David Freitas, Investment Writer, 7IM, is reflecting on last week’s Budget speech and the announcement of a big chunk of funds being allocated to the health service – but in digital technology as he shares his analysis as follows:
Have you recently been asked to come up with a wedding speech? Or answer a difficult Excel question? Maybe summarise a large chunk of text?
If you have, chances are you’ve engaged with ChatGPT in some form. There’s a lot AI is great at, and helping with admin is one of them!
Aside from the novelty factor, leveraging AI to make ‘industry’ more efficient is a growing theme. In fact, it was referenced specifically in the Spring Budget last week.
The headline is that The Chancellor committed £3.4bn to the healthcare sector (reader, as we have outlined before, we largely ignore domestic politics).
But what interested us wasn’t the figure, it was where it was being directed. This money is to be spent on digital transformation – including the expansion of AI capabilities for diagnosis, and lots of digitisation of tasks. According to the UK government, “this funding will significantly reduce the 13 million hours of time doctors spend on poor IT, freeing up significant capacity (…)”.
Far more informed people than the humble asset allocators at 7IM will run the rule over the accuracy of these numbers, but the theme is an interesting one. If we look to data – and somewhere away from our shores to make this more objective – then it would appear that there are some striking changes that have occurred over the past few decades.
Since the 1970s, the number of doctors in the US has doubled, but the number of admin staff has grown by a factor of 30. No, not 30%. 30 times!
Reports of unreadable, disjointed medical records, and lots of complex, labour-intensive insurance processes mean more people are needed to deal with admin than treat patients. And it’s expensive!
The positive is that technology is already having a tremendous impact elsewhere in the world of healthcare:
Source: 7IM/KKR
If AI can help in the less glamourous area of reducing the admin burden, the upsides could be material. For an ageing population, for workers within the sector… and for investors in it!
See you next week!
* https://www.gov.uk/government/publications/spring-budget-2024/spring-budget-2024-html
