Takeaway Healthcare

The healthcare sector is at a point of inflection as it navigates a set of major forces, many of which merge into one another.

You have the ageing population increasing demand for services, changing consumer habits in the age of the smartphone, the birth of the nascent insure-tech industry, blockchain changing how we use data, as well as advances in AI and machine learning that should make the whole healthcare system smarter and more responsive.

All this means major investment opportunities for those who can work out where the chips will fall.

This is a huge opportunity. Healthcare is a US$3.2 trillion industry in the US alone.

I know disruption is an overused word, but there’s no question that’s what’s happening in healthcare.

Just look at the money pouring into digital health ventures:

Digital Health Funding 2011-2017 08-03-2018

Source: Rock Health
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And, as always, it’s technology driving the changes.

The ultimate aim is to bring the appropriate service to you rather than the current way of you going from specialist to specialist.

Anyone who’s had ongoing treatment knows it can be a constant battle of making and keeping appointments, sitting in specialist waiting rooms, navigating weird private health rules and dealing with government bureaucracy.

It’s enough to make you ill! 

The future of healthcare

In the future, everything from diagnosis to treatment will happen from the comfort of your own home. To be clear, this is not just for your benefit.

It’s partly about costs.

It’s cheaper and more efficient to use automated data system to manage patient’s ongoing issues. All manner of trackers, m-health devices on your smartphone and smart testing mechanisms are in development.

These will be the new first line of the healthcare system.

They will alert the specialists if and when you need them.

Rather than replacing Doctors, the idea is to free up their scarce time. Time is, after all, money.

And if we’re going to provide decent health care for the vast amount of people who are going to need it over the next decade, we’d better get smart about it.

Now, the idea of outsourcing healthcare to machines might be a scary thought for you.

But then again, the idea of outsourcing plane flight to machines was scary to some too. But that’s what happens. Today’s planes fly on autopilot most of the time. And soon cars might too.

Computers are simply better at some things than humans.

From an investing point of view, there are a few investing themes to look out for.

Computers are simply better at some things than humans. From an investing point of view, there are a few investing themes to look out for. 08-03-2018

Source: ontheflyingbridge.wordpress.com
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To be clear, this isn’t just hype.

Even the great Warren Buffett is moving into the healthcare business.

In January, he announced plans to team up with Amazon and JP Morgan to fix the healthcare system in the US.

That’s a formidable line up.

An insurance company, a tech company and a Wall Street bank.

Or Buffett, Bezos and Dimon, if you want to look at it another way. That’s the business equivalent of the famous basketball dream team.

They’ve got the financial muscle and tech smarts to make things happen.

In an interview on CNBC’s Squawk Box, the billionaire investor said healthcare spending is a ‘tapeworm on the economic system’. He said the private sector can do more to lower health-care costs than the government can.

Though in typical Buffett style he was cautious:

It isn’t difficult to shave a little bit off here. The question is whether we can come up with something better. I’m hopeful, but don’t expect any miracles.

There’s no doubt change is certainly coming. And I’d wager for the better.

Ryan Dinse,
Editor, Exponential Stock Investor

Ryan Dinse is an Editor at Money Morning.

He has worked in finance and investing for the past two decades as a financial planner, senior credit analyst, equity trader and fintech entrepreneur.

With an academic background in economics, he believes that the key to making good investments is investing appropriately at each stage of the economic cycle.

Different market conditions provide different opportunities. Ryan combines fundamental, technical and economic analysis with the goal of making sure you are in the right investments at the right time.

Ryan's premium publications include:

Money Morning Australia