Artificial intelligence isn’t just the next shiny tool in healthcare’s long line of tech trends. According to James Wallace, senior researcher at Harvard Business School and author of Precision Medicine: AI and the Science of Personalized Health Care, it’s the layer that could finally make sense of the system’s massive data problem—and cut billions in waste along the way.
In a recent episode of Health/Tech Edge, Wallace joined me to talk about how AI is reshaping healthcare right now, not in some distant future.
When asked whether AI is just another tool, Wallace didn’t hesitate. AI, he said, is a synthesis layer—the connective tissue that can finally bridge the payer, provider, and patient sides of healthcare. Instead of running in silos, AI can integrate data across systems to improve decisions and outcomes.
He compared the moment to a telecom leapfrog: countries that skipped copper wiring and went straight to wireless. Healthcare, long known for lagging in tech adoption, now has the same opportunity—if it can move fast enough.
But speed isn’t the only challenge. Regulation, legacy systems, and entrenched business models all slow progress. Wallace believes the organizations that embrace open systems and interoperability will lead the next generation of care.
Wallace points to the staggering cost of inefficiency in U.S. healthcare. Roughly 16% of total healthcare spending could be eliminated through basic pharmacogenomic testing—simple $120 tests that identify which drugs actually work for each person.
“That’s low-hanging fruit,” he said. “We could do it tomorrow.”
Other operational targets include revenue cycle management and prior authorization—process-heavy areas where AI can automate coding, predict denials, and reduce delays that hurt both patients and payers. For Wallace, these are the near-term wins that prove AI’s business value.
The conversation turned from efficiency to impact. Wallace believes the future lies in moving from reactive, episodic care to predictive, preventive care. AI will make it possible to identify conditions before they manifest—and to target treatments to those who will truly benefit.
In oncology, for example, companies like Tempus AI are using genomics and data modeling to identify which cancers are likely to respond to certain treatments, potentially replacing chemotherapy altogether with targeted therapies.
“We’re shifting from trial and error to precision,” Wallace said.
One of Wallace’s most provocative ideas is the coming “democratization of health data.” He envisions a near-future world where patients own their data—and get paid for it.
“Imagine showing up at the doctor and being paid $40 to share your pharmacogenomic data,” he said. “That flips the model. Suddenly, patients are compensated to do the right thing.”
He believes this shift will finally break down the walled gardens that have long kept healthcare data locked inside EHR vendors like Epic. Open, portable data could enable an entirely new ecosystem of innovation, with patients at the center.
For all the optimism, Wallace doesn’t underestimate the barriers. Healthcare remains heavily regulated and resistant to rapid change. But he sees signs of movement—from startups rethinking patient engagement to large payers experimenting with predictive analytics.
“We’re just coming to terms with what Alvin Toffler called future shock,” Wallace said. “Our ability to receive information has exceeded our ability to synthesize it. AI is how we catch up.”
Watch the full interview with James Wallace on Health/Tech Edge or listen to the full episode below. Learn how AI can cut costs, improve productivity, and bring healthcare closer to the people it serves.