AI in healthcare: 2024 stats explained

Is your health or wellness business on the verge of AI adoption, or are you just curious if AI is all hype or a game-changer? At Vention, we've gathered all essential statistics to help you understand AI's transformative power and impact in the healthcare industry.

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What’s Vention, and why do we care about artificial intelligence in healthcare landscape?

Vention is a software development company with a wealth of AI and healthtech experience. For over 20 years, we've been crafting custom AI solutions like computer vision-based medical imaging, speech recognition, medical chatbots, virtual assistants, and machine learning-powered predictive analytics.

We've teamed up with hundreds of healthcare giants, including Thirty Madison and K Health, so we always stay on top of the latest trends in the healthcare industry to offer extra value to our clients and readers. Use these AI statistics to make smarter strategic decisions, uncover innovation opportunities, and get ahead of the competition.

Healthcare AI fundamentals: market size and CAGR

First, let's dive into the current healthcare AI market and its future trends to set the stage for effective strategic decisions on market entry and investments.

Various sources offer slightly differing estimates of the current and projected market size for artificial intelligence in healthcare, but they all agree on one thing — ~~the numbers are staggering.~~

Healthcare AI market size (in billion USD)

MarketsandMarkets

$20.9B

2024

$148.4B

2029

Sources: [1], [2], [3]

29%

of 2022’s funding pot

29%

of 2022’s funding pot

2022

33%

of 2023 digital health funding

33%

of 2023 digital health funding

2023

40%

of the Q1 2024's funding total

40%

of the Q1 2024's funding total

2024

Investment trends

AI-based digital health startups brought in 40 percent of Q1 2024's funding total, or $1.1 billion across 45 deals, rising from 33 percent of 2023 digital health funding and 29 percent of 2022’s funding pot. ^[34]

In 2023, 39 percent of surveyed healthcare leaders planned to invest in AI to predict outcomes and support clinical decisions, 37 percent aimed to optimize operational efficiency, and 32 percent intended to integrate diagnostics. ^[5]

Currently, 29 percent of healthcare leaders are investing in generative AI technology, with 56 percent planning to invest within the next three years. ^[5]

A deeper look at AI adoption and application scenarios

Interested to know which field is the most promising in the healthcare market? Here are the facts:

$0.9B

Market size

$0.9B

Market size

2023

$4.9B

Expected market size

CAGR +40.2%

$4.9B

Expected market size

CAGR +40.2%

2028

AI in drug discovery

Of all AI application scenarios, drug discovery dominated the healthcare market in 2023 with a share of 28.1 percent. The market size was estimated at $0.9 billion, and it is expected to reach $4.9 billion by 2028, growing at a CAGR of 40.2 percent during the forecast period. ^{[6] [7]}

As of January 2024, approximately 80 percent of pharmaceutical and life sciences professionals use AI in drug discovery. ^[2]

AI technology can significantly reduce the time (from five or six years to just one year) pharmaceutical companies require to discover new drugs. Also, AI promises a potential cost reduction of up to 70 percent and an economic value of $60 billion to $110 billion a year for the pharma and medical-product industries.

The latter is mainly possible because AI can accelerate the identification of compounds for potential new drugs, speed their development and approval, and improve how they are marketed. ^{[2] [8] [9]}

Medical devices

As of May 2024, the FDA approved 882 devices powered by artificial intelligence and machine learning. The top five application areas are ~~radiology~~ (671 devices), ~~cardiovascular~~ (90), ~~neurology~~ (32), ~~hematology~~ (17), and ~~gastroenterology-urology~~ (13). ^[10]

Number of AI/ML-enabled medical devices approved by the FDA

Total accumulated

before  2010

2010

2011

2012

2013

2014

2015

2016

2017

141

2018

221

2019

332

2020

461

2021

616

2022

837

2023

882

Q1’24

Other AI applications

In 2023, 53 percent of global AI drug discovery companies were based in the US.
Half of the 50 largest pharmaceutical companies have partnered with or licensed agreements with AI companies (think Novartis and Microsoft, Sanofi and Aqemia). 
The healthcare chatbots market was valued at $116.9 million in 2018 and is projected to reach $345.3 million by 2026, at a CAGR of 14.5 percent.
The virtual assistants market segment is expected to grow at a 44.2 percent CAGR from 2024 to 2030.
The AI in the healthcare market is split into two segments: software (81.25 percent, valued at $11.7 billion) and services (18.75 percent, valued at $2.7 billion).
The virtual nursing assistant AI application market is estimated to reach $20 billion by 2026.

Sources: [6], [11], [12], [13], [14], [15]

AI through the eyes of healthcare providers: experiences and expectations

94 percent of healthcare companies report using artificial intelligence/machine learning in some capacity.

However, about 70 percent of health system respondents believe AI will have a greater impact on their organization, shifting AI strategies from the IT department to the C-suite. This aligns with the fact that 80 percent of US healthcare providers are accelerating spending on IT and software, with AI being a top priority. ^{[16], [17]}

The 201 US healthcare provider executives surveyed in June 2023 have mixed feelings toward AI — from fear, concern, and caution to neutral, optimism, and excitement. The highest percentage of positive sentiment (53 percent) among this broad spectrum of emotions is attributed to academic medical centers, followed by health systems and hospitals (40 percent). Freestanding hospitals show the lowest percentage of positive sentiment (24 percent). ^[17]

Percentage of positive sentiment (neutral, optimism, excitement)

Percentage of negative sentiment (fear, concern, caution)

Health systems and hospitals

Percentage of positive sentiment (neutral, optimism, excitement)

40 percent

Percentage of negative sentiment (fear, concern, caution)

60 percent

Academic medical centers

Percentage of positive sentiment (neutral, optimism, excitement)

53 percent

Percentage of negative sentiment (fear, concern, caution)

47 percent

Other national and regulated health systems

Percentage of positive sentiment (neutral, optimism, excitement)

36 percent

Percentage of negative sentiment (fear, concern, caution)

64 percent

Freestanding hospitals

Percentage of positive sentiment (neutral, optimism, excitement)

24 percent

Percentage of negative sentiment (fear, concern, caution)

76 percent

Key barriers to AI adoption identified by respondents include unclear benefits, regulatory and legal considerations, clinical risk, and lack of technical experience.

Voices of patients: The impact of AI in healthcare

The Outbreak Near Me survey of 3,317 US adults conducted in May 2023 reports that nearly one-third (32 percent) of people are comfortable with artificial intelligence leading a primary care appointment, although fewer (25 percent) would be comfortable with AI-led therapy. ^[18]

Twelve percent of adults in the US say their healthcare providers currently use AI to help diagnose, treat, or communicate with patients, but 66 percent expect AI to play a bigger role in healthcare in the next five years. ^[18]

Another survey of 1,000 respondents conducted in June 2023 shows that eight in 10 Americans believe that AI has the potential to improve the quality of healthcare, reduce healthcare costs, and increase accessibility to healthcare.

The top three positive effects named are ~~increased efficiency~~ (63 percent), ~~cost savings~~ by automating tasks (56 percent), and ~~improved diagnosis and treatment~~ (53 percent). ^[19]

The same survey reports that 25 percent of Americans would not visit a healthcare provider who refuses to embrace AI technology. They believe that AI brings faster medical care (52 percent), reduces risks of human error in medical decision-making (47 percent), enables remote access to healthcare (42 percent) and more accurate diagnoses (42 percent).

Interestingly, the Pew Research Center survey conducted in December 2022 with a panel of 11,000 respondents showed that 60 percent of Americans would feel uncomfortable if their healthcare provider relied on AI in their medical care to diagnose diseases and recommend treatments. ^[20]

What’s more, the public was unconvinced that the use of AI in healthcare would improve health outcomes: only 38 percent expected better results, while 33 percent expected worse results and 27 percent thought it wouldn't make any difference. ^[20]

Are we seeing a shift from negative to mixed (and even positive) feelings about AI solutions for healthcare? It's too soon to tell, but if a change is happening, we're just at the starting line.

Benefits of AI in healthcare

Potential for reducing emergency room visits and hospitalizations by 79.2 percent and healthcare workers’ errors by 86 percent. ^{[21] [22]}

Increased share of physicians' time spent on treating patients: from 50 percent before AI implementation to 67 percent after AI implementation. ^[23]

Potential to save 250,000 lives by 2030 — a forecast based on the expectations that AI solutions for healthcare can eliminate 86 percent of errors made by healthcare workers. ^[21]

A study involving 80,000 women found that AI helped healthcare workers detect 20 percent more cases of breast cancer, while also avoiding an increase in false positives and reducing doctor workloads by 44 percent. ^[24]

Financial impact

Wider adoption of AI could lead to five to ten percent savings in US healthcare spending. ^[25]

AI applications could cut annual US healthcare costs by $150 billion in 2026.

Other forecasts suggest that wider AI adoption could generate savings of up to $360 billion annually — approximately 10 percent of the country’s healthcare spending. ^{[8] [26]}

Utilizing AI to diagnose could save up to 50 percent on treatment costs while improving health outcomes by up to 40 percent. ^[27]

AI can potentially reduce drug production costs by $70+ billion by 2028. ^[21]

Market drivers for AI adoption

AI in healthcare is booming due to four key factors: a critical shortage of medical staff, widespread burnout among healthcare professionals, an aging population, and the explosive increase in health data.

15M

The global shortage of health workers

15M

The global shortage of health workers

2020

10M

The global shortage of health workers

10M

The global shortage of health workers

2030

Lack of medical staff

In 2020, the global shortage of health workers was estimated at 15 million. In 2024, 77 percent of health leaders report care delays, even in emergency departments, due to staff shortages. The World Health Organization projects a shortfall of 10 million health workers by 2030. ^{[28] [29] [30]}

This global trend is mirrored regionally with grim forecasts ^[4]:

US: 87 percent of healthcare providers list staffing shortages as their biggest challenge. Over 5 million medical workers left their jobs during the COVID-19 pandemic. By 2026, more than 6.5 million are expected to leave, with only 1.9 million replacements, creating a deficit of over 4 million health workers.
EU: The region will need an additional 1.6 million care workers by 2050.
Britain: The National Health Service is understaffed by 154,000 full-time workers, and if current trends continue, that figure could rise to 571,000 by 2036.
Japan: The Land of the Rising Sun needs 960,000 health and welfare workers by 2040.

How can AI help mitigate the medical staff shortage, you ask?

By automating routine tasks like data entry and documentation, facilitating diagnostics, enabling remote patient monitoring, and assisting in clinical decision-making, such as medication dosage calculations.

47%