A Primer on US Healthcare

Summary

I’ve written about twenty industries on Generative Value. The largest, and most complex one, that I haven’t yet touched is healthcare. I’ve spent the last few months changing that. Talking to clinicians, administrators, and investors.I’ve come away believing the opportunity for AI’s impact on healthcare is one of the most exciting applications in the world. It’s a rare opportunity for a (very) important problem to meet a new technology perfectly suited to solve it. But to lay out that case, we have to first understand the problem.The US Healthcare System has become a $5T web of suppliers, providers, payers, and middlemen accounting for nearly 20% of US GDP:This has created an administrative burden that costs $1 trillion annually. Hospitals have teams of people filling out forms and documentation, in addition to the clinicians themselves. I’d include some more stats, but just Google physician burnout and you’ll get the picture.My goal of this article is to explain (as best I can) the structure of the US healthcare industry today, the incentives that made it that way, and how technology can be a part of the solution.In summary:There’s no one problem that’s created this system; many variables have contributed to it.While reform is important, it’s much harder than automating processes within today’s system.That system connects the US gov’t, insurance companies, pharmaceutical companies, healthcare providers, a few extra middlemen, and patients; all requiring documentation between each.That administrative burden, while well-intentioned, decreases the well-being of both providers and patients.AI provides a perfect solution to this burden.To explain the final point, we first have to understand the system today, how we got here, and the incentives for each party involved.Thank you to the thirty or so people I talked to in preparation for this article. If it takes that many people to understand something, it’s a real indictment of either the complexity of the system or the i...