If you want to invest in artificial intelligence (AI), tech stocks aren't your only options. There are plenty of ways that AI can and will help transform the healthcare industry. While it's not an area that's usually considered to be involved with AI, this technology can help healthcare businesses become much bigger and more profitable in the years ahead. Let's consider just a few ways.
1. Helping with administrative tasks
One of the big benefits of AI assistants is that they can summarize notes in meetings. That means less paperwork for doctors, and there's the potential for it to easily digitize health records.
Telehealth company Teladoc Health (TDOC -2.40%) has partnered with tech giant Microsoft and now offers a Solo Virtual Care platform that can help streamline workflows. With Microsoft Teams, it can facilitate communication between staff and patients. It also integrates with health records and can assist with scheduling and staffing issues.
Microsoft acquired conversational AI company Nuance in 2021. Its technology can help automatically document interactions between patients and physicians. Whether it's helping a virtual care platform such as Teladoc or hospitals that HCA Healthcare owns, there's a potential for AI to significantly expedite operations for healthcare providers -- and this, in turn, can lead to greater efficiency and lower costs.
2. Analyzing scans and images
Patients routinely undergo testing to check for diseases, tumors, and any potential problems. But that involves a manual process of reviewing images. And while medical experts may be experienced, they're also humans; they can and do miss things. Using AI can improve outcomes, potentially catching things more quickly and reducing the risk of false positives as well.
Medical device maker Medtronic (MDT 0.62%) obtained clearance from the Food and Drug Administration in 2021 for its GI Genius endoscopy module, which helps to identify pre-cancerous growths. It uses AI to identify colorectal polyps, and identifying polyps early on and before they develop into cancer can significantly improve patient outcomes.
For Medtronic, using AI in its devices can make them much more valuable to hospitals and physicians by potentially being able to incorporate AI into other devices. That can translate into a sizable growth opportunity for Medtronic while potentially creating competitive advantages along the way.
3. Speeding up drug discovery
Another significant opportunity for healthcare and AI is in using algorithms to help predict which compounds may help treat certain diseases and conditions.
Researchers at Janssen, which is part of Johnson & Johnson (JNJ -0.46%), have found that by using AI, drug discovery can be 250 times more efficient. Researchers have large data sets available to study, and since AI and machine learning can potentially predict which compounds may work best, that can significantly speed up the process.
Currently, it may take multiple years for a drug to go through clinical trials and obtain approval. It's also a costly process; clinical trials can cost a company tens of millions of dollars, with some potentially hitting nine figures.
For a company like Johnson & Johnson, which is focusing more on growth initiatives after spinning off its consumer health business recently, bringing new drugs to market will be key in driving its long-term growth. Even though it is facing losses in exclusivity for some of its top drugs, the company projects that in 2025 its pharmaceutical sales will top $60 billion. In 2022, its pharmaceutical business brought in $52.6 billion in revenue.
If the company has a more efficient process for developing new drugs, that could make J&J a much more valuable business moving forward. It's too early to tell how well AI will help in drug discovery, but if it's as promising as it sounds, investors may not have to wait too long to find out.
Healthcare stocks can be great AI investments
There are many ways AI can help transform the healthcare industry, and the examples listed above are just a few of them. Healthcare often involves many manual processes, and that means it may benefit the most from automation and AI in the long run.
While cutting down on administrative tasks may be the low-hanging fruit today, aiding with drug discovery and analyzing scans and images can lead to amazing results for both patients and companies, and that's what should have growth investors very excited.
Investing in any of the companies mentioned above can be a way to take advantage of these opportunities in AI. But there are sure to be many more out there.
