The following is a guest article by Durga Chavali, IT leader at Trinity Health

The runaway cost of healthcare always forces us to face one simple fact: waste breaks our system. And let’s be straight: a huge chunk of that waste isn’t accidental; it’s induced. Academics call it Physician-Induced Demand (PID), which means providers use their superior knowledge—the information imbalance—to recommend procedures that benefit their bottom line more than the patient. This isn’t just an ethical issue for doctors; it’s an indictment of the perverse incentives running our healthcare market.

We must recognize PID for what it is: a profound market failure. It acts like a giant economic straw, sucking up everyone’s premiums, unnecessarily enriching specific medical sectors, and, worst of all, exposing patients to needless procedures and financial stress. Our hospitals already struggle with staffing crises; we just can’t afford this self-serving inefficiency anymore. We have a moral and financial obligation to fight PID.

The System is Broken: How FFS Pushes Doctors to Over-Treat

The evidence is clear: the structure of modern medicine actively encourages PID. The doctor-patient relationship is essentially an agency agreement. We trust our doctors implicitly because they hold the specialized knowledge we lack. But this informational gap gives them the power to influence our care, and when you couple that power with the wrong financial structure, it becomes toxic.

The true problem is the Fee-For-Service (FFS) model. Decades of research show a clear link: FFS rewards volume over value. When a doctor’s income starts to dip—maybe a new clinic opens up nearby—they naturally try to make up for it by increasing the intensity or quantity of services for each patient. We see this in the almost frantic way hospitals over-adopt expensive equipment like MRI scanners; they effectively create demand just to cover their huge capital costs. PID is a complex, systemic problem rooted in human nature and sustained by flawed economic design.

The Computational Antidote: AI as Our Objective Co-Pilot

Fortunately, we now possess the most powerful tool to counteract PID: Augmented Intelligence (AI). AI’s strength lies in its ability to directly attack both the informational imbalance and the system’s operational flaws that encourage over-treatment.

Neutralizing Discretion with Data

AI-powered Clinical Decision Support Systems (CDSS) deliver the most direct blow to self-interested prescribing. These algorithms read and analyze mountains of data to provide evidence-based, real-time recommendations.

This technological layer introduces an objective second opinion to human judgment. The AI doesn’t have debt or financial pressures. It provides a transparent, non-financialized recommendation based on what works for large patient populations. This feature shrinks the information gap and actively steers the physician toward the optimal level of care, not the maximum. It transforms the professional relationship from simple agency to augmented intelligence, where computational facts rigorously support the doctor’s decision.

Dismantling the Infrastructure of Waste

While we fight to eliminate the FFS model, AI simultaneously removes the systemic waste that inflates costs and validates high-volume targets. Machine Learning and Predictive Analytics are revolutionizing operations, helping us optimize supply chains, and radically cutting inventory waste.

Even more immediately, Generative AI tools are finally automating the stressful administrative tasks, like clinical documentation and insurance prior authorizations. When AI frees a physician from hours of desk work, it not only reduces burnout but also structurally eliminates the need to inflate service volumes to cover high overhead. The system’s focus naturally shifts from volume-based pay to value-based outcomes, creating a permanent barrier against induced waste.

Exhortation: Act Now—The Time for Timidity is Over! 

The data is clear: AI offers us a real chance to fix the deepest market failures in healthcare. We can no longer afford to run small pilots. We all must commit to widespread, standardized implementation across the entire industry.

I urge every institutional leader, regulator, and technology developer to embrace three non-negotiable actions immediately:

• Demand Transparency and Auditability: We must fully validate any AI used for clinical or financial review; regulators must constantly audit these systems to track true waste reduction, making absolutely sure the AI prioritizes patient outcomes over corporate profit
• Integrate AI into Payment Reform: Policymakers must proactively design new payment models that position AI as the technological engine for Value-Based Care (VBC); they must reward organizations that show measurable cuts in induced services and demonstrate better patient health, not just higher revenue
• Invest in Responsible Augmentation: Our goal must be to empower the physician with an objective partner, not to replace them; we must invest heavily in clinician training and inclusive AI design to ensure we prevent AI itself from becoming the next tool of exploitation

The cost of waiting—measured in billions of dollars and, far worse, in avoidable patient suffering—is simply unacceptable. By rigorously and ethically deploying AI, we restore the fiscal sanity of our healthcare system and, most importantly, ensure that a patient’s welfare motivates every single medical decision.

About Durga Chavali

Durga Chavali is an award-winning healthcare technology leader, AI researcher, and cloud solution architect with nearly two decades of experience driving innovation across healthcare ecosystems. She currently serves as an IT leader at Trinity Health, where she leads enterprise initiatives.

Durga is a Distinguished Fellow of the Soft Computing Research Society (SCRS) and a recipient of the Distinguished Research Excellence Award from CISCOM for her pioneering work in healthcare AI and data integration frameworks. She serves as a Global Ambassador for Women in Tech, amplifying opportunities for women in technology worldwide. Her research has been featured in leading outlets, including Tech Times and Phi Kappa Phi. She has also contributed peer-reviewed articles to IEEE Access, Cureus, and other journals on topics such as AI ethics, healthcare interoperability, blockchain in healthcare, and predictive analytics.

With a passion for ethical and human-centric AI, Durga actively shapes technology policy, editorial review boards, and thought leadership in the field—ensuring innovation is aligned with compassionate care, compliance, and meaningful impact.