When hospitals build their own AI: a comparison of the EU and US regulatory framework

Hospitals are increasingly shifting from being passive purchasers of artificial intelligence (AI) systems to active developers of medical AI, particularly in the form of in-hospital machine learning tools tailored to local clinical needs. This paper examines how the European Union (EU) and the USA regulate in-hospital-developed AI-based medical devices, focusing on the legal and institutional conditions that shape innovation, oversight and diffusion. Through a comparative analysis across three dimensions-responsiveness to clinical need, distribution of innovative capacity and pathways for scaling and diffusion-the paper shows that both systems enable hospital-based innovation but embed it in different regulatory logics. The EU adopts a structured model that treats hospitals as regulated innovators operating under defined institutional obligations, whereas the USA relies on a more permissive and less institutionally differentiated framework in which hospital innovation emerges as a by-product of general software regulation.