Artificial intelligence is no longer something healthcare organizations are merely exploring. It is already embedded in electronic health records, documentation platforms, scheduling systems, revenue cycle software, and many other applications that providers rely on every day. As a result, the real question is no longer whether your organization uses AI, but whether you understand how it is being used and what legal risks may accompany it.

1. Do You Have Full Visibility Into Where AI Is Operating?

One of the first questions every healthcare executive should ask is whether the organization has a complete picture of where AI is being used. While most leaders can identify the AI tools they intentionally purchased, many are unaware that AI capabilities may also be built into existing software and third-party platforms. Without a clear understanding of where AI is operating, it becomes much more difficult to establish meaningful oversight, evaluate compliance obligations, or respond to regulatory scrutiny.

2. Are You Prepared for Increasing Regulatory Expectations Around Transparency?

Healthcare organizations should also consider whether they are prepared for increasing expectations surrounding transparency. Regulators are paying closer attention to the role AI plays in healthcare decision-making, and that focus is likely to expand. Organizations should expect greater scrutiny of their governance processes, documentation, and, in some circumstances, whether patients should be informed that AI was involved in aspects of their care or administrative operations.

3. Do Your Vendor Agreements Protect Your Practice?

Finally, healthcare executives should take a close look at their vendor agreements. In many cases, AI enters an organization through third-party software rather than through products purchased specifically for their AI capabilities. Contracts should clearly address key operational and legal terms, including:

• Ownership: Clear terms regarding who owns AI-generated content and output.

• Data Usage: Restrictions on whether organizational and patient data may be used to train external AI models.

• Liability: The allocation of responsibility if an AI tool produces inaccurate results or operational failures.

• Regulatory Flexibility: Adaptable agreement structures that ensure protections remain sufficient as legal requirements evolve.

Looking Ahead

Artificial intelligence presents significant opportunities for healthcare organizations, but it also introduces new legal and operational risks. The organizations that will be best positioned moving forward are not necessarily those adopting AI the fastest, but those taking the time to understand how it is being used, establishing appropriate governance, and ensuring that their contracts adequately address the realities of an increasingly AI-driven healthcare environment.

At MDRXLaw, we work with healthcare providers, physician practices, pharmacies, management companies, and other healthcare organizations to identify and manage legal and regulatory risks before they become enforcement issues. Whether you are evaluating a new AI platform, negotiating a vendor agreement, or developing policies to govern the use of AI within your organization, our team can help you navigate the evolving legal landscape while supporting your operational goals. You may contact our healthcare attorneys by phone at 212.668.0200 or via email at info@mdrxlaw.com.