The Big Winner in Obamacare: Healthcare IT?

A couple of weeks ago I met with a very smart client who happens to work in the healthcare field.

We were discussing which areas, if any, would be the ultimate financial beneficiaries of the implementation of the Affordable Care Act a.k.a. Obamacare.

The news for most sectors seems to be mixed.  The pharmaceutical companies, for example, will probably benefit from more product demand.  However, with the government becoming even more involved with drug pricing, and the continued push towards generics, the new law will probably be a net neutral for Big Pharma.

The same could be said for most of the other areas of health care - hospitals, medical devices, and so on.

However, my client strongly felt that healthcare information technology (IT) - delivering quality care to patients more efficiently - would be a huge beneficiary.

This is not a new concept, of course.  The stocks of companies involved with providing IT systems to the healthcare system have soared in recent years, as you can see from the chart of healthcare IT industry leader Cerner above.

Yet my client felt that the improvements in healthcare IT were only beginning.

Doctors and other medical professionals are constantly challenged to get a full picture of a patient's medical history, often under stressful situations.  Integrating a wide variety of different systems to get crucial information needed for diagnosis and treatment is a massive challenge.

Forbes carried an interesting piece written by Greg Satell pointing out that improving healthcare IT is not simply a matter left to the technology field. 

Sharing information is vitally important to making the system work, for example, yet often there is a reluctance to make past medical history available.

In addition, highly trained medical professionals are often reluctant to work with computer programs like IBM's "Watson" - which is perhaps the world's most advanced cognitive computing system to date  - in making diagnostic and treatment decisions.

Yet many are arguing that this is a crucial step to delivering better medical results in a more cost-efficient manner.

Here's an excerpt:


We like to think of innovation being solely about great ideas and technology, but social networks are just as important.  As Sandy Pentland, one of the world’s most foremost data scientists puts it,  “We teach people that everything that matters happens between your ears, when in fact it actually happens between people.”...

 ..in the years to come we will all have to learn to collaborate with machines. What we have come to regard as expertise is really the ability to recognize the patterns specific to a particular field and pattern recognition is something that computers are beginning to excel at.

Dr. {Lynda Chin of MD Anderson Cancer Center} sees technology taking the medical profession in two directions. First, she sees that time researchers now spend on information processing—a task that humans are notoriously bad at— will be spent imagining how they can push the envelope.  Second, clinical physicians will be able to focus more on human interaction with patients.

http://www.forbes.com/sites/gregsatell/2013/10/27/how-ibms-watson-will-change-the-way-we-work/