Artificial intelligence (AI) is no longer a futuristic concept in healthcare, it’s here, woven into everyday operations. From patient triage chatbots and diagnostic support systems to scheduling tools and billing platforms, AI is transforming how medical practices function.

For buyers, this raises a critical question: What exactly are you inheriting when you purchase a medical practice that has AI in its operations? What risks are there? Is AI going to take over the medical and healthcare industry?

These questions pile up; potential business owners freak out, and AI may seem like this completely unknown, possibly dangerous threat. But, at You Legal, were here to explain the risks, benefits and potential future of AI, without any hysteria.

On the surface, the technology might look efficient, innovative and cost saving. But underneath, it may also carry legal, regulatory, and financial risks that don’t appear in a standard due diligence checklist. Unless these issues are uncovered and addressed, buyers risk stepping into liabilities that could be expensive, time-consuming, and even damaging to their professional reputation.

Here are the key areas to focus on when buying a medical practice that uses AI and why expert support is essential in protecting your investment.

AI Systems Due Diligence

The first step is knowing exactly what AI tools are in play, creating a digital footprint of the practices AI usage. A medical practice may potentially be using a range of technologies, such as:

Diagnostic support platforms powered by machine learning;
Patient engagement chatbots using natural language processing;
Administrative AI tools for rostering, scheduling, or billing;
Off-the-shelf generative AI (like Claude or ChatGPT) for drafting patient materials or internal documents.

Some medical practices may not be diligent with recording and overseeing AI usage within their practice. This can create several legal risks.

The problem is that AI can be deeply embedded into a practice’s daily operations without clear records of what’s being used.

The risk is that without understanding the full scope of AI usage, a buyer may miss hidden costs (such as ongoing subscription fees), licensing restrictions, or compliance gaps. You could end up responsible for technology you didn’t even know existed.

The solution is to engage specialist legal due diligence to map out the practice’s AI footprint and identify risks that a financial review alone won’t uncover.

Structuring for AI Risk Management

Medical practices rarely develop their own AI. More commonly, they are using third-party AI tools that don’t have the governance needed to manage the complex risks involved in healthcare.

The problem is that AI doesn’t always make the right decision. If an AI scribe provides inaccurate client notes or an AI-powered diagnostic system malfunctions, who is responsible: the supplier, the practice, or you as the new owner?

The risk is, without clear governance structures, liability often falls directly on the practice. This means that as the buyer, you inherit the accountability. Poor structuring around AI can also complicate contracts, insurance, and compliance obligations.

The solution is engaging an expert to do a proper review ensures that the practice is set up to manage AI risks appropriately and that liability is clearly allocated, rather than left sitting until something goes wrong.

Reviewing AI Contracts

AI tools don’t just “come with the practice.” They are governed by contracts that can significantly impact ongoing operations if they are not accurate and pass over ownership or usage rights to the buyer.

The problem is that buyers often assume that once they acquire a practice, they automatically inherit all the rights to use the technology. This is not always the case, which is why legal due diligence to review contracts is critical.

The risk is that some licensing arrangement may not be transferable, or may be held by a separate entity, not the service entity. Subscription terms may allow providers to increase costs or even terminate access to the AI tools when a change of ownership occurs (known as a change of control clause). Some contracts also shift liability for misuse or data breaches onto the practice.

The solution is to ask a lawyer to review contracts to ensure continuity, prevent unpleasant surprises, and safeguard your rights.

Data Management and Legal Compliance

AI tools are only as reliable as the data behind them. That makes data management one of the highest-stakes issues in due diligence. Data risk, privacy and confidentiality are a major focus within the healthcare industry, third-party AI tools only increase that risk without proper review.

The problem is that many AI systems rely on sensitive patient, staff, or third-party data. If that data has not been collected, stored, or used lawfully, the liability transfers to you when you buy the practice.

The risk is that breaches of privacy law can attract significant fines, investigations, litigation, and reputational damage. Even if the breach occurred before your ownership, you may still face consequences as the current operator.

The solution is that experts can examine the source of AI training data, privacy compliance, and intellectual property rights. This ensures you are not buying into hidden breaches or unlawful use.

Performance Management

AI doesn’t always behave as expected. System errors, mistakes in scribing and hallucinations can lead to unintended consequences can occur and when they do, the liability usually falls on the practitioner and the practice. Even if you did not intend for the AI to have an issue, liability can fall onto your business.

The problem is that many practices don’t have formal processes to monitor or manage AI performance over time or a review process embedded in their annual governance calendar.

The risk is that if a failure occurs after you acquire the practice, you inherit the responsibility, including the financial and reputational fallout. For example, if an AI-scribe provides the wrong clinical recommendation and a patient is harmed, the consequences could be serious.

The solution is to engage an expert to review and identify whether the practice has sufficient incident management, testing, and oversight systems in place and where gaps may leave the practice exposed.

Regulatory Compliance and AI Governance

AI regulation is developing rapidly and varies across jurisdictions. Even if a practice is compliant today, that may change tomorrow. AI is becoming more advanced and elaborate by the day, meaning regulations are also evolving. This leaves a lot of people in the dark about how to be compliant and manage the associated risks.

The problem is that many medical practices are not proactively monitoring evolving AI laws, ethical guidelines, and the relevant codes of conduct.

The risk for buyers is that in this uncertain legislative and regulatory landscape may face sudden compliance costs, regulatory investigations, or mandatory system upgrades. This can potentially significantly affect profitability and operational stability.

The solution is that experts can be engaged to assess whether the practice has proper AI governance and compliance frameworks in place and advise on how to stay ahead of regulatory change.

Insurance and Staying Ahead of Change

Insurance is often the last thing buyers check, but it can be one of the most important. AI-related risks are such a new concept that many buyers overlook them, as it doesn’t seem ‘relevant’ yet. But AI is relevant and rapidly becoming more so.

The problem is that many policies do not automatically cover AI-related risks. They may exclude liability for system failures, data misuse, or errors caused by technology.

The risk is that buyers may believe they are covered, only to discover after a claim that the policy excludes AI-related incidents.

The solution is to arrange for a legal expert to review the practice’s insurance arrangements, highlight any gaps, and advise on securing appropriate coverage.

Why Expert Support Matters

AI has enormous potential to improve efficiency and patient outcomes, but it also introduces complex risks that most buyers cannot identify alone. Traditional financial due diligence will not uncover hidden AI liabilities. Without a specialist review, buyers risk acquiring problems that only surface after settlement, when it’s too late.

Our team has experience helping buyers navigate AI-related risks when acquiring medical practices and allied health clinics. We can ensure you know exactly what you’re taking on before you sign, and that your investment is protected against both current and emerging risks.

If you’re considering buying a medical practice that uses AI, contact us today. We’ll connect you with the right expert support to safeguard your purchase and give you peace of mind.

Buying a medical practice or health business that uses AI