Where should you put your money?

Let’s stipulate that digital technology will continue to generate change and wealth. If that’s true – and it is – then where should we move our chips?

There are already lots of investment funds that focus squarely on digital technology: if you have Electronic Arts Electronic Arts and Apple Apple in your portfolio you’re pretty happy. Some funds do better than others. The larger challenge is to find the industries most likely to benefit from the application of emerging digital technologies.

There are three that scream out: healthcare, entertainment and war.

Healthcare is an easy pick where costs continue to rise. Those dedicated to greater healthcare profitability, especially in the diagnostic and straightforward treatments areas, need to reduce costs. Cost containment is the best answer because there’s only so much money available to keep people healthy. Data suggests that when costs rise, people (AKA “customers”) stop taking their medicine and stop going to the doctor. This is bad for healthcare profiteers for many reasons: medications and doctors can prevent larger health problems and thereby reduce insurance claims. So costs must be reduced to keep spending – and profits – at acceptable levels.

Digital technology will impact healthcare in many ways. The areas where DT will most directly impact healthcare costs include the use of big data for improved, faster and cheaper diagnoses, wearables (for continuous patient monitoring), automated reasoning (to make continuous big data actionable), and self-administration, where patients take greater and greater control over their own bodies. Healthcare cost management can only happen with digital technology. The field has long exhausted other significant cost control/profitability strategies and tactics: how high can deductibles actually rise? How much can medication actually cost before no one buys it? Making US healthcare more expensive for everyone is ultimately self-defeating. Profit walls will be hit quickly, as patients stop paying high deductibles and buying expensive medications – which will ultimately increase healthcare costs as patients receive treatment for heart attacks versus “consuming” statins that reduce the risk of heart disease.

Compliance is another area for digital technology. Wearables make it possible to watch, monitor and remind patients about what they have to do to stay healthy. They can also talk to other wearables located on loved ones and even employers who all have vested interests in compliance.

There are countless high-leverage healthcare opportunities for digital technology. Professional fund managers can tell us about the “best managed” healthcare providers but the digital market is ready made.

article source