Healthcare Tech: The Next Investment Wave

If there's one thing we've learned during the past few years, it's that healthcare is more than just important. It's a top priority.

The technology healthcare providers rely on is the most advanced it's ever been. It's hard to imagine how much more advanced it might become. And yet, healthcare improves almost daily.

For investors, that makes healthcare and healthcare technology a perfect opportunity.

The 4P model and shifting healthcare trends

There is a tectonic and timely shift happening in healthcare service.

A new need to cut costs and create efficiencies fuels this shift. The old paradigm of sick care is being replaced by a new focus on preventative care. To combat this, healthcare companies and providers are shifting to a 4P medicine model. The "4P" model is:

  • Predictive
  • Preventive
  • Personalized
  • Participatory

Increasing advances in technology make the 4P model possible. But how does that create opportunities for investors?

What creates healthcare investing opportunities?

The healthcare industry within the United States is massive.

In 2020, spending related to healthcare reached almost 20% of the U.S. GDP. For those of you keeping score, that means we spent over $4 trillion on the healthcare industry. With an aging population and rising inflation, studies expect that number to rise at the same rate as the GDP through the year 2030. That's an increase of over $200 billion this year alone—and it will increase every year.

As the need for healthcare grows, the industry must work to become increasingly efficient. This requires continuous investment in new and improved health technology.

Over the past twenty years, certain segments of healthcare have struggled to keep pace with the rapid technological advances seen in other industries. Recently, the need for the global healthcare market to digitize and innovate has become increasingly clear.

Meanwhile, healthcare costs continue to rise at unsustainable levels. Some of the many reasons for this, including:

  • An aging population
  • An increase in chronic disease
  • A current mental health crisis
  • A continuing shortage of physicians, nurses, and other healthcare professionals
  • A lack of access to care
  • An increase in digital demand by hospitals and patients

We also can't understate the long-term effects of the COVID-19 pandemic. Practices previously viewed as typical shifted to create a new normal. Both health services themselves and the healthcare sector as a whole must change to meet the current state of the world.

Innovation in healthcare creates new avenues to improve patient care, treat patients remotely, improve patient flow through digital appointments, and reduce emergency care services. These improvements are possible through predictive modeling, artificial intelligence, and technology.

As these healthcare systems and technologies grow over the next decade, so do our investment opportunities.

Revolutionizing the world with healthcare tech

With new technology comes a new patient experience: virtual care. Artificial intelligence (AI), augmented reality (AR), and virtual reality (VR), along with Machine Learning, are transforming almost every aspect of medicine that you can imagine. You can now find these technologies in nearly every facet of healthcare, such as:

  • Robots assisting surgery
  • Virtual nursing assistants
  • Voice-to-text transcriptions
  • Electronic health record analysis
  • Preventative health tracking

For healthcare organizations and patients alike, the uses seem endless. AI can learn to detect diseases and analyze information from a patient's health record in order to more accurately diagnose a health problem. Machine Learning can process large pieces of data from clinic trials and other sources. It can use this data to identify patterns and make medical decisions with minimal direction. This allows doctors to better assess risk and offer more effective treatments. AR, combined with AI, can help healthcare apps be extremely beneficial to both doctors and patients. VR can also help with training clinicians through simulation, educating patients, and aiding with treatment.

Where do we go from here?

As investors, it seems like a golden opportunity: we invest, health systems improve, and people get the care they need. While other parts of the system can benefit from similar tectonic shifts (health insurance, for example), the future is very bright for healthcare investors.

The medical technology industry creates opportunities for us all: for patients, care providers, healthcare companies, and their investors. Now that we know that, we can look for those opportunities when we make investment decisions.

The Medical Device industry led by companies like Medtronic, Edwards Lifesciences, Baxter, and Boston Scientific are interesting places to watch for developing trends. As always, research can help you find companies that match your money personality, risk tolerance, and personal preferences.

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Colby McFadden

Founder, Quiver Financial

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Director of Retirement Services,
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Director of Alternative Investments,
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