AI Deregulation: What Physician Practices Need to Know About the Risks and Benefits

Why AI Deregulation Matters for Physician Practices

Artificial intelligence (AI) is becoming an integral part of physician practice operations—from clinical decision support and diagnostic tools to revenue cycle management and patient engagement platforms. Conversations around AI deregulation raise important questions about how these changes could impact the safety, efficiency, and financial stability of physician practices.

Unlike large hospital systems, small and medium-sized practices often operate with limited staff and budgets. Deregulation could offer some advantages, but it also places new compliance and risk management burdens squarely on practices themselves.

The Potential Benefits of AI Deregulation

1. Faster Access to Innovation

   Regulatory processes, like FDA clearance, can be lengthy and costly. Removing these barriers may allow practices to adopt cutting-edge tools sooner, improving patient care and operational efficiency.

   
   

   • Examples: Earlier access to advanced diagnostic algorithms, remote monitoring tools, or practice management systems enhanced by AI.

     
     

2. Lower Cost of Entry for AI Tools

   Vendors might pass along cost savings from avoiding expensive regulatory approval processes, making AI products more affordable for smaller practices.

   
   

   • Impact: Practices may be able to access tools previously out of reach due to cost, such as advanced imaging interpretation software or predictive analytics.

     
     

3. Operational Efficiency Gains

   AI can automate routine tasks (prior authorizations, patient outreach, coding) and free up time for clinicians to focus on patient care. Deregulation could expand the availability of these tools.

The Risks of AI Deregulation for Physician Practices

1. Patient Safety Concerns

   Without regulatory oversight, AI tools may not be rigorously validated before use.

   
   

   • Why it matters: Misdiagnoses or inappropriate treatment recommendations can lead to patient harm and malpractice exposure. Practices with fewer resources may rely more heavily on AI for decision support, magnifying the risk.

     
     

2. Greater Liability Exposure

   If AI causes harm and there’s no regulatory framework in place, practices could face more lawsuits.

   
   

   • Why it matters: FDA clearance can serve as a defense that a product met minimum safety standards. Without it, practices must prove their due diligence in selecting and using the tool.

     
     

3. Vendor Vetting Challenges

   Deregulation removes FDA or other external validations that practices often rely on to evaluate vendors.

   
   

   • Why it matters: Practices will need to establish their own evaluation criteria, which may be difficult without internal IT or compliance teams.

     
     

4. Quality & Equity Issues

   Unregulated AI tools may not undergo bias testing or independent quality audits.

   
   

   • Why it matters: Poorly validated tools could exacerbate health disparities, undermine quality metrics, and negatively impact value-based reimbursement arrangements.

     
     

5. Financial Strain

   Practices may face added costs to:

   • Implement robust internal oversight of AI tools

   • Replace tools that underperform or cause harm

   • Defend against potential lawsuits

     
     

   • Why it matters: Small practices already face thin margins, and unexpected costs could threaten viability.

     
     

6. Loss of Patient Trust

   High-profile errors by unregulated AI tools could damage patient confidence in the practice.

   
   

   • Why it matters: Patient satisfaction and retention are critical, especially in competitive markets.

   
   

What Physician Practices Should Do to Prepare

1. Develop Vendor Vetting Protocols: Require detailed information on how AI tools are validated, tested for bias, and maintained.

   
   

2. Implement AI Oversight Processes: Track performance and outcomes over time; update or discontinue use of tools that show safety or accuracy issues.

   
   

3. Educate Clinicians and Staff: Train physicians to use AI tools as support, not as replacements for clinical judgment.

   
   

4. Review Liability Coverage: Ensure malpractice policies and vendor contracts address AI-related harms.

   
   

5. Monitor Emerging Standards: Voluntary frameworks like NIST’s AI Risk Management Framework can help fill gaps left by deregulation.

Bottom Line

AI deregulation could speed access to innovative tools and potentially lower costs, but it also shifts the burden of safety validation and oversight from regulators to physician practices.

For small and medium-sized practices, the stakes are high. Without robust internal processes for evaluating and monitoring AI, deregulation could increase patient safety risks, liability exposure, and financial strain. Practices must balance the benefits of faster access to AI innovation with the need for cautious, structured adoption.

Do you have questions about this blog? Please contact jessicazeff@simplycomplianceconsulting.com.