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1/ The Next Pandemic is Cost in Healthcare. And artificial intelligence (AI) will play a transformative role in solving this problem. And along the way, shows a more general solution to a “disease” in economics -- curing Baumol’s cost disease. https://a16z.com/2020/12/14/solving-baumols-cost-disease-healthcare/
2/ Why does the cost of education and healthcare services continue to rise rapidly? According to economics theory, wages rise when there’s greater productivity, but a rise without an increase in productivity is often referred to as “Baumol’s Cost Disease” https://en.wikipedia.org/wiki/Baumol%27s_cost_disease
3/ One way out of this trap is to turn services into goods. Employing a cobbler to make a pair of custom shoes, for instance, is expensive, so we buy factory made shoes: shoes as a good instead of as a service.
4/ But is this seemingly alchemical transformation possible in healthcare? Until today, it’s essentially been accepted as a given that this cost “disease” is incurable where there’s the need for professional, highly trained people performing services.
5/ The cure involves bringing more artificial intelligence (AI) to the industry. ***AI creates a new opportunity: to transform services into goods.*** https://a16z.com/2019/11/19/ai-industrializing-discovery-biology-healthcare/
6/ We’ve been waiting decades -- maybe even centuries -- for the ability to reverse Baumol’s Cost Disease in our most service-heavy, yet most critical, industries, such as healthcare. The transformation of services into goods won’t occur overnight.
7/ If applied in the right places, with the right conditions, taking into account the hard realities of the healthcare system, AI can be a vastly powerful lever to pull.
8/ We may not cure Baumol’s Cost Disease overnight, but even a small gain in cost and time savings would have huge impacts in healthcare.
9/ To go into more depth, please check out the full blog post https://a16z.com/2020/12/14/solving-baumols-cost-disease-healthcare/
10/ As well as my podcast with @pmarca ! https://bio-eats-world.simplecast.com/episodes/cost-disease-healthcare-baumol
