• Written by Azhar Aliyar, Director

Healthcare organisations are spending more on IT every year, but a significant portion of that investment is going towards extracting insights from existing systems rather than improving patient care, with 20.7% of US health care and social assistance providers reporting using AI in the previous two weeks, according to the US Census Bureau's Business Trends and Outlook Survey, AI supplement, late 2025 to early 2026.

Where IT money actually goes in a healthcare business

Most IT budgets in healthcare are consumed by the costs of maintaining and integrating various systems, such as electronic health records, PACS, revenue cycle, and ERP, rather than investing in new technologies that can improve patient outcomes. This is because healthcare organisations often have to resort to custom-built reports and dashboards to answer specific questions, which can be time-consuming and costly. A significant portion of the IT budget is spent on getting answers out of these systems, rather than running them efficiently.

For instance, a category manager at a hospital may need to compare the prices of different medical suppliers, but the existing systems may not be able to provide this information easily, leading to a request for a custom-built report. This can lead to a never-ending cycle of report requests, each of which requires significant IT resources to build and maintain.

The report and dashboard backlog

The report and dashboard backlog is a major contributor to the growing IT spend in healthcare, with each new question requiring a custom-built solution. This can be replaced by AI-powered systems that can answer questions in real-time, without the need for manual intervention. By placing AI over the existing systems, healthcare organisations can reduce the need for custom-built reports and dashboards, and free up IT resources to focus on more strategic initiatives.

A shift supervisor at a hospital, for example, can use AI to check the maintenance log and identify potential issues before they become major problems, rather than relying on a custom-built report to provide this information.

Extending the electronic health record, PACS, revenue cycle and ERP instead of replacing them

Rather than replacing existing systems, healthcare organisations can use AI to extend their capabilities and ask better questions of the data they already own. This can help defer a replacement programme and reduce the associated costs. By using AI to unlock the insights hidden in their existing systems, healthcare organisations can make better decisions and improve patient outcomes, without having to invest in new systems.

According to the US Census Bureau's Business Trends and Outlook Survey, 64.3% of US businesses made no change of any kind to adopt AI, and only 6.8% changed how they collect or manage data. This suggests that healthcare organisations can adopt AI without having to make significant changes to their existing systems or processes.

Integration spend

Integration spend is another major contributor to the growing IT spend in healthcare, with each new system requiring point-to-point links to existing systems. AI can help reduce this spend by joining data at the point of the question, rather than building and maintaining a point-to-point link for each one. This can help reduce the complexity and cost of integration, and make it easier for healthcare organisations to adopt new systems and technologies.

For more information on how AI is being used in healthcare, visit our blog to learn more about the latest trends and developments.

Where AI adds cost rather than removing it

While AI can help reduce IT spend in some areas, it can also add cost in others, such as the data work and governance required to ensure that AI systems are accurate and reliable. This cost cannot be skipped, and healthcare organisations need to budget for it honestly. According to the US Census Bureau's Business Trends and Outlook Survey, 11.4% of US businesses used AI in their information technology function in the previous six months, which suggests that there is a growing need for AI expertise and resources in healthcare.

Healthcare organisations need to be aware of these costs and plan accordingly, rather than assuming that AI will automatically reduce IT spend. For more information on how to implement AI effectively, contact us at our contact page to speak to one of our experts.

How to tell whether IT spending actually fell

To determine whether IT spending has actually fallen, healthcare organisations need to measure it against the requests and licences that stopped, rather than against a projection. This requires a detailed analysis of the IT budget and a clear understanding of where costs are being reduced. According to our analysis of the US Census Bureau's Business Trends and Outlook Survey, 22.4% of US businesses reported using AI in the two weeks to July 2026, which suggests that there is a growing trend towards AI adoption in healthcare.

For more information on how to measure the effectiveness of AI in reducing IT spend, visit our executive and strategic leadership page to learn more about the latest best practices and strategies.

What this does not do

This approach to reducing IT spend in healthcare does not replace the need for strategic planning and leadership, but rather complements it. It is not a silver bullet that can solve all IT problems, but rather a tool that can help healthcare organisations make better decisions and improve patient outcomes. Healthcare organisations need to be aware of the limitations of AI and plan accordingly, rather than assuming that it will automatically solve all their IT problems.