contrary to what health care executives advertise, hospital mergers and acquisitions aren’t good for patients. They rarely improve access to health care or its quality, and they don’t reduce prices. But the system in place to stop them is often more bark than bite.

During 2019 and 2020, hospitals acquired an additional 3,200 medical practices and 18,600 physicians. By January 2021, almost half of all U.S. physicians were employed by a hospital or health system.

In 2018, the last year for which complete data are available, 72% of hospitals and more than 90% of hospital beds were affiliated with a health care system. Mergers and acquisitions are increasing the number of health care systems while decreasing the number of independently operated hospitals.

When hospitals buy provider practices, it leads to more unnecessary care and more expensive care, which increases overall spending. The same thing happens when hospitals merge or acquire other hospitals. These deals often increase prices and they don’t improve care quality; patients simply pay more for the same or worse care.

Mergers and acquisitions can negatively affect clinician morale as well. Some argue they lead to providers’ loss of autonomy and increase the emphasis on financial targets rather than patient care. They can also contribute to burnout and feeling unsupported.

Considerable machinery is in place at both the federal and state levels to stop “anticompetitive” mergers before they happen. But that machinery is limited by a lack of follow through.

The Federal Trade Commission (FTC) and the U.S. Department of Justice have always had broad authority over mergers. By law, one or both of these entities must review for any antitrust concerns proposed deals of a certain size before the deals are finalized. After a preliminary review, if no competition issues are identified, the merger or acquisition is allowed to proceed. This is what happens in most cases. If concerns are raised, however, the involved parties must submit additional information and undergo a second evaluation.

Some health care organizations seem willing to challenge this process. Leaders involved in a pending merger between Lifespan and Care New England in Rhode Island — which would leave 80% of the state’s inpatient market under one company’s umbrella — are preparing to move forward even if the FTC deems the deal anticompetitive. The companies will simply ask the state to approve the merger despite the FTC’s concerns.

The reality is that the FTC’s reach is limited when it comes to nonprofits, which most hospitals are. While the FTC can oppose anticompetitive mergers involving nonprofits, it cannot enforce action against them for anticompetitive behavior. So if a merger goes through, the FTC has limited authority to ensure the new entity plays fairly.

What’s more, the FTC has acknowledged it can’t keep up with its workload this year. It modified its antitrust review process to accommodate an increasing number of requests and its stagnant capacity. In July, the Biden administration issued an executive order about economic competition that explicitly acknowledges the negative impact of health care consolidation on U.S. communities. This is encouraging, signaling that the government is taking mergers seriously. Yet it’s unclear if the executive order will give the FTC more capacity, which is essential if it is to actually enforce antitrust laws.

At the state level, most of the antitrust power lies with the attorney general, who ultimately approves or challenges all mergers. Despite this authority, questionable mergers still go through.

In 2018, for example, two competing hospital systems in rural Tennessee merged to become Ballad Health and the only source of care for about 1.2 million residents. The deal was opposed by the FTC, which deemed it to be a monopoly. Despite the concerns, the state attorney general and Department of Health overrode the FTC’s ruling and approved the merger. (This is the same mechanism the Rhode Island hospitals hope to employ should the FTC oppose their merger.) As expected, Ballad Health then consolidated the services offered at its facilities and increased the fees on patient bills.

It’s clear that mechanisms exist to curb potentially harmful mergers and promote industry competition. It’s also clear they aren’t being used to the fullest extent. Unless these checks and balances lead to mergers being denied, their power over the market is limited.

Experts have been raising the alarm on health care consolidation for years. Mergers rarely lead to better care quality, access, or prices. Proposed mergers must be assessed and approved based on evidence, not industry pressure. If nothing changes, the consequences will be felt for years to come.

Is the perception of safety in healthcare settings declining?

https://mailchi.mp/13ef4dd36d77/the-weekly-gist-august-27-2021?e=d1e747d2d8

Improving Patient Safety—Why Data Matters

When COVID volumes waned in the spring and early summer, most health systems “de-escalated” dedicated COVID testing and triage facilities. But with the Delta variant surging across the country, consumers are now once again looking for services like drive-through testing, which is perceived as more convenient and safer.

One physician leader told us patients in the ED are asking why the hospital got rid of the “COVID tent”, which provided a separate pathway for patients with respiratory and other COVID symptoms—and a highly visible signal that the rest of the department was as COVID-free as possible.

Another system is now fielding questions from the media about whether they’ll bring back their dedicated COVID hospital: “We spent a lot of time last year convincing the community that the dedicated hospital was key to safely managing care during the pandemic. Now we’ve got almost as many COVID admissions spread across our hospitals.” 

Over the past year, providers have learned how to safely manage COVID care and prevent spread in healthcare settings—but consumers may perceive the lack of dedicated facilities as a decline in safety. 

Unlike last year, hospitals are full of non-COVID patients, as those who delayed care reemerge. And with the current surge likely to continue into flu season, emergency rooms will only get more crowded, necessitating a new round of communication describing how hospitals are keeping patients safe, and reassuring patients that healthcare settings remain one of the safest places to visit in the community. 

CommonSpirit Health mandates COVID-19 vaccination for employees in 21 states

About Us | Serving the Common Good | CommonSpirit Health

CommonSpirit Health is requiring full COVID-19 vaccination for its 150,000 employees, the Chicago-based health system said Aug. 12. 

The requirement applies to employees at CommonSpirit’s 140 hospitals and more than 1,000 care sites and facilities in 21 states. It includes physicians, advanced practice providers, volunteers and others caring for patients at health system facilities. 

“As healthcare providers, we have a responsibility to help end this pandemic and protect our patients, our colleagues and those in our communities —  including the most vulnerable among us,” Lloyd H. Dean, CEO of CommonSpirit, said in a news release. “An abundance of evidence shows that the vaccines are safe and highly effective. Throughout the pandemic we have made data-driven decisions that will help us best fulfill our healing mission, and requiring vaccination is critical to maintaining a safe care environment.”

The compliance deadline for the vaccination requirement is Nov. 1, although the implementation date will vary by region in accordance with local and state regulations. Employees who are not in compliance and do not obtain a medical or religious exemption risk losing their jobs.

Medicare finalizes its hospital payment policy for next year

https://mailchi.mp/ef14a7cfd8ed/the-weekly-gist-august-6-2021?e=d1e747d2d8

CMS finalizes $2.3B pay bump for hospitals in federal fiscal 2022 |  FierceHealthcare

The Centers for Medicare & Medicaid Services (CMS) issued its final payment rule for inpatient hospitals for FY22 this week, giving providers a 2.5 percent pay increase, and implementing a number of other regulatory changes. Of particular note, the rule puts in place a requirement for hospitals and long-term care providers to report on COVID vaccination rates among their workers, amid growing calls for healthcare organizations to mandate vaccines.

The final rule will also extend additional payments to hospitals for delivering COVID care until the end of the public health emergency is declared.

On top of a number of changes to quality reporting programs aimed at reducing the adverse impact of the pandemic on hospital metrics, CMS also used the final inpatient rule to begin acting on the Biden administration’s stated desire of improving health equity by adding a maternal morbidity measure to hospital quality reporting requirements.

The measure will require hospitals to report whether they participate in initiatives to improve perinatal health, an area in which unequal treatment has led to disproportionately adverse outcomes for women of color. In what will surely be welcome news for hospitals, CMS will no longer require disclosure of the contract terms providers strike with Medicare Advantage insurers, which was a key provision of Trump-era transparency regulations.

Nevertheless, based on earlier proposed changes to physician and outpatient surgery payment rules, and the President’s recent executive order on competition policy, we’d anticipate the Biden administration will continue to boost efforts to increase transparency of provider pricing.

First things first, however: there’s a pandemic to get through, and this final inpatient payment rule should largely come as good news to hospitals who are increasingly feeling the strain of a fourth surge of COVID cases.

More hospitals poised to require COVID-19 vaccines

It’s “a trickle that will become a torrent,” Ashish Jha, dean at Brown University’s School of Public Health, tweeted.

More hospitals are likely to require employees receive a COVID-19 vaccine, experts said, to further protect the sick and vulnerable patients who rely on them for care.

A Houston-area hospital captured headlines after taking a firm stance on requiring vaccines that prevent severe illness of the coronavirus, which has killed more than 600,000 in the U.S. and ravaged the economy.

Houston Methodist employees who refused the vaccine were either terminated or resigned. A judge earlier this month sided with the hospital and tossed out an employee lawsuit that was seeking to block the mandated inoculation. The ruling may give other hospitals the green light to require the jab, and as more facilities put a similar policy in place, others are likely to follow, experts said.

It’s “a trickle that will become a torrent,” Ashish Jha, professor and dean at Brown University’s School of Public Health, posted Thursday on Twitter.

3 large health systems in Massachusetts to require all workers to be vaccinated.

Given the critical need to protect vulnerable patients, its critical all hospitals do this.

Leading systems will do it soon.

Laggards will get there eventually.

Joining the growing tide of vaccine mandates are a variety of systems and hospitals, including Mass General Brigham in Boston, BJC Healthcare in St. Louis and Inova Health System in Virginia.

Some of the nation’s largest health systems have yet to mandate the shot, including Kaiser Permanente and CommonSpirit Health.

“Vaccination will only be required for Kaiser Permanente employees if a state or county where we operate mandates the vaccine for health care workers,” the company said in an email.

The American Hospital Association continues to hear that a growing number of its members are requiring the vaccine, with some exemptions. However, many member hospitals are waiting until the FDA grants full approval, a time when more safety and efficacy data will be made available.

“Getting vaccinated is especially critical for health care professionals because they work with patients with underlying health conditions whose immune systems may be compromised,” AHA, which has not taken on stance on the requirement, said in a statement.

The mandates raise ethical questions, some say, pointing to the profession’s promise to “do no harm.”

Arthur Caplan, head of medical ethics at New York University School of Medicine, said the codes of ethics that doctors and nurses says to put patients first, do no harm and protect the vulnerable.

“Of course they should be vaccinated,” he said. “If they don’t want to get vaccinated, I think they’re in the wrong profession.”

The Equal Employment Opportunity Commission said employment law does not prohibit employers from requiring the jab, essentially giving the green light to employers to put incentives and requirements in place for their workers. The EEOC is the federal agency tasked with ensuring that workplaces do not discriminate.

Some states are going against the tide and signing legislation that bars vaccine mandates, including Florida. The city of San Francisco will require hospital employees and workers in high-risk settings to get the vaccine. San Francisco, like other employers and universities, will require all city workers get inoculated.

The differing policy stances across the country creates additional hurdles for corporations with a large footprint.

North Carolina AG gets 116 complaints about Mission Health

A concerning number,' Attorney General describes recent Mission Health  complaints filed | WLOS

The North Carolina attorney general’s office received 116 complaints about Asheville, N.C.-based Mission Health over a 12-month period, WLOS reported June 8. 

WLOS reported that most of the complaints were related to billing issues, 23 percent were concerns over quality of care, 16 percent were related to cost of service, 7 percent were from employees or former employees of Mission Health and 5 percent were related to charity care requirements.

“It’s a concerning number, 116 over a year,” Attorney General Josh Stein told WLOS. “That’s a lot, so we’re sharing our serious concerns with the management of the health system and we are going to be on top of this to the extent we possibly can.”

Mr. Stein told the publication that his office recently dedicated one of his employees to keeping track of all the complaints about Mission Health.

Mission Health was acquired by Nashville, Tenn.-based HCA Healthcare in 2019. HCA agreed to certain commitments as part of the deal, including keeping major Mission Health facilities open and continuing to provide certain services.

Since the acquisition, there have been a number of physician exits from the health system, and an independent monitor is looking into the reason behind the exits.

Mission Health shared the following statement with WLOS:

“Since January of 2021, we are aware of 15 complaints made to the Attorney General’s office, nine of which were related to billing and all of which have been resolved. We address every issue the Attorney General’s office brings to our attention promptly—both with them and the patient. Our patient care is our first priority. We strongly encourage everyone to contact us directly any time there is a concern so we can address it with them immediately and personally.

Going back to 2020, the majority of billing concerns were made shortly after acquisition of Mission and primarily regarded questions around changes to medical practice operations and a variety of billing issues all of which were resolved. Any patient or guarantor with billing questions or concerns should contact 833-323-0834 and we are happy to discuss, answer any questions you may have, and seek resolution where needed. Further, we have an email address, contactmission@hcahealthcare.com, where people can reach out to us on any matter.”

JPMorgan launches healthcare company, Morgan Health

JPMorgan Chase launches new healthcare-focused unit for U.S. employees |  Reuters

JPMorgan Chase on May 20 unveiled its new healthcare company, dubbed Morgan Health, which its top executive told Becker’s Hospital Review can be viewed as a continuation of Haven, an ambitious healthcare venture that recently disbanded

“We learned a lot from the Haven experience,” Dan Mendelson, CEO of Morgan Health, said. “The Haven experience focused us on primary care, digital medicine and specific populations. … You can see this as a continuation of the work that was started at Haven.” 

However, Mr. Mendelson said there are several key differences between Morgan Health and Haven, the healthcare venture launched by Amazon, Berkshire Hathaway and JPMorgan Chase in 2018. For one, it has a much more simplified business structure, as it is a unit of JPMorgan Chase. Second, it has a philosophy of striking partnerships to meet its goals rather than working from the ground up. 

“We don’t want to create things from scratch,” Mr. Mendelson said. “We are going to be collaborating with outstanding healthcare organizations nationally to accomplish our objectives. That’s another piece that differentiates this effort from the prior one.” 

Morgan Health said its new business is focused on improving employer-sponsored healthcare in the U.S. and bringing meaningful innovation into the industry by targeting insurance and keeping populations healthy. Success for the company will be measured by whether it improves the Triple Aim: quality of care, access to care and cost to deliver care, Mr. Mendelson said. Morgan Health initially will focus its efforts on improving care for JPMorgan Chase employees, but its long-term goals are to become a leader at improving healthcare in the U.S. and to create a successful model other employers can adopt.

“We come at this with the benefit of having 285,000 employees and dependents,” Mr. Mendelson said. “We have a very strong interest in driving quality improvements for them and also creating models that are reproducible across organizations. We are looking to take a leadership role to improve care in the United States.” 

Morgan Health said it has three core focus areas at its launch: improving healthcare by investing $250 million into organizations that are improving employer-sponsored healthcare; piloting new benefits for employees; and promoting healthcare equity for its employees and the broader community. 

One employee benefit Morgan Health will be piloting is advanced primary care, Mr. Mendelson said. Morgan Health said it is working to create improved primary care capacity to enable employees to better navigate the healthcare system. One example of this is instead of having employees see just a primary care physician, they would be directed to a clinic that leverages more healthcare talent, such as pharmacists and nurses, to improve health outcomes. 

Morgan Health said it will work with a range of partners, including provider groups, health plans and other employers. One such organization is CVS Health/Aetna, which is one of JPMorgan Chase’s insurance carriers, Mr. Mendelson said. 

“CVS Health has a lot of innovation within the organization that we are not currently tapping into,” Mr. Mendelson said. “It’s a great example of a great American company that is ripe for further partnership and innovation in this effort.” 

Morgan Health initially will have 20 dedicated employees, but Mr. Mendelson said the healthcare unit is tapping talent from other existing departments at JPMorgan Chase, including its legal, communications and benefits departments. 

“This is a company that is very passionate about leading; there’s a very deep reservoir of support from the organization to accomplish the objectives,” Mr. Mendelson said. “These are objectives that are hard — it will take us time to accomplish and to show meaningful improvement. But there’s a sense that this is so important that there’s going to be a sustained effort in this regard and that we will achieve our objectives together.” 

Prior to joining Morgan Health, Mr. Mendelson served as an operating partner at private equity firm Welsh, Carson, Anderson & Stowe. He also is the founder and former CEO of healthcare advisory firm Avalere Health and worked in the White House Office of Management and Budget during the Clinton administration. 

Mr. Mendelson said his passion for establishing collaborative partnerships in healthcare will help him succeed in his new role. 

Study: Higher Death Rates and Taxpayer Costs at Nursing Homes Owned by Private Equity

About 1 in 10 nursing homes in California and nationwide are owned by private equity (PE) investors, and new research suggests that death rates for residents of those facilities are substantially higher than at institutions with different forms of ownership.

Essential Coverage

Researchers from New York University, the University of Chicago, and the University of Pennsylvania found that the combination of subsidies from Medicare and Medicaid alongside incentives for PE owners to increase the value of their investments “could lead high-powered for-profit incentives to be misaligned with the social goal of affordable, quality care [PDF].” The researchers — Atul Gupta, Constantine Yannelis, Sabrina Howell, and Abhinav Gupta — reported that nursing homes owned by private equity entities were associated with a 10% increase in the short-term death rate of Medicare patients over a 12-year period. That means more than 20,000 people likely died prematurely in homes run by PE companies, according to their study, which was published in February by the National Bureau of Economic Research (NBER).

In addition to the higher short-term death rates, these homes were found to have sharper declines in measures of patient well-being, including lower mobility, increased pain intensity, and increased likelihood of taking antipsychotic medications, which the study said are discouraged in the elderly because the drugs increase mortality in this age group. Meanwhile, the study found that taxpayer spending per patient episode was 11% higher in PE-owned nursing homes.

Double-Checked, Triple-Checked, Quadruple-Checked

The researchers were stunned by the data. “You don’t expect to find these types of mortality effects. And so, you know, we double-checked it, triple-checked it, quadruple-checked it,” Atul Gupta, a coauthor of the NBER study, told NPR reporter Gabrielle Emanuel.

There’s nothing new about for-profit nursing homes, but private equity firms are a unique subset that in recent years has made significant investments in the industry, Dylan Scott reported in Vox. PE firms typically buy companies in pursuit of higher profits for shareholders than could be obtained by investing in the shares of publicly traded stocks. They then sell their investments at a profit, often within seven years of purchase. They often take on debt to buy a company and then put that debt on the newly acquired company’s balance sheet.

They also have purchased a mix of large chains and independent facilities — “making it easier to isolate the specific effect of private equity acquisitions, rather than just a profit motive, on patient welfare.” About 11% of for-profit nursing homes are owned by PE, according to David Grabowski, professor of health care policy at Harvard Medical School. The NBER study covered 1,674 nursing homes acquired in 128 unique transactions.

While the owners of many nursing homes may not be planning to sell them, they also have strong incentives to keep costs low, which may not be good for patients. A study funded by CHCF, for instance, found that “early in the pandemic, for-profit nursing homes had COVID-19 case rates five to six times higher than those of nonprofit and government-run nursing homes. This was true of both independent nursing homes and those that are part of a corporate chain.”

Nationallyabout 70% of nursing homes are operated by for-profit corporations, 24% of nursing homes are nonprofit, and 7% are government-owned. Corporate chains own 58%. In California, 84% of nursing homes are for-profit, 12% are nonprofit, and 3% are government-owned, according to the CHCF report.

Growing PE Investment in Health Care

Given the dramatic increase in PE ownership of nursing facilities coming out of the COVID-19 pandemic, the higher death rates are troubling. The year-over-year growth between 2019 and 2020 is especially striking. Before the pandemic, 2019 saw 33 private equity acquisitions of nursing homes valued at just over $483 million. In 2020, there were 43 deals valued at more than $1.5 billion, according to Bloomberg Law reporter Tony Pugh.

And PE interest in health care is not restricted to nursing homes, explained Gretchen Morgenson and Emmanuelle Saliba at NBC News. “Private equity’s purchases have included rural hospitals, physicians’ practices, nursing homes and hospice centers, air ambulance companies and health care billing management and debt collection systems.” Overall, PE investments in health care have increased more than 1,900% over the past two decades. In 2000, PE invested less than $5 billion. By 2017, investment had jumped to $100 billion.

Industry advocates argue that the investments are in nursing homes that would fail without an influx of PE capital. The American Investment Council said private equity firms invest in “nursing homes to help rescue, build, or grow businesses, often providing much-needed capital to strengthen struggling companies and employ Americans,” according to Bloomberg Law.

The Debate Over Staffing

A bare-bones nursing staff is implicated in poorer quality at PE-owned nursing homes, both before and during the COVID-19 pandemic. Staff is generally the greatest expense in nursing homes and a key place to save money. “Labor is the main cost of any health care facility — accounting for nearly half of its operating costs — so cutting it to a minimum is the fastest profit-making measure owners can take, along with paying lower salaries,” journalist Annalisa Merelli explained in Quartz.

Staffing shrinks by 1.4% after a PE purchase, the NBER study found.

The federal government does not set specific patient-to-nurse ratios. California and other states have set minimum standards, but they are generally “well below the levels recommended by researchers and experts to consistently meet the needs of each resident,” according to the journal Policy, Politics, & Nursing Practice.

According to nursing assistant Adelina Ramos, “understaffing was so significant [during the pandemic] that she and her colleagues . . . often had to choose which dying or severely ill patient to attend first, leaving the others alone.”

Ramos worked at the for-profit Genesis Healthcare, the nation’s largest chain of nursing homes, which accepted $180 million in state and federal funds during the COVID-19 crisis but remained severely understaffed. She testified before the US Senate Finance Committee in March as a part of a week long look into how the pandemic affected nursing homes.Before the pandemic, we had this problem,” she said of staffing shortages. “And with the pandemic, it made things worse.”

$12.46 an Hour

In addition, low pay at nursing homes compounds staffing shortages by leading to extremely high rates of turnover. Ramos and her colleagues were paid as little as $12.46 an hour.

“The average nursing home in the US has their entire nursing home staff change over the course of the calendar year. This is a horrible way to provide good, quality nursing home care,” Grabowski told NPR, speaking of his March 2021 study in Health Affairs.

Loss of front-line staff leads to reductions in therapies for healthier patients, which leads to higher death rates, according to the NBER study. The effect of these cuts is that front-line nurses spend fewer hours per day providing basic services to patients. “Those services, such as bed turning or infection prevention, aren’t medically intensive, but they can be critical to health outcomes,” wrote Scott at Vox.

Healthier patients tend to suffer the most from this lack of basic nursing. “Sicker patients have more regimented treatment that will be adhered to no matter who owns the facility,” the researchers said, “whereas healthier people may be more susceptible to the changes made under private equity ownership.”

Growing Interest on Capitol Hill

In addition to the Senate Finance Committee hearings, the House Ways and Means Committee held a hearing at the end of last month about the excess deaths in nursing homes owned by PE. “Private equity’s business model involves buying companies, saddling them with mountains of debt, and then squeezing them like oranges for every dollar,” said Representative Bill Pascrell (D-New Jersey), who chairs the House Ways and Means Committee’s oversight subcommittee.

The office of Senator Elizabeth Warren (D-Massachusetts) will investigate the effects of nursing-home ownership on residents, she announced on March 17.

The hope is that the pandemic’s effect on older people will bring more attention to the issues that lead to substandard nursing home care. “Much more is needed to protect nursing home residents,” Denise Bottcher, the state director of AARP’s Louisiana office, told the Senate panel. “The consequence of not acting is that someone’s mother or father dies.”

Healthcare AI investment will shift to these 5 areas in the next 2 years: survey

The COVID-19 pandemic has accelerated the pace of artificial intelligence adoption, and healthcare leaders are confident AI can help solve some of today’s toughest challenges, including COVID-19 tracking and vaccines.

The majority of healthcare and life sciences executives (82%) want to see their organizations more aggressively adopt AI technology, according to a new survey from KPMG, an audit, tax and advisory services firm.

Healthcare and life sciences (56%) business leaders report that AI initiatives have delivered more value than expected for their organizations. However, life sciences companies seem to be struggling to select the best AI technologies, according to 73% of executives.

As the U.S. continues to navigate the pandemic, life sciences business leaders are overwhelmingly confident in AI’s ability to monitor the spread of COVID-19 cases (94%), help with vaccine development (90%) and aid vaccine distribution (90%).

KPMG’s AI survey is based on feedback from 950 business or IT decision-makers across seven industries, with 100 respondents each from healthcare and life sciences companies.

Despite the optimism about the potential for AI, executives across industries believe more controls are needed and overwhelmingly believe the government has a role to play in regulating AI technology. The majority of life sciences (86%) and healthcare (84%) executives say the government should be involved in regulating AI technology.

And executives across industries are optimistic about the new administration in Washington, D.C., with the majority believing the Biden administration will do more to help advance the adoption of AI in the enterprise.

“We are seeing very high levels of support this year across all industries for more AI regulation. One reason for this may be that, as the technology advances very quickly, insiders want to avoid AI becoming the ‘Wild Wild West.’ Additionally, a more robust regulatory environment may help facilitate commerce. It can help remove unintended barriers that may be the result of other laws or regulations, or due to lack of maturity of legal and technical standards,” said Rob Dwyer, principal, advisory at KPMG, specializing in technology in government.

Healthcare and pharma companies seem to be more bullish on AI than other industries are.

The survey found half of business leaders in industrial manufacturing, retail and tech say AI is moving faster than it should in their industry. Concerns about the speed of AI adoption are particularly pronounced among small companies (63%), business leaders with high AI knowledge (51%) and Gen Z and millennial business leaders (51%).

“Leaders are experiencing COVID-19 whiplash, with AI adoption skyrocketing as a result of the pandemic. But many say it’s moving too fast. That’s probably because of current debate surrounding the ethics, governance and regulation of AI.  Many business leaders do not have a view into what their organizations are doing to control and govern AI and may fear risks are developing,” Traci Gusher, principal of artificial intelligence at KPMG, said in a statement.

Future AI investment

Healthcare organizations are ramping up their investments in AI in response to the COVID-19 pandemic. In a Deloitte survey, nearly 3 in 4 healthcare organizations said they expect to increase their AI funding, with executives citing making processes more efficient as the top outcome they are trying to achieve with AI.

Healthcare executives say current AI investments at their organizations have focused on electronic health record (EHR) management and diagnosis.

To date, the technology has proved its value in reducing errors and improving medical outcomes for patients, according to executives. Around 40% of healthcare executives said AI technology has helped with patient engagement and also to improve clinical quality. About a third of executives said AI has improved administrative efficiency. Only 18% said the technology helped uncover new revenue opportunities.

But AI investments will shift over the next two years to prioritize telemedicine (38%), robotic tasks such as process automation (37%) and delivery of patient care (36%), the survey found. Clinical trials and diagnosis rounded out the top five investment areas.

At life sciences companies, AI is primarily deployed during the drug development process to improve record-keeping and the application process, the survey found. Companies also have leveraged AI to help with clinical trial site selection.

Moving forward, pharmaceutical companies will likely focus their AI investments on discovering new revenue opportunities in the next two years, a pivot from their current strategy focusing on increasing profitability of existing products, according to the survey. About half of life sciences executives say their organizations plan to leverage AI to reduce administrative costs, analyze patient data and accelerate clinical trials.

Industry stakeholders are taking steps to advance the use of AI and machine learning in healthcare.

The Consumer Technology Association (CTA) created a working group two years ago to develop some standardization on definitions and characteristics of healthcare AI. Last year, the CTA working group developed a standard that creates a common language so industry stakeholders can better understand AI technologies. A group also recently developed a new standard to advance trust in AI solutions.

On the regulatory front, the U.S. Food and Drug Administration (FDA) last month released its first AI and machine learning action plan, a multistep approach designed to advance the agency’s management of advanced medical software. The action plan aims to force manufacturers to be more rigorous in their evaluations, according to the FDA.