To make the best out of the new technology, health care workers need training, financial incentives have to change, and regulators should step in to provide guardrails. Lacking those steps, AI could remain more hype than reality.

AI is everywhere in discussions among business leaders. In fact, it may be virtually the only thing anyone talks about at events like Davos. At one dinner I moderated at Davos this month, which included executives from global tech, health care, and other firms, the group was so engaged we needed to call time to end the conversation.

But as dominant as AI is as a conversation topic, its most well-known consumer applications are still rather trivial. For now, generative AI programs such as Dall-E and ChatGPT are perhaps best known for helping college students with their essays, or CEOs like Jane Fraser of Citi with tasks like choosing their next holiday destination. But you can hardly call that a productivity or prosperity revolution.

Behind the scenes, though, much more drastic AI applications are brewing, and in no sector more so than health care. Health care slurps up more financial and human resources than any other part of the economy, especially in the U.S., yet its outcomes often remain sub-par, whether because of backlogs, high costs, or a lack of qualified and motivated personnel. At the same time, many processes in health care are ripe for further automation.

For these reasons and more, consulting firms such as BCG see health care’s AI growth written on the wall: “AI is projected to grow faster in health care than in any other sector,” Matthias Tauber, managing director at BCG, told me this week, reflecting on a BCG study that came out this month. He projects AI’s growth rate in the sector to 85% per year in the next four years——a market worth $22 billion by the end of 2027. “This is a pot of gold,” Tauber said.

It won’t come as a surprise, then, that health care’s largest companies are ready to roll out their AI applications—not tomorrow, but today. When I spoke to Paul Hudson, CEO of Sanofi, a year ago, he already was bullish on the promise of AI for drug discovery.

This year, Roy Jakobs, CEO of health tech company Philips, told me about applications that are ready to be rolled out, most particularly in medical imaging.

“AI has a huge potential in imaging,” Jakobs told me, because “more and more patients need an image, and there’s a huge backlog.” In response, Philips developed algorithms that help reschedule patient appointments, improve scan speed and quality, and help diagnose what is visible on the scans.

“With less staff, you can treat more patients,” Jakobs told me of the cumulative effect of his company’s AI applications. But the challenge, he said, is mass adoption of those solutions. “You need clinicians to be willing to work in a different way. They need to be retrained,” he said. “There needs to be a financial reward, too, and it needs to be regulated.”

All those elements are lacking today, Jakobs lamented. For all the business attention to AI, governments have moved on from health care as the priority in peak COVID times to geopolitics and war. “We see a retrench,” he said. “Governments are spending more on warfare. Priorities have changed.”

As a result, AI innovation competes with other priorities, both inside and outside the health care sector. It is another example, I would argue, of how tech can have either a positive or negative impact, or none at all. What really matters is the priorities and policies of the people in charge.

More news below.

Peter Vanham
Executive Editor, Fortune
peter.vanham@fortune.com

This edition of Impact Report was edited by Holly Ojalvo.

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