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Morgan Holzaepfel
Partner, Primary Investments
Thomas Bremner, CFA
Partner, Growth Equity
Alex Kessel
Partner, Co-Investments
Marcus Lindroos
Principal, Primary Investments
Vikram Chari
Senior Associate, Growth Equity

Key Takeaways

  • $360 billion in administrative costs could be stripped from US healthcare sector alone through deployment of AI solutions
  • Diagnosing rare diseases and analyzing digital imaging such as MRI scans are among the myriad AI applications that could help improve clinical decision making while reducing the administrative burden on healthcare professionals
  • Because patient privacy is critical, health systems are developing guardrails and regulations to ensure record keeping and data transfer are secure and accurate when deploying AI technologies
  • AI has the potential to speed up drug discovery while reducing the cost of pharmaceutical development while potentially reducing failure rates at the same time

Artificial intelligence (AI) has the potential to upend every sector in a way that we’ve not seen in our lifetime. Healthcare, a $9 trillion global industry1, is no exception.

While there is much speculation about likely use cases and the potential impact of AI, we believe innovations will have a positive impact on costs and quality of care delivery. This is especially true when you consider the significant opportunity to reduce or eliminate upwards of $1 trillion of fraud, waste, and abuse in the US healthcare system alone2.

We believe the impact of AI in healthcare will be far reaching, specifically as it relates to the following:

Administration & Engagement


Clinical Care


Risk & Regulatory




While we are still in the early innings of AI’s potential to impact the healthcare sector, we believe use cases will be far reaching. We are cautiously optimistic about the use of health data to inform AI models, given privacy and regulatory restrictions. We believe that AI will meaningfully impact the cost and quality of care delivered and will ultimately lead to more efficient and effective drug discoveries. While it will happen in phases over time, we are in a once-in-a-lifetime paradigm shift and are excited to monitor the impact on healthcare and the investible opportunities that advances in AI and ML will create.

1. Source:  World Health Organization
2. Source: Jama Network Waste in the US Health Care System: Estimated Costs and Potential for Savings, October 7, 2019
3. Source: Jama Network Administrative Simplification and the Potential for Saving a Quarter-Trillion Dollars in Health Care, October 20, 2021
4. Source: National Bureau of Economic Research The Potential Impact of Artificial Intelligence on Healthcare Spending, Page 4, January 2023, revised October 2023
5. Sources: Forbes, Congress.gov
6. Source: whitehouse.gov. Executive Order.
7. Source: National Library of Medicine Estimated Research and Development Investment Needed to Bring a New Medicine to Market, 2009-2018, March 3, 2020
8. Source: McKinsey & Company Fast to first-in-human: Getting new medicines to patients more quickly, February 10, 2023
9. Source: National Library of Medicine Why 90% of clinical drug development fails and how to improve it?, February 11, 2022
10. Source: For illustrative purposes only as a select example of a company in the Adams Street portfolio related to use of AI in healthcare. This company is not intended to be representative of the holdings of the broader Adams Street portfolio or any particular Adams Street-managed investment vehicle.
11. Source: Freenome
12. Source: PLOS Digital Health Performance of ChatGPT on USMLE: Potential for AI-assisted medical education using large language models, February 9, 2023.
13. Source: Atropos Health How Well Do Large Language Models Support Clinician Information Needs?, March 31, 2023
14. Source: WhatIs.com What are AI hallucinations?, June 2023
15. Source: Atropos Health How Well Do Large Language Models Support Clinician Information Needs?, March 31, 2023
16. Source: Nature Supervised deep learning with vision transformer predicts delirium using limited lead EEG, May 16, 2023
17. Source: Amazon Web Services What is an API (Application Programming Interface)?
18. Source: Amazon Web Services AWS HealthScribe
19. Source: Journal of Medical Internet Research Assessing the Utility of ChatGPT Throughout the Entire Clinical Workflow: Development and Usability Study August 22, 2023
20. Source: Bain & Company Beyond Hype: Getting the Most Out of Generative AI in Healthcare Today August 7, 2023

Important Considerations: The above information is for informational purposes only and is not investment advice or an offer or sale of any security or investment product or investment advice. Offerings are made only pursuant to a private offering memorandum containing important information. Statements made are as of the date hereof unless stated otherwise, and there is no implication that the information contained herein is correct as of any time subsequent to such date. All information has been obtained from sources believed to be reliable and current, but accuracy cannot be guaranteed. References herein to specific sectors, strategies or companies are not to be considered a recommendation or solicitation for any such sector, strategy, or company. While Adams Street believes in the merit of private market investing, such investments are subject to a variety of risk factors and there can be no guarantee against loss. Past performance is not a guarantee of future results. Projections or forward-looking statements contained in the Paper are only estimates of future results or events that are based upon assumptions made at the time such projections or statements were developed or made. There can be no assurance that the results set forth in the projections or the events predicted will be attained, and actual results may be significantly different from the projections. Also, general economic factors, which are not predictable, can have a material impact on the reliability of projections or forward-looking statements. Adams Street Partners, LLC is a US investment adviser governed by applicable US laws, which differ from laws in other jurisdictions.