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Artificial Intelligence, the Evolution of the Healthcare Value Chain, and the Future of the Physician

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  • David Dranove
  • Craig Garthwaite

Abstract

Artificial intelligence (AI) is transforming production across all sectors of the economy, with the potential to both complement and substitute for traditional labor inputs. Healthcare is no exception. Dozens of recent academic studies demonstrate that AI can contribute to the healthcare value chain, by improving both diagnostic accuracy and treatment recommendations. In these ways, AI may wither complement or substitute for physicians. We argue that AI represents the culmination of decades of efforts to enhance medical decision making. Using an historical lens that considers long-standing institutional features of healthcare markets, we identify numerous obstacles to the implementation of AI in medical care, and identify which specialties are most at risk for substitution by AI.

Suggested Citation

  • David Dranove & Craig Garthwaite, 2022. "Artificial Intelligence, the Evolution of the Healthcare Value Chain, and the Future of the Physician," NBER Working Papers 30607, National Bureau of Economic Research, Inc.
    • Handle: RePEc:nbr:nberwo:30607
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    References listed on IDEAS

    as
    1. Amitabh Chandra & Douglas O. Staiger, 2007. "Productivity Spillovers in Health Care: Evidence from the Treatment of Heart Attacks," Journal of Political Economy, University of Chicago Press, vol. 115(1), pages 103-140.
    2. Dranove, David, 1988. "Demand Inducement and the Physician/Patient Relationship," Economic Inquiry, Western Economic Association International, vol. 26(2), pages 281-298, April.
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    Cited by:

    1. Ritu Agarwal & Michelle Dugas & Guodong (Gordon) Gao, 2024. "Augmenting physicians with artificial intelligence to transform healthcare: Challenges and opportunities," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 33(2), pages 360-374, March.
    2. Rathi, Sawan & Majumdar, Adrija & Chatterjee, Chirantan, 2024. "Did the COVID-19 pandemic propel usage of AI in pharmaceutical innovation? New evidence from patenting data," Technological Forecasting and Social Change, Elsevier, vol. 198(C).

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    More about this item

    JEL classification:

    • I11 - Health, Education, and Welfare - - Health - - - Analysis of Health Care Markets
    • I19 - Health, Education, and Welfare - - Health - - - Other
    • O32 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Management of Technological Innovation and R&D
    • O38 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Government Policy

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