January 28, 2025 • 12 mins
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.
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Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Lindsey Helman (00:05):
Hello and welcome to Financial
Perspectives, a CFA Society SanFrancisco podcast where we
interview and discuss trendswith leaders from across the
investment and finance industry.
This month, our host, tanyaSuba-Tang, membership Director
with CFA Society San Francisco,had the pleasure of speaking
with Kate Jackson-Hobbs, vicePresident at T Rowe Price.
(00:27):
Listen in as they discussinnovations in AI and medical
technology.
Tanya Suba-Tang (00:40):
Hi Kate, how are you?
It's great having you on ourshow today.
Kate Jackson Hobbs, CFA (00:43):
It's great to be here.
Thank you for having me
Tanya Suba-Tang (00:45):
so, kate, as Vice President at T Rowe Price,
we're going to talk about themedtech sector.
You know, obviously healthcareis in everyone's mind with
everything that's happening intoday's world, but specifically
today we're going to talk aboutmedtech and AI, two very
interesting topics that I can'twait to dive in with you.
Kate Jackson Hobbs, CFA (01:02):
Great.
Tanya Suba-Tang (01:02):
So AI buzzword maybe has exploded in almost
every sector and industry we canimagine right, and the
healthcare industry, of course,is no different, particularly
within the medical technology.
But before we discuss exactlyhow AI is transforming medical
technology, I'd love for you tokind of lay out the groundwork
for our listeners of where theindustry was just five to 10
(01:24):
years ago.
Kate Jackson Hobbs, CFA (01:25):
Yeah, so we've been talking about AI
in healthcare ever since Istarted investing in the space
about 12 years ago.
There's always been this hopethat technology tools could
improve outcomes and lower costs.
And, let's face it, we all knowthat there's room for
improvement in our healthcaresystem.
So one area where we've seentremendous advances in the past
(01:45):
decade has been inrobotic-assisted surgery.
Robotic-assisted surgery hasbeen around for decades, but 10
years ago it was primarily usedin urology and gynecology and a
little bit in orthopedics, butmostly in the United States.
Today, intuitive Surgical'sDaVinci robots have assisted in
17 million soft tissueprocedures cumulatively across
(02:07):
more than 70 indications in morethan 67 countries, and there's
new competitors in the softtissue space, as well as the
orthopedic surgery space, whereStryker's Mako robot pioneered
this space for orthopedicsurgery.
But many of the other largeorthopedic implant companies
have now announced and launchedrobotic solutions.
(02:27):
Most importantly, we're seeingdata to support the idea that
outcomes in some areas ofrobotic surgeries are now better
than in non-robotic surgery.
Another area where we've seentremendous strides is in the
early, more accurate detectionof disease.
We are seeing better imagingand better algorithms that have
both improved detection andimproved monitoring.
(02:48):
We have patients and clinicianswith more information and we
have a better knowledge of whatsymptoms mean, as well as a
greater knowledge of what testsare available.
We're seeing more, withconnected devices to automate
collection and dissemination ofinformation that was previously
collected manually to informtreatment.
I remember the CEO of adiabetes company telling me 10
(03:09):
years ago that we wouldn't seean artificial pancreas in our
lifetime.
And now we've got millions ofdiabetics worldwide who have
closed-loop insulin pumps thatdetect low blood sugar and
automatically administerlife-saving insulin.
This new standard of care hasreduced adverse events and
alleviated the cognitive loadthat many diabetics live with.
Having said all that, theindustry has been very slow to
(03:31):
adopt.
I mean, I remind people thathealthcare didn't broadly adopt
the internet until about 15years ago with the HITECH Act.
When there's a new tech trend,you can expect that healthcare
is amongst the last industry toadopt.
Now why is that?
Well, providers are overwhelmed, they're short-staffed and half
of them are non-profits, so themargin of error is zero.
(03:52):
When a bank adopts newtechnology and things go wrong,
they can make their customerswhole financially, but when a
healthcare provider adopts a newtechnology tool and things go
wrong, people can die.
So these technology tools haveto be fully vetted and de-risked
before they can be broadlyadopted.
So, really, what's changed inthe past five, 10 years?
Well, the tools are betterRobotics, imaging, monitoring,
(04:15):
automation.
Any tech-enabled tool that wehad 10 years ago has gone
through multiple generations andis now probably costs less and
is more accurate.
Either it has proven itseconomic utility or it's gone.
But I'm also seeing a greaterdifference between the haves and
have-nots around cutting-edgetools.
Given how slow the industry hasbeen to change and the
(04:36):
distractions of the pandemic,many companies in the past have
gotten away with not reallyinvesting in cutting-edge
technology.
Going forward, I think we'regoing to see greater benefits to
those who have invested.
Those competitive advantagesthat they already have will
likely accelerate.
Tanya Suba-Tang (04:51):
So how has AI transferred the medtech sector?
What is similar and differentabout AI within medtech versus,
say, other sectors?
Kate Jackson Hobbs, CFA (04:59):
So let's start with what's similar.
I mean at its core, AI can makehumans better, and by humans I
mean those humans who arehealthcare providers.
So with robotic-assistedsurgery, we've got intuitive
surgicals, da Vinci and softtissue.
We've got strikers, Mako andorthopedics.
What we're seeing is a greaterprecision with robotics than
(05:19):
with humans.
Robots can go places thathumans can't.
They can also quantify everystep of the procedure and
collect data.
They can collect data on theangle, the amount of time, the
pressure and correlate all ofthat with patient outcomes.
Those are tools we've never hadbefore.
Robotic-assisted surgery hasthe potential to take your
lowest quartile surgeons andactually make them average.
(05:40):
Another area where we're seeingsome similarities within med
tech and other sectors is inimaging.
You have the opportunity tohelp radiologists organize and
manage the images better.
If you're a radiologist, you'recoming in on Monday morning.
You've got a stack of imagesthat you need to look through to
see where there might becancerous lesions.
Well, AI tools can helporganize those, help the
(06:02):
radiologist be much moreefficient in detecting the
disease and not wasting time onimages that aren't as important.
But one area that's verydifferent about AI within med
tech versus other sectors is howslow the pace of disruption is.
It's not that what we haveright now in healthcare is so
great.
It's that we have to make surethat the new tools don't make
the outcomes worse and,alternatively, that they don't
(06:24):
just add cost without improvingoutcomes.
So we need clinical andeconomic data to prove that
these tools add value and lowercost, and it needs to be able to
scale across health systemsglobally.
Another thing that's differentis that being successful in one
industry doesn't necessarilymake you successful in
healthcare.
Many tech companies have triedand failed in healthcare.
(06:46):
It is a highly regulatedindustry.
It has different incentives anddifferent non-market forces
than other industries.
Tanya Suba-Tang (06:53):
So what are some misconceptions about AI
within MedTech?
Kate Jackson Hobbs, CFA (06:57):
So I'm going to bucket my response here
in two buckets, but I'm goingto look at this both as an
investor and also as a patient.
So, as an investor, you knowone major misconception you just
highlighted the idea that whathas worked in other sectors will
work here.
Again, this is a highlyregulated industry.
People's lives are at stake,and those who drive the costs,
(07:17):
who drive the utilization, whoselect the therapies, aren't
necessarily the ones who arepaying the bills.
So I think that's a reallyimportant difference to
understand about med tech versusother sectors.
It's one thing to develop abetter solution, but it's
another thing to do itprofitably at scale, in a way
that can consistently performthe same way in every procedure
and be standardized across anentire industry Healthcare,
(07:39):
medtech.
It's hard to disrupt this space.
The incumbents have theadvantage of guidelines that
have been around for decades,reimbursement that has been
firmly in place, decades of dataand doctors who have spent
their entire clinical careertraining and using the current
solutions.
So before I invest, wheneverI'm looking at a new tool,
particularly an AI-enabled tool,I analyze how that company will
(08:02):
navigate the healthcare systemas it is not as we wish it would
be.
Now, as a patient, as you'rethinking about AI within medtech
and within healthcare.
I would encourage everyone toget their information from
credible sources.
Read the clinical studies.
The good news is now we haveaccess to a lot of great
clinical data that we didn'thistorically have access to.
(08:23):
But the great information, thehelpful information, it's
probably not in the popularmedia or on social media.
Think about the incentives ofpeople on social media and in
the popular media or on socialmedia.
Think about the incentives ofpeople on social media and in
the popular media to publicizeinformation about hot new
devices or tests.
That information is probablypublicized more to generate
clicks than to improve healthoutcomes, and so, as a patient,
(08:43):
I'm always very skeptical ofanything that's not FDA approved
or covered by reimbursement,and, as both a patient and an
investor, I'd encourageeverybody to talk to their
doctors, talk to the medicalprofessionals in their lives.
As an investor, I spend hoursevery week talking to doctors to
help me put new technology anddata into context.
Tanya Suba-Tang (09:03):
That's such a great takeaway.
Thank you so much, Kate.
So before I let you go, I wouldlove for you to share your
outlook for investment themes infive to 10 years.
Kate Jackson Hobbs, CFA (09:12):
Yeah well, it's a pretty exciting
time for MedTech.
This is a space that there's alot of opportunity to serve
patients better and to improveoutcomes and lower costs to the
system.
So I expect to see a lot morein robotics.
I expect to see greateradoption.
I expect to see robotic surgerykind of find its footing within
areas where it lowers costs anddrives clinical outcomes.
(09:35):
I expect to see more data and Iexpect to see more data
specifically demonstrating theutility.
I expect to see more dataspecifically demonstrating the
utility.
I expect to see more withinautomation.
I expect to see more automationin labs, in pharmacies, more
automation even withinprocedures.
This can potentially drivefewer mistakes and lower the
costs.
Within diagnostics, I expect tosee more imaging.
(09:56):
I expect to see more clinicaldiagnostics.
I expect better detection andbetter algorithms to help us
diagnose and monitor diseaseearlier.
And I think overall for all ofus, both as investors and
patients, there's going to bemore data and easier access to
information, which will lead usto have more information upon
which to make both our treatmentand investment decisions.
(10:17):
The flip side of this isthere'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 everybodyto keep that lens of clinical
and economic utility as theylook at some of the new
innovations in the space.
Overall, I expect winners tokeep on winning and I expect the
benefits to accrue toestablished innovation leaders,
(10:40):
but I'd also keep an eye on thedisruptors.
It's hard to scale in a smallcompany, but I think some of the
innovative, exciting technologywill get acquired and
commercialized.
Tanya Suba-Tang (10:49):
Well, thank you so much, Kate, for providing
your insights.
So many exciting new thingshappening in that space and we
can't wait to see what else willUs 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 insightsinto medical technology and AI.
Join us next time for anotherFinancial Perspectives episode
airing on the last Tuesday ofthe month.
Want to receive a shout out inthe next episode or share your
thoughts with us?
Send in a message to the showthrough the link at the top of
each episode description, oremail us at podcast@ cfa-sf.
org.
We love hearing from ourlisteners and look forward to
(11:33):
learning what you thought ofthis episode and any topics
you'd like for us to cover next.
Thank you for being a dedicatedlistener.
This podcast is produced by CFASociety San Francisco, a
not-for-profit professionalassociation providing
professional learning and careerresources to over 13,000
(11:55):
investment industryprofessionals worldwide.
To learn more about CFA SocietySan Francisco, visit our
website at cfa-sf.
org or connect with us onLinkedIn.
Hello and welcome to Financial
Perspectives, a CFA Society SanFrancisco podcast where we
interview and discuss trendswith leaders from across the
investment and finance industry.
This month, our host, tanyaSuba-Tang, membership Director
with CFA Society San Francisco,had the pleasure of speaking
with Kate Jackson-Hobbs, vicePresident at T Rowe Price.
(00:27):
Listen in as they discussinnovations in AI and medical
technology.
Tanya Suba-Tang (00:40):
Hi Kate, how are you?
It's great having you on ourshow today.
Kate Jackson Hobbs, CFA (00:43):
It's great to be here.
Thank you for having me
Tanya Suba-Tang (00:45):
so, kate, as Vice President at T Rowe Price,
we're going to talk about themedtech sector.
You know, obviously healthcareis in everyone's mind with
everything that's happening intoday's world, but specifically
today we're going to talk aboutmedtech and AI, two very
interesting topics that I can'twait to dive in with you.
Kate Jackson Hobbs, CFA (01:02):
Great.
Tanya Suba-Tang (01:02):
So AI buzzword maybe has exploded in almost
every sector and industry we canimagine right, and the
healthcare industry, of course,is no different, particularly
within the medical technology.
But before we discuss exactlyhow AI is transforming medical
technology, I'd love for you tokind of lay out the groundwork
for our listeners of where theindustry was just five to 10
(01:24):
years ago.
Kate Jackson Hobbs, CFA (01:25):
Yeah, so we've been talking about AI
in healthcare ever since Istarted investing in the space
about 12 years ago.
There's always been this hopethat technology tools could
improve outcomes and lower costs.
And, let's face it, we all knowthat there's room for
improvement in our healthcaresystem.
So one area where we've seentremendous advances in the past
(01:45):
decade has been inrobotic-assisted surgery.
Robotic-assisted surgery hasbeen around for decades, but 10
years ago it was primarily usedin urology and gynecology and a
little bit in orthopedics, butmostly in the United States.
Today, intuitive Surgical'sDaVinci robots have assisted in
17 million soft tissueprocedures cumulatively across
(02:07):
more than 70 indications in morethan 67 countries, and there's
new competitors in the softtissue space, as well as the
orthopedic surgery space, whereStryker's Mako robot pioneered
this space for orthopedicsurgery.
But many of the other largeorthopedic implant companies
have now announced and launchedrobotic solutions.
(02:27):
Most importantly, we're seeingdata to support the idea that
outcomes in some areas ofrobotic surgeries are now better
than in non-robotic surgery.
Another area where we've seentremendous strides is in the
early, more accurate detectionof disease.
We are seeing better imagingand better algorithms that have
both improved detection andimproved monitoring.
(02:48):
We have patients and clinicianswith more information and we
have a better knowledge of whatsymptoms mean, as well as a
greater knowledge of what testsare available.
We're seeing more, withconnected devices to automate
collection and dissemination ofinformation that was previously
collected manually to informtreatment.
I remember the CEO of adiabetes company telling me 10
(03:09):
years ago that we wouldn't seean artificial pancreas in our
lifetime.
And now we've got millions ofdiabetics worldwide who have
closed-loop insulin pumps thatdetect low blood sugar and
automatically administerlife-saving insulin.
This new standard of care hasreduced adverse events and
alleviated the cognitive loadthat many diabetics live with.
Having said all that, theindustry has been very slow to
(03:31):
adopt.
I mean, I remind people thathealthcare didn't broadly adopt
the internet until about 15years ago with the HITECH Act.
When there's a new tech trend,you can expect that healthcare
is amongst the last industry toadopt.
Now why is that?
Well, providers are overwhelmed, they're short-staffed and half
of them are non-profits, so themargin of error is zero.
(03:52):
When a bank adopts newtechnology and things go wrong,
they can make their customerswhole financially, but when a
healthcare provider adopts a newtechnology tool and things go
wrong, people can die.
So these technology tools haveto be fully vetted and de-risked
before they can be broadlyadopted.
So, really, what's changed inthe past five, 10 years?
Well, the tools are betterRobotics, imaging, monitoring,
(04:15):
automation.
Any tech-enabled tool that wehad 10 years ago has gone
through multiple generations andis now probably costs less and
is more accurate.
Either it has proven itseconomic utility or it's gone.
But I'm also seeing a greaterdifference between the haves and
have-nots around cutting-edgetools.
Given how slow the industry hasbeen to change and the
(04:36):
distractions of the pandemic,many companies in the past have
gotten away with not reallyinvesting in cutting-edge
technology.
Going forward, I think we'regoing to see greater benefits to
those who have invested.
Those competitive advantagesthat they already have will
likely accelerate.
Tanya Suba-Tang (04:51):
So how has AI transferred the medtech sector?
What is similar and differentabout AI within medtech versus,
say, other sectors?
Kate Jackson Hobbs, CFA (04:59):
So let's start with what's similar.
I mean at its core, AI can makehumans better, and by humans I
mean those humans who arehealthcare providers.
So with robotic-assistedsurgery, we've got intuitive
surgicals, da Vinci and softtissue.
We've got strikers, Mako andorthopedics.
What we're seeing is a greaterprecision with robotics than
(05:19):
with humans.
Robots can go places thathumans can't.
They can also quantify everystep of the procedure and
collect data.
They can collect data on theangle, the amount of time, the
pressure and correlate all ofthat with patient outcomes.
Those are tools we've never hadbefore.
Robotic-assisted surgery hasthe potential to take your
lowest quartile surgeons andactually make them average.
(05:40):
Another area where we're seeingsome similarities within med
tech and other sectors is inimaging.
You have the opportunity tohelp radiologists organize and
manage the images better.
If you're a radiologist, you'recoming in on Monday morning.
You've got a stack of imagesthat you need to look through to
see where there might becancerous lesions.
Well, AI tools can helporganize those, help the
(06:02):
radiologist be much moreefficient in detecting the
disease and not wasting time onimages that aren't as important.
But one area that's verydifferent about AI within med
tech versus other sectors is howslow the pace of disruption is.
It's not that what we haveright now in healthcare is so
great.
It's that we have to make surethat the new tools don't make
the outcomes worse and,alternatively, that they don't
(06:24):
just add cost without improvingoutcomes.
So we need clinical andeconomic data to prove that
these tools add value and lowercost, and it needs to be able to
scale across health systemsglobally.
Another thing that's differentis that being successful in one
industry doesn't necessarilymake you successful in
healthcare.
Many tech companies have triedand failed in healthcare.
(06:46):
It is a highly regulatedindustry.
It has different incentives anddifferent non-market forces
than other industries.
Tanya Suba-Tang (06:53):
So what are some misconceptions about AI
within MedTech?
Kate Jackson Hobbs, CFA (06:57):
So I'm going to bucket my response here
in two buckets, but I'm goingto look at this both as an
investor and also as a patient.
So, as an investor, you knowone major misconception you just
highlighted the idea that whathas worked in other sectors will
work here.
Again, this is a highlyregulated industry.
People's lives are at stake,and those who drive the costs,
(07:17):
who drive the utilization, whoselect the therapies, aren't
necessarily the ones who arepaying the bills.
So I think that's a reallyimportant difference to
understand about med tech versusother sectors.
It's one thing to develop abetter solution, but it's
another thing to do itprofitably at scale, in a way
that can consistently performthe same way in every procedure
and be standardized across anentire industry Healthcare,
(07:39):
medtech.
It's hard to disrupt this space.
The incumbents have theadvantage of guidelines that
have been around for decades,reimbursement that has been
firmly in place, decades of dataand doctors who have spent
their entire clinical careertraining and using the current
solutions.
So before I invest, wheneverI'm looking at a new tool,
particularly an AI-enabled tool,I analyze how that company will
(08:02):
navigate the healthcare systemas it is not as we wish it would
be.
Now, as a patient, as you'rethinking about AI within medtech
and within healthcare.
I would encourage everyone toget their information from
credible sources.
Read the clinical studies.
The good news is now we haveaccess to a lot of great
clinical data that we didn'thistorically have access to.
(08:23):
But the great information, thehelpful information, it's
probably not in the popularmedia or on social media.
Think about the incentives ofpeople on social media and in
the popular media or on socialmedia.
Think about the incentives ofpeople on social media and in
the popular media to publicizeinformation about hot new
devices or tests.
That information is probablypublicized more to generate
clicks than to improve healthoutcomes, and so, as a patient,
(08:43):
I'm always very skeptical ofanything that's not FDA approved
or covered by reimbursement,and, as both a patient and an
investor, I'd encourageeverybody to talk to their
doctors, talk to the medicalprofessionals in their lives.
As an investor, I spend hoursevery week talking to doctors to
help me put new technology anddata into context.
Tanya Suba-Tang (09:03):
That's such a great takeaway.
Thank you so much, Kate.
So before I let you go, I wouldlove for you to share your
outlook for investment themes infive to 10 years.
Kate Jackson Hobbs, CFA (09:12):
Yeah well, it's a pretty exciting
time for MedTech.
This is a space that there's alot of opportunity to serve
patients better and to improveoutcomes and lower costs to the
system.
So I expect to see a lot morein robotics.
I expect to see greateradoption.
I expect to see robotic surgerykind of find its footing within
areas where it lowers costs anddrives clinical outcomes.
(09:35):
I expect to see more data and Iexpect to see more data
specifically demonstrating theutility.
I expect to see more dataspecifically demonstrating the
utility.
I expect to see more withinautomation.
I expect to see more automationin labs, in pharmacies, more
automation even withinprocedures.
This can potentially drivefewer mistakes and lower the
costs.
Within diagnostics, I expect tosee more imaging.
(09:56):
I expect to see more clinicaldiagnostics.
I expect better detection andbetter algorithms to help us
diagnose and monitor diseaseearlier.
And I think overall for all ofus, both as investors and
patients, there's going to bemore data and easier access to
information, which will lead usto have more information upon
which to make both our treatmentand investment decisions.
(10:17):
The flip side of this isthere'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 everybodyto keep that lens of clinical
and economic utility as theylook at some of the new
innovations in the space.
Overall, I expect winners tokeep on winning and I expect the
benefits to accrue toestablished innovation leaders,
(10:40):
but I'd also keep an eye on thedisruptors.
It's hard to scale in a smallcompany, but I think some of the
innovative, exciting technologywill get acquired and
commercialized.
Tanya Suba-Tang (10:49):
Well, thank you so much, Kate, for providing
your insights.
So many exciting new thingshappening in that space and we
can't wait to see what else willUs 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 insightsinto medical technology and AI.
Join us next time for anotherFinancial Perspectives episode
airing on the last Tuesday ofthe month.
Want to receive a shout out inthe next episode or share your
thoughts with us?
Send in a message to the showthrough the link at the top of
each episode description, oremail us at podcast@ cfa-sf.
org.
We love hearing from ourlisteners and look forward to
(11:33):
learning what you thought ofthis episode and any topics
you'd like for us to cover next.
Thank you for being a dedicatedlistener.
This podcast is produced by CFASociety San Francisco, a
not-for-profit professionalassociation providing
professional learning and careerresources to over 13,000
(11:55):
investment industryprofessionals worldwide.
To learn more about CFA SocietySan Francisco, visit our
website at cfa-sf.
org or connect with us onLinkedIn.
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