A Look at the Big Questions Facing Healthcare
October 29, 2021
The U.S. healthcare market has been changing but those changes have come very slowly. We’re seeing advances in some areas including telemedicine and CVS adding walk-in clinics to many of its locations, but those are sort of changes at the edges, not wholesale disruption. WIll big changes come? The answer is complicated, according to Dana Abmramovitz who explained that due to its size and ingrained ways healthcare has been very resistant to change. That does not mean, however, that she does not see hope for the future.
Samantha Bailey 0:12 Welcome to 7Investing Now, a show that teaches you how to take a long term view on investing by better understanding what’s happening in the market now.
Dan Kline 0:22 Good afternoon. Good morning. Good evening, wherever you might be. My name, of course is Daniel Brooks Kline. I am the host of 7Investing Now. It’s kind of a special episode today. So Halloween is coming up. So we decided to talk about one of the scarier topics in the United States. That of course, is healthcare and you can’t do a Halloween topic and it’s not really a heavy topic, but you can’t have a Halloween episode without some gremlins getting in the system. So this is going to be sort of a two part interview. There’s about 12 minutes here with with Dana Abramovitz on everything facing healthcare in the US.
Sort of can it be disrupted, will it change? How do you invest in it? And at some point, Dana disappears. And I’ll come back for a second. I’ll say hi. And then we’ve got about eight minutes to finish the interview. Dana was having all sorts of computer gremlins. But JT Street before we do that, if you want to pop back on, I was asked a great question on a podcast I did this morning and I thought it’d be fun to ask you. What is your go to Halloween candy of choice? I said Milky Way this morning. That to me is just a classic. You’re never upset to get it. There might be some candies. I like more. But like I’m not sure I want to eat 50 Skor bars and I’d be happy to eat 50 Milky Way’s What is your favorite Halloween candy of choice?
JT Street 1:37 See, I’m a big Skor fan. So I would totally eat 50 Skor bars and then hate myself the next day. My dentist would hate me more. My go to as a kid and still today as always Twix. It’s a two for one, it’s way better than Kit Kat. I pull here no arguments that Kit Kat is better than Twix. And you could get a little one you could get one or two. They were great.
Dan Kline 2:02 I’ll go by my standard of eating a Twix when I was a kid is I will just scrape the chocolate and Carmel off the terrible biscuit. I don’t know why that cookie can’t be better. Twix is a good idea. It’s executed badly. But this is not what you wanted to hear us talk about. We’re of course going to go to Dana Abramovitz. If you have some questions, if you have some comments, feel free to share those. I’ll try to address them. But if you want to hit this interview, and we will stay vigilant because at some point Dana just disappeared. And then I will come back for a second. So if you see me looking stunned. Unfortunately, I’m in the same outfit. So you’re not going to know quite the difference of the two videos. But JT if you want to hit play. Thank you for doing that.
Joining me in the middle of a miserable day is our very own Dana Abramovitz. Dana had probably the worst thing that can happen that isn’t health happened to her today. Her laptop died. And that sounds bad. But usually you’re like, well, I’ll take it to BestBuy. I’ll take it to Apple. You took it to Apple Dana, did they read it the last rites? Was there a little ceremony? Because it did not end well.
Dana Abramovitz 3:04 You know, the worst part about it is he ran this diagnostic tests and across the screen in big red letters was failed. And it just like yeah, no, my heart sank. And I was just like, ah.
Dan Kline 3:16 Yeah, you might as well get the pirate flag and a laugh. Like, yeah, my my wife wants dropped her laptop, and was super freaked out. But it actually just broke the monitor. So later on, we were able to hook it up to another computer so we could actually get the stuff off. But no, Dana is I appreciate you being here because I know you have to redo a lot of work that was in that computer. Data was actually 110,000 words into the Great American Novel. She was far into some work that now she has to redo. So we’re gonna talk some big questions about healthcare. This is something we’ve done before, I’m sure it’s something we will do again, it’s just an area you know so much about, so I’m gonna throw the questions out, but I’m gonna sit back, I’m gonna drink water. Let’s tell the people its water. No, it’s definitely water. It’s only three in the afternoon here. So the first question here is, do you think we and when I say we all me, I mean, the United States of America not not you and I personally, will see a major disruption to how we pay for healthcare.
Dana Abramovitz 4:15 Uh, probably, and I say that just because the healthcare industry moves so slowly. So you know, we will see it, but I can’t predict when it will be. But you know, people have been talking about, you know, things, you know, the prices of things for some time, and we are making progress. So the good news is, last year, this time, the Center for Medicare and Medicaid Services, put in a final ruling for price transparency. So that’s at least a first big step. So now we at least understand what it is that we’re paying for, and how much we’re paying. It’s requiring first hospitals – so if you go to a hospital, and it actually, it’s already going on this year. Hospitals are required to list in a user friendly formats, prices.
So if you go to hospitals websites, you know, you should be able to find that information. Some hospitals even have on their website, a phone number to contact so that just if things don’t make sense, you can actually talk to a person, I haven’t tried it. So I don’t know how great it is. And we were talking earlier about, you know, customer support phone calls and how painful they can be. So I don’t know. But at least that’s the first step for people to be aware of what they’re paying for. And so, you know, I think that that’s going to move us in the right direction. Again, I don’t know how long it will take till we get to there completely. But we are making that first step.
Dan Kline 5:58 Seven or eight years ago, I went to a walk in clinic because my wife had strep, and I was 99% Ssre, I had strep. This was pre telemedicine, and I got an itemized bill. And I had pretty good health insurance at the time. I had New York Times health insurance through the Boston Globe. And it was like $500. I waited longer than I saw a person. Saw the person and said, don’t even give me a throat culture. My wife has strep. I clearly have strep. I’m allergic to penicillin. And he wrote me a prescription. And that itemized bill had about 18 things on it. And it basically taught me everything that’s wrong about healthcare.
But that’s sort of leads into the second question, because it’s great to think that there’s going to be this massive disruption, where all of a sudden, healthcare is not tied to work. And there’s some other way to do it. But it’s really the the little daggers that are sort of killing the current system, or at least giving us some options. So question number two is, Will efforts by major players like CVS to make health care accessible, have a major impact? So you can walk into 1000s of CVS is now and they have MinuteClinic. So they can do things like hey, I don’t feel well, or could you check my blood pressure, like they’re not gonna, you know, do the big things, but they can do a lot of things that previously, you would have spent significant amounts of money to walk into a walk in clinic or to see your general practitioner for.
Dana Abramovitz 7:12 Yeah no, CVS is doing I think a great job on you know, so they acquired Minute Clinic they acquired Aetna, they have, right, so they have the insurance component, they have the care component, and you know, they’re just your neighborhood pharmacy. So, you know, you can go in if you’re not feeling well, you can see a nurse practitioner gets a prescription, pick up your medication and pick up a can of soup, so that you can go home and feel a little bit better. There’s pretty much a CVS, you know, in close proximity, I would say five to seven miles from most people. So a really good job with that.
Dan Kline 8:01 Well, let me ask the sub question there. Is this really just about a mix of accessibility and options, because previously, you get sick, you go to the hospital, maybe in some markets, you go to a walk in clinic, you could call your doctor and get an appointment. But now I could go to CVS, I could jump online, my health insurance through my wife, I has a telemedicine component. So if if I’m having say, an allergic reaction, I had a small finger infection a few months ago, and I didn’t really need to go sit somewhere in the middle of a pandemic, is it really just about sort of making it so we don’t put every medical need into this same hole of like having to go sit in a doctor’s office, which costs money as opposed to the person just talking to you for five minutes is significantly less expensive? I would have to assume.
Dana Abramovitz 8:45 See that that’s definitely one component. And you know, it’s interesting, you know, the pandemics been so hard for so many of us for so long. But one good thing that came out of it was telemedicine and telemedicine has been in the making for many, many years. And it just took so much time for acceptance, right for it to be fully accepted. And so with a pandemic and people not, you know, feeling comfortable making those in person visits. It’s definitely been great that telemedicine had everything, you know, they had already made that that groundwork in order to make it accessible and now, it was adopted. And the good thing is, is, you know, like we’ve kind of open that floodgate and we’re not going back.
So there’s talking concern about is telemedicine really here to stay? Just because there’s still some unanswered questions about how do you pay for this cost or, you know, this other thing, and people are still figuring it out. But the Department of Health and Human Services, they have a telemedicine site set up so it is something that they are looking to, you know, keep on going so that we can, you know, best utilize that. And just reducing the cost of care is also preventative care and primary care. So moving to the point of being able to have that chat with your doctor without having to go to the emergency room. The cost of an emergency room visit is significantly higher than a telephone visit. But then also doing your preventative care, so, you know, preventative tests or just visiting having an annual checkup with your primary care physician.
Now, I’ve actually heard of people that have done, you know, basically their physical as a telemedicine appointment along with going in and getting lab work and blood pressure and that kind of stuff, which then frees up the doctor’s time. And I know a lot of the times I’ve had to go to the doctor, or someone in my household has had to go to the doctor, we know exactly what’s wrong. Like my son had, once a year gets terrible allergies. And last year’s medicine is always expired by the time it’s this year. Happened to us in Orlando. We jumped on a telemedicine appointment. Orlando is a city that has 24/7 pharmacies as amazing as that is. So like 11 o’clock at night, we were able to fill a prescription. And he went from looking like he’d been in a heavyweight title fight to waking up and feeling basically normal.
Dan Kline 11:29 I’m really excited about this. And we’ve talked a lot about wearables. I am wearing, I don’t know, Dana, this might be the 14th watch I bought since since knowing you. This is the Fitbit Charge five. I bought it because it has a nicer screen than the old Fitbit. But it’s supposed to turn on when you do this. And it’s like 50/50 on that. So I’m, I’m pretty much thinking about smashing it with a rock it is not, you know, I get up in the middle that I but that is not what my question is. My question is, is wearables right now are nice fitness trackers. They’re really good to remind you, Hey, you didn’t take any steps today or, you know, gee, she your heart rates not great. But it’s anecdotal. It’s useful from a fitness, it’s not a health device, do you think we’re moving towards a time when these might actually be helping us track meaningful health statistics, including people who maybe have things wrong with them, or you know, are diabetics or the chronically dehydrated, whatever it might be?
Dana Abramovitz 12:22 They do and I think, you know, we already have some of those things. And so the, so the FDA, has a agency for digital health and medical devices, but also, you know, software software as medical devices. They’re already thinking about this, and the reason why I bring this up, is because the FDA is designed to keep us safe, and make sure that you know, like, it’s a good thing. Making sure that we don’t get injured by you know, any of the drugs, foods, cosmetics that we might take. And with the advent of the smartphone, and digital health applications, you know, they started to get into that as well. And they want people to use these medical devices, you know, wearables for their health, because the FDA wants us to be healthy. Go figure.
Where wearing a wearable or software may have some risk they have set up some regulatory guidelines for that. For most of the devices, you know, the low risk devices so like just tracking the number of steps and your heart rate and stuff like that – they’re not going to have that as much. But things for we talked about, you know, like glucose monitoring. So there are devices, not necessarily on your, you know, for the general population, and like an Apple watch or something. But there are companies like Dexcom that make a glucose monitor, so that is a medical device, the software that runs that goes to your, your phone, that would be regulated because the FDA want to make wants to make sure that the software works, that the wearable works. Doctors appreciate that. So there are more relationships. Patients are coming to their physicians with more information because they are able to, to monitor, and in fact again going back to the pandemic, the FDA had some devices and software that they made emergency use accessible to like patient monitoring that type of thing so that patients could monitor and have that contact with their physician without necessarily going into seeing their physician in person. So we’re moving there.
Dan Kline 15:23 So when we’re reading all those rumors about all the cool things, the next Apple Watch will do, which, by the way, this Apple Watch did none of those things.
And that is where we hit the glitch. Yes, that is where everything glitched out Dana disappeared. But we will be back with more Dana Abramovitz momentarily before we do that, it is almost the first of the month. I know that’s hard to believe it is almost November 1. What happens November 1? Our new 7Investing stock picks come up. Each of the lead advisors, and that is an incredibly diverse incredibly talented group of people, make one stock pick our highest conviction stock each month. We do a major write up about that we record a video deep dive, we answer your questions about them in our members only call. So if you are not a member of 7Investing, you have to go to 7investing.com/subscribe. Once You’re there if you use the code “now” you’ll save 10 bucks that doesn’t almost even matter. It is such a great value. For $49 A month or $399 a year you get access to not only all of our new picks you also get all of our older picks. You get everything we’ve ever done. You also get access to us in members only call and all sorts of other information that is seven investing.com/subscribe.
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Okay, so Dana Abramovitz is back we had a bit of a technical problem there. I’m not entirely sure where I cut off. So I’m gonna go back to the second part of that question here. This is basically saying there’s a pretty high bar for Apple, well, we hear all these rumors, but all these cool things they’re going to do. It’s one thing for Apple to say like, Hey, maybe you need more water. It’s another thing to say like, hey, diabetic, like you need more insulin. Right? So this is a pretty high FDA bar to clear.
Dana Abramovitz 17:34 Yeah, I think so. And, you know, I mean, if a device actually becomes a device, then they either need to, you know, depending on the level of you know – class to three, risk the endpoints you want either data, so as a PMA, forget what that stands for, or a 510 K, which basically means you need to show that the device is as good as what is currently on the market. So there’s, there’s going to be some clinical study for a device and software if you’re going to actually provide health care information.
Dan Kline 18:25 Yeah. So for those of you who are getting all excited about what might happen with wearables, realize that they’re going to get better at tracking your sleep. They’re going to get better at understanding your workout, they’re going to get better at all of this sort of entertainment, informational things that can help you have a good workout, or in my case, make me get up and walk for 250 steps every hour, whatever it is. But they are probably not going to replace serious medical devices. That doesn’t mean it won’t happen. It doesn’t mean that Apple might not pick a market and go through all the approvals and do what it has to do. But that is not very likely. And it is very different to take, you know, sort of a, you know, a fun ECG and actually take a medical grade one nothing. I don’t know why that would be fun for anyone. But that is something you could do on the new app. One final question here, Dana, and I know we are tempting the computer Gods given how things have been going today. But what are most investors getting wrong about healthcare?
Dana Abramovitz 19:23 Oh, I think it’s timing. I say it all this time, healthcare moves really slowly. And I was actually presenting in a conference and somebody from the audience made this really great point, which I’ve been using ever since healthcare moves at the speed of trust. Right. And so, you know, it takes a long time to build that relationship and trust somebody. So it just it just takes a long time. Think about the Genome Project, right? So that was in, like the late 1990s, early 2000s. Right. And, you know, we finally sequenced the complete genome. And we were so excited like, and I say, we collectively we, as, at least the scientific community, it was.
Dan Kline 20:19 I didn’t help just so you know, I got nothing to do with that.
Dana Abramovitz 20:24 But, um, you know, we’re thinking, Okay, now we have all this information, we’re gonna, you know, like, Do this, do this, do this. And it’s like, 2021. And we’re still now just doing some things with the genome. We’ve made some progress but that’s two decades to fully be able to use it. And some of the potential that we had, that we thought it had, it still hasn’t come to fruition. So, I think investors that we, as investors think that it’s going to happen sooner, you know, like, Oh, this is great idea, this needs to happen, or, you know, like, we want to have have happen. A company is going to do this. And it just takes a little bit longer.
So, I mean, it’s great for us long term investors, because we have that, we invest with that horizon. So we’re like, okay, you know, like this company is tracking to do you know, these things. And in healthcare, it’s great, because, you know, you can kind of just see that potential and, you know, just kind of check and make sure that you’re the company’s doing the things in the direction keeping it in that in that direction. But I think that investors, I know, a lot of VCs have failed by not fully understanding that healthcare is not necessarily the technology industry, and it’s just not going to move that quickly.
Dan Kline 21:53 And I think we’ve seen the technology industry do a pretty good job on the fringes of healthcare, but it is very different to say, we’re going to provide telemedicine and then hire a bunch of nurses to go take blood pressure readings and do tests. That’s, that’s on the edges. That’s not a big disruption. And any of the big swings have failed pretty mightily. And that’s also because it’s such a large apparatus. If you’re changing something that the vast majority of us have, I mean, look, most people still go to McDonald’s.
And I don’t mean that from a healthcare point of view. I mean, we have much better fast food, and it hasn’t unseated McDonalds. As a country, and I know that’s a weird example to tie to tie it in. But like we don’t change all that easily. And we still have 80 plus million legacy cable customers, like as a country. You know, okay, other than newspapers, we were really good about giving up newspaper. We don’t want it which says the lifelong journalist we, we generally have not been quick to change. And we’ve seen in this country and correct me if I’m wrong with health care, sometimes will, people will cling to something, even if it’s worse than they than what they might be getting. Because familiar when it’s your health is really, really important.
Dana Abramovitz 23:04 Yeah, well, and so it’s people like us, as a consumer are very cautious and, and bad to change. But physicians are just as bad if not worse, right? Because they’re, their whole premise is to do no harm. And if something is working, you don’t change it, because, you know, there’s that level of risk. So the healthcare industry itself doesn’t do risk well, and, normally, change brings about some sort of risk. And so, you know, it’s just, it’s just very, very, very hard to healthcare.
Dan Kline 23:45 This is not unique to doctors. And I’ll close out here because Dana is glitching, a little bit. This is true of every industry. Like I know, countless grizzled old reporters that still use the notebook when their young colleagues are using recording devices and tablets and all like, a lot of people just don’t want to change even when clearly what’s new is better. And I’m not sure it matters if a reporter takes notes in a notebook or takes notes digitally, but certainly if he has a recording, that’s pretty valuable in terms of like, I didn’t say that. Well, yes, you did. I didn’t just write it down.
Here it actually is. So for doctors, I fully get it you were trained one way you did it for 20, 30 years. And that was some like young kid and the IT departments like here’s your tablet and that this thing you were in your head and all of a sudden, you know that’s not going to be easy. But Dana Abramovitz I recommend not using a computer the rest of the day, write your report out on paper, maybe have it scanned. To me like the universe is telling you something but thank you for doing this. I will throw it back to myself.
Dana Abramovitz 23:47
Alright, thanks, Dan.
Dan Kline 23:50 That was a challenging interview. From a technology point of view. We thank you for watching. It is a Friday afternoon. We will be back on Monday with Steve Symington. We’re going to be talking space on Monday. If you’d like to get in touch with us email@example.com. If you want to follow us on social media you can go to @7Investing and if you’re there you can find ways into I think you can this cool new thing we’re working on and I don’t remember if we announced it public so I’m not gonna say it out loud. So go to @7Investing calm and you can interact with us and maybe find some surprises. Mike Fee, Karen, we thank you for watching apologies we didn’t take a lot of comments on this show. We will get back to that on Monday. See you soon.
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