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Using AI to draft contracts, policies, or patient forms can look like a powerful shortcut. Here’s what you need to know before relying on AI tools.
Artificial Intelligence (AI) simulates human learning, reasoning, and decision-making to perform a range of tasks with minimum human input. The most popular AI tools include ChatGPT, Claude, Google Assistant, and Amazon Alexa.
AI now plays a role in everything from planning meals and vacations to helping with workplace tasks like writing and summarizing documents. Healthcare professionals are increasingly turning to AI tools to take clinical notes. They’re using AI to draft healthcare contracts and policies (such as employment agreements, business associate agreements, or vendor agreements), compliance materials (like HIPAA manuals), and patient-facing documents (such as intake forms and telehealth consents).
Although AI often produces fast, confident-sounding results, it’s not always accurate. And when used in the context of healthcare, a highly regulated industry, inaccuracies can carry serious consequences. Before you use AI tools to create documents for your private practice, you need to understand their limits.
AI “Hallucinations”
One of the most significant risks with AI tools is that they can generate false information and legal citations. This phenomenon is known as “AI hallucination.”
Even OpenAI, the company behind ChatGPT, acknowledges the issue. In fact, in its own testing, one of its newest “reasoning” models produced hallucinations in nearly 50% of responses on a specific benchmark. This doesn’t mean that ChatGPT or other AI models are wrong half the time across all uses. However, the data highlights how even advanced models can return incorrect answers at rates that would be unacceptable in law or healthcare, where even one false citation or omitted disclosure could have severe consequences.
In the heavily regulated healthcare field, HIPAA manuals, intake forms, and other practice documents must reflect the correct federal and state-specific requirements. AI has been known to generate citations that reference the wrong section of a law, omit vital ones, or fabricate them altogether.
Misinterpretation or Misapplication of Terms
Because healthcare is such a heavily regulated field, there are several legal frameworks to consider with each healthcare document. This overlapping mix of federal and state-specific regulations presents challenges that most AI models aren’t built to navigate.
Although AI tools can explain basic legal concepts, they can misapply those concepts when drafting documents, especially when jurisdiction-specific rules are involved. For example, HIPAA sets a federal baseline, but many states add additional requirements. AI tools may not flag those, or they might confuse rules across jurisdictions, leaving your policies incomplete.
Furthermore, using AI to draft healthcare contracts and policies is constantly changing the legal landscape at both the federal and state levels, and AI doesn’t always keep pace. Many tools are not up to date with the latest rules or court decisions.
All patient-facing documents, internal practice procedures, and manuals must be current, comprehensive, and compliant. For instance, if a patient intake form omits the required Notice of Privacy Practices, or if a telehealth consent form fails to include the necessary disclosures for valid informed consent, the consequences for the practice can be severe.
One-Size-Fits-All Output
Using AI to draft healthcare contracts and policies will provide one-size-fits-all templates that likely don’t account for your unique situation. These generic drafts often ignore key differences in practice structure, licensing, and state law.
Each practice has its own unique business goals. For a contract or policy document to serve you and your patients effectively, it must be specifically tailored to meet your needs. While AI can suggest common provisions, it may miss key terms that address your situation.
Privacy Concerns
Protecting a patient’s confidential information is always a top priority. When drafting or customizing healthcare documents with AI, some providers enter real patient or practice data. Depending on the vendor and plan, that information might be used to train the AI model to generate better responses over time.
Many AI tools have terms of service that allow them to store and use your data to train their model. Some even share data with third parties. As a result, information entered into these AI models could be leaked into the public domain. Because of these risks, companies such as JPMorgan Chase and Amazon prohibit their employees from using AI to draft healthcare contracts and policies such as ChatGPT for work-related content.
In healthcare, the stakes are high. If your patient’s protected health information (PHI) is exposed, your practice could face HIPAA violations, fines, and loss of trust.
Unless your AI vendor has signed a Business Associate Agreement (BAA) and allows you to configure strict privacy controls, assume that your AI tool is not HIPAA-compliant. Never enter PHI, patient examples, or practice-specific information into public AI tools.
Lack of Accountability
Perhaps the most critical difference between an AI tool and a human attorney is accountability.
Attorneys owe clients professional duties of competence, loyalty, and confidentiality, and they are regulated by state licensing boards. If an attorney makes an error in drafting or providing advice, there are systems in place for accountability, ranging from malpractice liability to disciplinary action.
AI, by contrast, carries no such responsibility. If by using AI to draft healthcare contracts and policies and if that omits an essential clause or misstates the law, the burden falls entirely on you and your practice. AI vendors generally disclaim liability in their terms of service, leaving you with no recourse for flawed outputs.
In short, an attorney is bound by law and ethics to protect your interests. AI is not. It’s powerful and fast, but it’s not accountable for its mistakes.
When AI is Useful
AI can be a valuable resource if used in the right way. It can assist with:
- Explaining complex legal and medical terms in plain language.
- Providing a high-level overview of statutes.
- Brainstorming contract terms to consider (e.g., compensation, length of term, and services controlled by the agreement).
- Proofreading documents for spelling, grammar, punctuation, and formatting.
AI can help you prepare for a conversation with your attorney by giving you a basic understanding of what’s involved. It’s a great way to get oriented before you discuss your legal needs. Just remember that using AI to draft healthcare contracts and policies isn’t gospel and may sometimes contradict what an experienced attorney will tell you.
Is AI Good For Creating a First Draft?
You may assume that you can save money by using AI to draft healthcare contracts and policies and then asking an attorney to review the output. However, in practice, this often requires more of the attorney’s time and results in higher fees.
When an attorney drafts a document from scratch, the result is tailored to your goals, risk profile, and regulatory environment. With an AI-generated draft, the attorney must dissect the entire document, checking for errors, omissions, misused terms, contradictory clauses, and incorrect citations.
AI drafts appear professional; they can give you a false sense of confidence. But underneath the polish, they often require line-by-line rewrites.
Ultimately, trying to “save time” with AI often yields disappointing results. Until the technology improves, you may pay more to fix an AI-generated draft than to have it done right from the start.
Get Legal Support
AI can be a helpful tool for learning and brainstorming, but it is not a substitute for legal counsel. In healthcare, errors carry serious consequences, and what seems like a shortcut often creates more costs and risks. An experienced healthcare attorney can create documents that are accurate, compliant, and tailored to your practice, providing the accountability that AI cannot.
If you operate in one of the states where we have licensed attorneys, you can schedule a consultation to get started.
This blog is made for educational purposes and is not intended to be specific legal advice to any particular person. It does not create an attorney-client relationship between our firm and the reader. It should not be used as a substitute for competent legal advice from a licensed attorney in your jurisdiction.
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