Unlocking Healthcare Innovation: AI Market to Surge to $176.4 Billion by 2031

Unlocking Healthcare Innovation: AI Market to Surge to $176.4 Billion by 2031

According to the latest report from Meticulous Research®, the global healthcare artificial intelligence (AI) market is expected to soar to $176.4 billion by 2031, growing at an impressive compound annual growth rate (CAGR) of 31.3% from 2024 to 2031. This rapid expansion is fueled by the increasing demand for personalized healthcare, the exponential growth of complex healthcare datasets, and the rising need to cut healthcare costs. However, despite this strong growth trajectory, challenges such as trust issues with AI technology adoption persist, limiting the pace of market development.

In addition, the potential of AI in treating chronic and infectious diseases, as well as its rising use in clinical trials to accelerate drug launches, is anticipated to create significant opportunities for the market. Yet, discrepancies caused by technological upgrades and human reluctance to embrace AI remain hurdles for stakeholders. Notably, the rise of AI-powered clinical decision support systems (CDSS), designed to assess patient risk, represents a key trend shaping the future of healthcare AI.

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Market Segmentation

1. By Offering

The healthcare AI market is divided into software, hardware, and services, with each segment playing a critical role in industry growth.

• Software Segment Dominance: In 2024, the software segment is expected to capture the largest share of the market. Its dominance is due to AI’s ability to reduce administrative complexities, improve data analysis accuracy, and manage disease progression and recovery. Additionally, healthcare IT companies are continuously releasing new software tailored for these purposes, further driving growth.

• Services Segment Fastest Growth: The services segment, however, is projected to record the highest CAGR during the forecast period. The increasing use of AI services in clinical trials to speed up drug launches, the reduction of human error, and the integration of AI to provide 24/7 personalized support are key factors contributing to this rapid expansion.

2. By Technology

The market is further segmented by technology into machine learning, natural language processing (NLP), context-aware processing, and querying methods.

• NLP Leads the Way: Natural language processing is expected to account for the largest share of the market in 2024. This is primarily due to its ability to manage vast amounts of healthcare data, streamline physician documentation, and optimize billing processes. Moreover, its ability to predict potential health risks early on makes it an invaluable tool in modern healthcare.

• Rapid NLP Growth: NLP is also expected to grow at the fastest rate in the coming years, given its increasing relevance in organizing complex datasets and driving efficient backend operations in healthcare settings.

3. By Application

AI in healthcare is used across various applications, including drug discovery, hospital workflow management, patient data and risk analytics, medical imaging, patient management, and precision medicine.

• Hospital Workflow Management Leads: In 2024, hospital workflow management is expected to dominate the market. With hospitals generating massive amounts of data, the use of AI to organize and evaluate patient information, improve care coordination, and reduce operational costs has become essential. AI-powered chatbots are also increasingly utilized for customer service, further contributing to this segment's growth.

• High Growth Potential: This segment is also forecasted to register the highest growth rate over the next decade, driven by the demand for improved patient experience, automated tasks, and streamlined hospital operations.

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4. By End User

The market is segmented by end user into hospitals & diagnostic centers, pharmaceutical & biotechnology companies, healthcare payers, patients, and other end users.

• Hospitals & Diagnostic Centers at the Forefront: Hospitals and diagnostic centers are expected to represent the largest market share in 2024. This is attributed to the growing need to speed up patient visits, automate routine tasks like record-keeping and data entry, and enhance the accuracy of diagnostics. AI technologies have the potential to drastically reduce costs and time, leading to widespread adoption in these facilities.

• Growth in Automation: The ability of AI to handle repetitive administrative tasks while improving accuracy in patient care is a key driver for hospitals and diagnostic centers, and this segment is expected to maintain high growth rates.

Regional Insights

North America

In 2024, North America is expected to hold the largest share of the healthcare AI market. The region’s healthcare sector has swiftly adopted AI, utilizing it for diagnostic assistance, predictive analytics, patient care, and drug discovery. The use of AI in clinical trials is further accelerating new drug launches, supporting the region's market growth. Additionally, the growing demand for personalized treatments is a key factor driving the expansion of AI in North American healthcare systems.

Asia-Pacific

While North America leads the market, the Asia-Pacific region is expected to witness the fastest growth, with a high CAGR over the forecast period. Factors driving this growth include an increasing need for coordination between healthcare providers and patients, the rising adoption of precision medicine, and a significant rise in venture capital investments in healthcare AI technologies. The region’s expanding use of big data and the growing technological innovations further contribute to this rapid market expansion.

Key Market Players

The global healthcare AI market is competitive, with several major players driving innovation and adoption. Leading companies include: NVIDIA Corporation (U.S.), Google LLC (U.S.) (A Subsidiary of Alphabet Inc.), Intel Corporation (U.S.), International Business Machines Corporation (U.S.), Microsoft Corporation (U.S.), GE HealthCare Technologies Inc. (U.S.), Amazon.com, Inc. (U.S.), Verint Systems Inc. (U.S.), General Vision, Inc. (U.S.), Siemens Healthineers AG (Germany), CloudMedx Inc. (U.S.), AltexSoft Inc. (U.S.), IQVIA Holdings Inc. (U.S.), Welltok, Inc. (U.S.), and iCarbonX (China).

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Conclusion

As the healthcare industry continues to embrace AI technologies, the global healthcare AI market is poised for tremendous growth over the coming decade. Key factors such as the demand for personalized care, advancements in AI-driven healthcare tools, and the increasing role of AI in clinical trials will drive this market to new heights. Despite challenges related to trust and human barriers, the potential of AI to transform healthcare remains undeniable, offering exciting opportunities for stakeholders across the globe.

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