AI and MedTech: Innovations Shaping the Future with Kate Jackson Hobbs

Explore the groundbreaking world of medical technology and artificial intelligence with Kate Jackson Hobbs, Vice President at T. Rowe Price. By tuning in to this episode, you'll gain insights into how AI is revolutionizing healthcare, leading to life-saving advancements in robotic-assisted surgeries and disease monitoring. These advancements are not just reshaping patient care but are also setting new benchmarks in medical practices across the globe. 

Join us for a compelling conversation that not only examines the current landscape of medical technology but also peeks into the future. Kate Jackson Hobbs shares why, despite these incredible innovations, the healthcare industry remains hesitant to embrace new technologies. From the need for thorough vetting to the divide between those with access to cutting-edge tools and those without, this episode uncovers the realities behind the slow adoption of technology in healthcare. With a focus on economic utility and the evolution of tech-enabled tools, this discussion promises to be an eye-opener for anyone interested in the future of healthcare and AI.

If you'd like to learn more about the show, have a topic or speaker to suggest, or would like to leave us a comment, email podcast@cfa-sf.org.


This podcast is produced by CFA Society San Francisco, a not-for-profit professional association, providing professional learning and career resources to over 13,000 investment industry professionals worldwide. To learn more about CFA Society San Francisco, visit our website or connect with us on LinkedIn.

The information contained in this podcast does not constitute financial or investment advice. Please consult your own financial advisor for information concerning your specific situation.

Transcript

Lindsey Helman: 0:05

Hello and welcome to Financial Perspectives, a CFA Society San Francisco podcast where we interview and discuss trends with leaders from across the investment and finance industry. This month, our host, tanya Suba-Tang, membership Director with CFA Society San Francisco, had the pleasure of speaking with Kate Jackson-Hobbs, vice President at T Rowe Price. Listen in as they discuss innovations in AI and medical technology.

Tanya Suba-Tang: 0:40

Hi Kate, how are you? It's great having you on our show today.

Kate Jackson Hobbs, CFA: 0:43

It's great to be here.

Kate Jackson Hobbs, CFA: 0:44

Thank you for having me

Tanya Suba-Tang: 0:45

so, kate, as Vice President at T Rowe Price, we're going to talk about the medtech sector. You know, obviously healthcare is in everyone's mind with everything that's happening in today's world, but specifically today we're going to talk about medtech and AI, two very interesting topics that I can't wait to dive in with you.

Kate Jackson Hobbs, CFA: 1:02

Great.

Tanya Suba-Tang: 1:02

So AI buzzword maybe has exploded in almost every sector and industry we can imagine right, and the healthcare industry, of course, is no different, particularly within the medical technology. But before we discuss exactly how AI is transforming medical technology, I'd love for you to kind of lay out the groundwork for our listeners of where the industry was just five to 10 years ago.

Kate Jackson Hobbs, CFA: 1:25

Yeah, so we've been talking about AI in healthcare ever since I started investing in the space about 12 years ago. There's always been this hope that technology tools could improve outcomes and lower costs. And, let's face it, we all know that there's room for improvement in our healthcare system. So one area where we've seen tremendous advances in the past decade has been in robotic-assisted surgery. Robotic-assisted surgery has been around for decades, but 10 years ago it was primarily used in urology and gynecology and a little bit in orthopedics, but mostly in the United States. Today, intuitive Surgical's DaVinci robots have assisted in 17 million soft tissue procedures cumulatively across more than 70 indications in more than 67 countries, and there's new competitors in the soft tissue space, as well as the orthopedic surgery space, where Stryker's Mako robot pioneered this space for orthopedic surgery. But many of the other large orthopedic implant companies have now announced and launched robotic solutions. Most importantly, we're seeing data to support the idea that outcomes in some areas of robotic surgeries are now better than in non-robotic surgery.

Kate Jackson Hobbs, CFA: 2:36

Another area where we've seen tremendous strides is in the early, more accurate detection of disease. We are seeing better imaging and better algorithms that have both improved detection and improved monitoring. We have patients and clinicians with more information and we have a better knowledge of what symptoms mean, as well as a greater knowledge of what tests are available. We're seeing more, with connected devices to automate collection and dissemination of information that was previously collected manually to inform treatment. I remember the CEO of a diabetes company telling me 10 years ago that we wouldn't see an artificial pancreas in our lifetime. And now we've got millions of diabetics worldwide who have closed-loop insulin pumps that detect low blood sugar and automatically administer life-saving insulin. This new standard of care has reduced adverse events and alleviated the cognitive load that many diabetics live with.

Kate Jackson Hobbs, CFA: 3:29

Having said all that, the industry has been very slow to adopt. I mean, I remind people that healthcare didn't broadly adopt the internet until about 15 years ago with the HITECH Act. When there's a new tech trend, you can expect that healthcare is amongst the last industry to adopt. Now why is that? Well, providers are overwhelmed, they're short-staffed and half of them are non-profits, so the margin of error is zero. When a bank adopts new technology and things go wrong, they can make their customers whole financially, but when a healthcare provider adopts a new technology tool and things go wrong, people can die. So these technology tools have to be fully vetted and de-risked before they can be broadly adopted.

Kate Jackson Hobbs, CFA: 4:08

So, really, what's changed in the past five, 10 years? Well, the tools are better Robotics, imaging, monitoring, automation. Any tech-enabled tool that we had 10 years ago has gone through multiple generations and is now probably costs less and is more accurate. Either it has proven its economic utility or it's gone. But I'm also seeing a greater difference between the haves and have-nots around cutting-edge tools. Given how slow the industry has been to change and the distractions of the pandemic, many companies in the past have gotten away with not really investing in cutting-edge technology. Going forward, I think we're going to see greater benefits to those who have invested. Those competitive advantages that they already have will likely accelerate.

Tanya Suba-Tang: 4:51

So how has AI transferred the medtech sector? What is similar and different about AI within medtech versus, say, other sectors?

Kate Jackson Hobbs, CFA: 4:59

So let's start with what's similar. I mean at its core, AI can make humans better, and by humans I mean those humans who are healthcare providers. So with robotic-assisted surgery, we've got intuitive surgicals, da Vinci and soft tissue. We've got strikers, Mako and orthopedics. What we're seeing is a greater precision with robotics than with humans. Robots can go places that humans can't. They can also quantify every step of the procedure and collect data. They can collect data on the angle, the amount of time, the pressure and correlate all of that with patient outcomes. Those are tools we've never had before. Robotic-assisted surgery has the potential to take your lowest quartile surgeons and actually make them average.

Kate Jackson Hobbs, CFA: 5:40

Another area where we're seeing some similarities within med tech and other sectors is in imaging. You have the opportunity to help radiologists organize and manage the images better. If you're a radiologist, you're coming in on Monday morning. You've got a stack of images that you need to look through to see where there might be cancerous lesions. Well, AI tools can help organize those, help the radiologist be much more efficient in detecting the disease and not wasting time on images that aren't as important.

Kate Jackson Hobbs, CFA: 6:08

But one area that's very different about AI within med tech versus other sectors is how slow the pace of disruption is. It's not that what we have right now in healthcare is so great. It's that we have to make sure that the new tools don't make the outcomes worse and, alternatively, that they don't just add cost without improving outcomes. So we need clinical and economic data to prove that these tools add value and lower cost, and it needs to be able to scale across health systems globally. Another thing that's different is that being successful in one industry doesn't necessarily make you successful in healthcare. Many tech companies have tried and failed in healthcare. It is a highly regulated industry. It has different incentives and different non-market forces than other industries.

Tanya Suba-Tang: 6:53

So what are some misconceptions about AI within MedTech?

Kate Jackson Hobbs, CFA: 6:57

So I'm going to bucket my response here in two buckets, but I'm going to look at this both as an investor and also as a patient. So, as an investor, you know one major misconception you just highlighted the idea that what has worked in other sectors will work here. Again, this is a highly regulated industry. People's lives are at stake, and those who drive the costs, who drive the utilization, who select the therapies, aren't necessarily the ones who are paying the bills. So I think that's a really important difference to understand about med tech versus other sectors. It's one thing to develop a better solution, but it's another thing to do it profitably at scale, in a way that can consistently perform the same way in every procedure and be standardized across an entire industry Healthcare, medtech. It's hard to disrupt this space. The incumbents have the advantage of guidelines that have been around for decades, reimbursement that has been firmly in place, decades of data and doctors who have spent their entire clinical career training and using the current solutions. So before I invest, whenever I'm looking at a new tool, particularly an AI-enabled tool, I analyze how that company will navigate the healthcare system as it is not as we wish it would be. Now, as a patient, as you're thinking about AI within medtech and within healthcare.

Kate Jackson Hobbs, CFA: 8:11

I would encourage everyone to get their information from credible sources. Read the clinical studies. The good news is now we have access to a lot of great clinical data that we didn't historically have access to. But the great information, the helpful information, it's probably not in the popular media or on social media. Think about the incentives of people on social media and in the popular media or on social media. Think about the incentives of people on social media and in the popular media to publicize information about hot new devices or tests. That information is probably publicized more to generate clicks than to improve health outcomes, and so, as a patient, I'm always very skeptical of anything that's not FDA approved or covered by reimbursement, and, as both a patient and an investor, I'd encourage everybody to talk to their doctors, talk to the medical professionals in their lives. As an investor, I spend hours every week talking to doctors to help me put new technology and data into context.

Tanya Suba-Tang: 9:03

That's such a great takeaway. Thank you so much, Kate. So before I let you go, I would love for you to share your outlook for investment themes in five to 10 years.

Kate Jackson Hobbs, CFA: 9:12

Yeah well, it's a pretty exciting time for MedTech. This is a space that there's a lot of opportunity to serve patients better and to improve outcomes and lower costs to the system. So I expect to see a lot more in robotics. I expect to see greater adoption. I expect to see robotic surgery kind of find its footing within areas where it lowers costs and drives clinical outcomes. I expect to see more data and I expect to see more data specifically demonstrating the utility. I expect to see more data specifically demonstrating the utility. I expect to see more within automation. I expect to see more automation in labs, in pharmacies, more automation even within procedures. This can potentially drive fewer mistakes and lower the costs.

Kate Jackson Hobbs, CFA: 9:51

Within diagnostics, I expect to see more imaging. I expect to see more clinical diagnostics. I expect better detection and better algorithms to help us diagnose and monitor disease earlier. And I think overall for all of us, both as investors and patients, there's going to be more data and easier access to information, which will lead us to have more information upon which to make both our treatment and investment decisions. The flip side of this is there's going to be even more noise out there. Not all information is useful, especially when it's inaccurate or detrimental. So I would encourage everybody to keep that lens of clinical and economic utility as they look at some of the new innovations in the space. Overall, I expect winners to keep on winning and I expect the benefits to accrue to established innovation leaders, but I'd also keep an eye on the disruptors. It's hard to scale in a small company, but I think some of the innovative, exciting technology will get acquired and commercialized.

Tanya Suba-Tang: 10:49

Well, thank you so much, Kate, for providing your insights. So many exciting new things happening in that space and we can't wait to see what else will Us too.

Kate Jackson Hobbs, CFA: 10:57

Thank you so much.

Lindsey Helman: 11:09

Thank you to this month's guest, kate Jackson Hobbs, for sharing her insights into medical technology and AI. Join us next time for another Financial Perspectives episode airing on the last Tuesday of the month.

Lindsey Helman: 11:17

Want to receive a shout out in the next episode or share your thoughts with us? Send in a message to the show through the link at the top of each episode description, or email us at podcast@ cfa-sf. org. We love hearing from our listeners and look forward to learning what you thought of this episode and any topics you'd like for us to cover next. Thank you for being a dedicated listener.

Lindsey Helman: 11:50

This podcast is produced by CFA Society San Francisco, a not-for-profit professional association providing professional learning and career resources to over 13,000 investment industry professionals worldwide. To learn more about CFA Society San Francisco, visit our website at cfa-sf. org or connect with us on LinkedIn.