Yesterday, I stood on stage at the historic Egyptian Theatre in Boise, Idaho, presenting a keynote on the future of generative AI in medicine. As I looked out across the audience, I couldn’t help but think back to another moment that took place just a few hundred miles west. In 1998, at Oregon Health & […] The post GenAI & value-based care: The partnership that can save American medicine appeared first on Robert Pearl, MD.
Yesterday, I stood on stage at the historic Egyptian Theatre in Boise, Idaho, presenting a keynote on the future of generative AI in medicine. As I looked out across the audience, I couldn’t help but think back to another moment that took place just a few hundred miles west.
In 1998, at Oregon Health & Science University, I presented a different talk on the future of healthcare. At the end I wandered the halls and saw a sign on the wall that remains etched in my memory. In big, bold letters, the top line read: “Cost. Access. Quality.” And below it, in small font: “Pick any two.”
That was the best we could do at the time. We could improve quality and expand access, but only by spending more. We could cut spending but inevitably would have to reduce access, quality or both.
My message to the audience in Bosie: this is a different era. We can do all three. We now have in our possession a technological tool that will allow us to drive down costs by elevating quality, improving health and making access easier.
A Crisis With One Solution
Healthcare spending in the United States now exceeds $5.5 trillion a year, yet outcomes continue to trail other developed nations. According to the Commonwealth Fund, the U.S. ranks last among 11 wealthy countries in health-system performance, with life expectancy five years below average and maternal mortality rates the highest of any high-income nation.
All this as costs continue to climb and access issues worsen. Employer insurance premiums are projected to climb 9% in 2026, ACA marketplace plans will go up 30%, and an additional 8 to 12 million Americans will lose their Medicaid coverage at the end of next year. When that happens, the costs of treating millions more uninsured American will fall to local hospitals, overcrowded ERs and the states.
Physicians, meanwhile, face their own pressures: burnout, staffing shortages and a payment system that rewards volume over value, putting them on a care-delivery treadmill. The result is a healthcare system that costs more, delivers less and leaves nearly everyone — patients and clinicians alike — frustrated and fatigued.
Nudges and small tweaks won’t be enough. The problems are too great and the challenges growing too fast.
Artificial Intelligence + Aligned Incentives: The 2 AIs Medicine Needs Now
Already, GenAI technology can summarize complex medical research, draft clinical notes and assist in diagnosis with accuracy rivaling (and sometimes exceeding) human experts.
Its capabilities are growing at an exponential rate. By conservative estimates, today’s models will be 30 times more powerful within five years and 1,000 times stronger within 10.
As its powers expand, the technology will transform every aspect of American medicine. Among its most promising applications are systems that can:
- Act as a digital partner for physicians to expand diagnostic accuracy and expertise.
- Close the “knowing–doing” gap in patient safety by catching errors and bias before harm occurs.
- Monitor hospitalized patients in real time, identifying danger hours before crisis strikes.
- Bring hospital-level care into the home, improving safety, comfort and convenience by empowering patients.
- Analyze mountains of unused clinical data to accelerate discovery, simplify research and fuel new breakthroughs.
- Safely extend affordable telemedicine to underserved communities, making quality care accessible to all 24/7.
- Perform precise surgical procedures with the skill and steadiness of the best human experts.
Those are the seven game-changing applications I described to the audience last night, which together have the potential to save hundreds of thousands of lives annually, make medical care affordable for the nation and give clinicians the time they need to restore the doctor-patient relationship. I will explore each topic in depth via an upcoming Forbes article (publishing November 3).
But it’s important to note that even the smartest technology will fail if it’s chained to yesterday’s payment models. Under the prevailing pay-for-volume (fee-for-service reimbursement system), the incentives are to do more regardless of whether it adds any value.
The future will require that we shift to a pay-for-value approach (capitation) that aligns the incentive for doctors, hospitals and patients. We need a medical approach that is a true “health system” not a “disease system.” The potential of generative AI will only be realized under value-based care, where physicians and organizations are rewarded for keeping people healthy, not for the number of procedures they perform.
That’s what makes Full Circle Health and its mission so inspiring. For 50 years, this Federally Qualified Health Center has provided high-quality, affordable care to tens of thousands of Idahoans, regardless of their ability to pay. They’ve proven that value-driven medicine isn’t theoretical. It’s possible. And with generative AI, it’s scalable.
Coming Full Circle
The future of medicine will depend on leadership. Meaningful progress will demand courage, collaboration and cooperation. We’ll need payment models that reward prevention and partnership, not volume and complexity. And we’ll need organizations willing to lead the way.
That’s why I’m grateful to Dr. Ted Epperly and everyone at Full Circle Health for inviting me to join their 50th anniversary celebration. Their commitment to value-based care, medical education and service for all Idahoans represents exactly the kind of leadership healthcare needs right now.
The most common question I am asked in the 40 keynotes I’ve presented this year is how will change happen. Everyone recognizes the need, but they are frustrated that so little is different today than 25 years ago. I tell them that visionary organizations like Full Circle Health will lead the way. The first individuals who walk down a snow-covered path make it easier for others to follow in their footsteps. And as others follow, the trail gets wider and easier for bigger groups to navigate. In this way, I’m confident that Boise, and Full Circle Health, will help shape the future of American medicine.
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Dr. Robert Pearl is the former CEO of The Permanente Medical Group (Kaiser Permanente), the nation’s largest physician group. He’s a Forbes contributor, bestselling author, Stanford University professor, and host of two healthcare podcasts. Check out Pearl’s newest book, ChatGPT, MD: How AI-Empowered Patients & Doctors Can Take Back Control of American Medicine with all profits going to Doctors Without Borders
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