A Stock for Investing in Healthcare Data and Analytics

Anyone who has worked in information technology for a while knows about the old “diapers and beer” story which a fellow named Mark Madsen actually got to the bottom of a few years ago. The story goes something like this.

Back in the early 90s, a woman named Karen Heath, a senior manager for health analytics with Accenture today, was running SQL queries on datasets at an unspecified Midwest retailer. What she discovered was that the sale of diapers and beer seemed to be highly correlated. The idea was that husbands who were sent to the store to buy diapers also decided that picking up a six pack of beer at the same time might make their evenings a bit less miserable. Maybe placing the baby products closer to the beer aisle would increase sales of beer? It was a great example of how data mining can produce unexpected insights that can generate value at scale. Perhaps there are numerous ways retailers could modify store layouts to increase the sale of high-margin items. And indeed, there are.

With more data available now than ever, there is a lot of money to be made for companies that can extract valuable insights from it. In industries that haven’t seen a lot of operational innovation over the years – like healthcare – data analytics companies can add value very quickly by addressing lots of “low hanging fruit.” The ideal business model is a “Software as a Service” (SaaS) offering that charges people a subscription fee for