Let's talk about some results. The first thing to realize is that the application of artificial intelligence in today’s healthcare proves that this technology is more than just making beautiful pictures or creating AI poetry. Some of us tend to think that the humanities are the primary (or only, if short-sighted) use cases for large language models. But like human college students, large language models can be used to pursue artistic or scientific achievements. They can be artists or doctors. That said, many of the most important use cases require a lot of integration. This means not only setting up hardware, training or prompting large language models, but also connecting them to existing infrastructure and business operations. It's easier said than done.

Alvin Graylin (author of Our Next Reality (a new book on the widespread impact of AI on society) and Karl Zhao (an AI expert who has been deploying enterprise AI solutions) recently sat down with me to discuss the reality of AI in healthcare in the United States and around the world. “I think it helps to analyze these healthcare systems and what will happen in the future, but also to understand that international trade is nuanced and we have various stakeholders operating from their respective perspectives in a global economy where most people think globally connected.

The rise of open source artificial intelligence in healthcare: On-premises solutions are shaping the future

Artificial intelligence is revolutionizing healthcare, transforming clinical workflows, and addressing key challenges such as labor shortages, diagnostic accuracy and chronic disease management. In the United States, healthcare leads the adoption of generative artificial intelligence, with investments reaching $500 million in 2024 — 67% higher than the second-ranked legal services industry. This growth highlights the potential of AI, but its real-world implementation requires more than just cutting-edge technology; it requires seamless integration with existing systems, focusing on cost transparency, and tailor-made solutions for privacy concerns.

Open source advantages: Enterprise adoption

One of the most notable changes in AI adoption is the shift to open source models such as DeepSeek R1 and V3. These models provide businesses with cost-effective, transparent and customizable solutions, making them ideal for healthcare applications. Unlike proprietary systems, open source AI allows organizations to review algorithms, ensure compliance, and adjust models to specific clinical needs without vendor lock-in.

Nvidia's recent strategic shift highlights this trend. Instead of focusing solely on hardware, the company works with companies specializing in industry-specific AI solutions based on open source frameworks. For example, DeepSeek-enabled tools have proven to have a 40% reduction in diagnosis time and a 28% increase in rare disease recognition. These advances highlight how the combination of open models and domain expertise can lead to tangible results in precision medicine.

Cost segmentation: Domain-specific software leads artificial intelligence deployment

A key but often overlooked aspect of AI implementation is cost allocation. While hardware like GPUs and inference chips are attracting much attention, software services account for nearly 70% of total deployment costs. This includes model fine-tuning, integration with electronic health record (EHR), and ongoing maintenance. The open source model helps reduce these expenses by reducing licensing fees and implementing internal customization.

On-premises and private clouds: a new area of ??artificial intelligence in healthcare

Privacy and data security are driving a significant shift in people’s shift from hyperscale cloud platforms to on-premises and private cloud deployments . As Alvin Grelin points out, “Most organizations are very hesitant to put customer or patient data in the cloud.” This is especially true in the healthcare field, where regulatory compliance (e.g., HIPAA in the U.S.) and patient confidentiality are crucial.

For example, in China, strict data localization laws require hospitals to keep patient records internally, driving the need for private AI deployment. While the U.S. is more flexible, concerns about cloud security and vendor lock-in are driving healthcare providers to move to hybrid or fully on-premises solutions. Carl Zhao highlighted this trend, noting that “software and deployment flexibility are often underestimated in AI planning.”

The future: a professional artificial intelligence ecosystem

The convergence of open source models, cost transparency and on-premises solutions is reshaping healthcare AI. Companies such as Stryker, Boston Science and Medtronic have seen stock growth related to AI innovation, while cloud providers such as AWS and Google Cloud face competition from on-premises reasoning chips such as TPUs.

As Grayling aptly summarizes, “AI is more than just plug and play – it takes time to integrate with existing systems.” The future is an ecosystem where open models, domain expertise and security infrastructure combine to create real-world impact. For healthcare, this means faster diagnosis, better patient outcomes, and more sustainable AI adoption curves—a curve that prioritizes privacy, cost efficiency, and scalability.

Conclusion: The AI ??revolution in healthcare is more than just about technology; it is about how to implement it. Open source models like DeepSeek, combined with on-premises and a clear understanding of cost structures, are paving the way for a new era of enterprise artificial intelligence—an era of balancing innovation and practicality.

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