In Medicine, It’s Man vs. Machine

A new system called computer-aided detection, or CAD, can identify the same patterns a doctor can, by referring to a database of known cancer films. And now a third of all second mammogram readings are done by CAD, for $20 each. But the study from the University of California, Davis, showed that a radiologist with CAD was statistically no better than a radiologist alone in finding cancer. Round 1: Doctors.
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What would happen to healthcare-related stocks if we all stayed healthy? Drug stocks alone are worth $1.1 trillion, biotech another $350 billion, and medical devices and equipment some $400 billion. Who would need that stuff if we had fewer heart attacks, strokes and diagnoses of cancer? Good question.
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CT scanners, in other words, are keeping up the same pace of innovation as silicon chips have. A 256-slice CT scanner, sheduled to be out later this year, will scan a heart in 4/10ths of second and create a high-definition, three-dimensional image that a cardiologist can visually fly through.

If such a diagnostic tool were used on, say, everyone over the age of 40, it would cut the market for cholesterol-lowering drugs to only the population that truly needs them. (My guess is that the market would shrink by 75 percent.) What do you think that would do to Pfizer and Merck, pharma companies that are already getting slapped around by the stock market?

The scans now cost about $1000 each, so you can see why insurance companies don’t pay for them. It’s cheaper to let nature do the screening. But what if the price of scans were to drop to $300, or even $100. Considering that it costs about $30,000 to patch up a patient who suffers a heart attack, insurance companies may decide it’s a good idea to make scans part of every physical. Round 2: Machines.

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