Investing in the Future: Why AI is the New Gold Rush in Healthcare

Artificial intelligence is the future, and that means it will revolutionize the future of the healthcare industry.

AI powered tools analyze medical data and track patient health.

The AI trade has been hot on Wall Street over the past few years, so it's no surprise that investors are watching the health. sector to innovate with the technology.

Well, joining me to weigh in this morning is Drew Biggs, CEO and CIO of Langer Holdings.

Good morning, Drew, and thank you so much for joining me.

Tell us what problems you're seeing when it comes to passively managed ETFs, especially when it comes to the healthcare sector.

Yeah, good morning as well.

Um, so to dive right into it, when you look at these broad-based legacy indices that has managed rule-based sectors, they advertise as being get healthcare, for example, like you mentioned.

So the underlying companies now, a lot of them are misclassified.

They have real estate companies that own the land the hospital is on.

They have chemistry companies doing laboratory type research.

They're not doing patient care at the bedside, which is what we're currently seeing in the video you have on display.

And that's where all the value is created in the healthcare industry.

So that was one of the pain points that we have to solve within longer holding, but how do you create an easy way for investors to access AI and healthcare in a very efficient manner.

So building on what you just said, why are actively managed ETFs better when it comes to the sector?

The beauty of an actively managed ETF when done correctly is that you can have a team of experts that actually can go through vet and select the fundamentally strong low industry risk companies within a given sector that gives that investors targeted exposure within AI enabled companies within healthcare, and that's exactly what we've done.

And Drew, what are you looking for specifically when it comes to investments in artificial intelligence in the healthcare space?

Look, some of the most exciting things that are currently going on are actually being done by the incumbents.

So take a step back.

I think a lot of things always innovation occurs with early stage private companies out of Silicon Valley.

When in reality we're seeing nowadays in the healthcare space, especially with the AI rates that these incumbents that have all of the data.

That have all of the distribution because they already have the hospitals and they also have the budget.

They've now built their own in-house AI tools they've now launched, and that's what's currently gaining traction and now these incumbents are actually now seeing record profits because they're actually developing their own AI tools versus historically the business model has always been acquired innovation.

This time they're actually building it in-house.

And you mentioned the AI race, so I do want to get your take on the companies that have an advantage here because there is a lot of noise as well as a lot of headlines.

But when it comes to signal, what do we need to watch and tell us about the companies?

Yeah, yeah, so look at a high level, there's a lot of chatter right now, right, in the industry.

Everything is AI.

You really have to dive deep into it.

And what we do, we say, look, first of all, where is the revenue of this company coming from?

Is it actually coming from?

An AI enabled product or service that's addressing a real clinical and business impact for a patient providerpa hospice, one of the stakeholders in the healthcare industry, right?

That's I have to go through and actually met these companies.

So you had a company before this intuitive surgical, right?

They're one of the top providers of robotic surgery within the industry and the healthcare industry, right?

And they have now AI tools they're now releasing within their product line.

That's a great example of a health tech company that is innovating from the space.

And finally, Drew, we can't have a conversation about AI without talking about regulations.

So a bipartisan bill introduced in Congress would allow for physicians to be reimbursed for utilizing AI based devices.

So take us through this.

So this is a big win for the health tech industry, right?

Anytime you see a policy discussion even right now of saying, hey, we're gonna have to start doing reimbursements at the Medicare level for these types of tools and services, it's just going to fuel more innovation at the end of the day, because now you can get reimbursements.

Companies can actually derive top line revenue by developing these AI enabled tools and products.

This is a big win for the sector that should only catalyze more growth and innovation and only accelerate what we're already seeing in the industry.

And finally, before I do let you go, I want to ask you about guardrails, especially when it comes to healthcare, because this is a very highly regulated industry, isn't it?

Yes, it absolutely is.

And this is where I'll give you sort of the contrarian take on the regulation side is that one of the reasons why we're so bullish on AI and healthcare is that because healthcare is regulated, because there's very strict rules, guess what?

The error rates of these tools when they're actually in the market has to be close to zero or negligible from putting any adverse effect on a patient.

So that means whatever gets released with In the hospital for a patient, right, it's gonna be very sticky.

It might take a while to get there, but once it gets there, it's gonna be a very sticky, very, uh, have proper patient outcome type of tools.

It's not gonna be anything that you can just throw to the wall and see what sticks.

So that's actually the regulations actually help us develop proper patient outcome derived technologies that have long-term impact without damaging patient care.

OK, Drew, thank you so much for joining us on this Wednesday morning and thank you so much for sharing your insights as well as perspective.

Thank you.