Only a small minority of hospitals and health systems say they’re prepared for an AI audit.
Hospitals are adopting artificial intelligence technology at increasingly rapid paces, but the majority aren’t putting enough funding into AI governance heading into 2026, according to a new report from Black Book Research.
Although AI continues to expand across clinical and operational workflows, the median 2026 budget share for AI governance and safety is just 4.2%, and only 22% of hospitals report high confidence that they could deliver a complete, auditable AI explanation within 30 days to regulators or payers, the data showed.
Large hospitals and health systems reported the most confidence, with 34% saying they would be prepared for an audit. Just 21% of community systems (those with three to nine facilities) reported the same, while only 15% of small hospitals reported confidence.
Despite higher spending among large systems, confidence in audit readiness remains low across all hospital types, according to Black Book.
WHAT’S THE IMPACT
Only 29% of hospitals and health systems have implemented and enforced AI policies covering model inventory, lineage and sign-offs; 48% are still drafting policies, numbers showed.
When it comes to vendor transparency, 41% cite limited explainability artifacts from vendors (such as model cards and drift reports) as their top audit barrier. And 37% report incomplete tracking of data inputs and model versions.
There also appears to be some ownership ambiguity: 33% say unclear internal ownership between IT, quality/safety and compliance slows the governance progress.
Meanwhile, 26% plan to increase governance/safety funding by about points in 2026; 18% plan no increase.
Recommendations from Black Book include funding a full AI governance stack, including model registry, lineage, monitoring and override logs.
The firm also advised contracting for audit rights in all vendor agreements, ensuring explainability artifacts are delivered; and clarifying ownership, with quarterly board reporting.
Hospitals and health systems should also conduct a 30-day AI audit drill in Q1 2026 and remediate any identified gaps, suggested Black Book.
THE LARGER TREND
An August report from the Healthcare Financial Management Association and market research company Eliciting Insights yielded similar findings: Eighty-eight percent of health systems are using artificial intelligence internally, but just 18% have a mature governance structure and fully formed AI strategy, according to that report.
Governance is lacking despite the fact that 71% of survey respondents have identified and deployed pilot or full AI solutions in finance, revenue cycle management or clinical functional areas.
Health systems realize the importance of governance – in 2025, nearly 70% of CFO respondents indicated there was some governance structure, whereas in 2024, only 40% of CFOs indicated there was some governance structure.
Jeff Lagasse is editor of Healthcare Finance News.
Healthcare Finance News is a HIMSS Media publication.