Amazon (NASDAQ: AMZN), Alphabet (NASDAQ: GOOG) (NASDAQ: GOOGL), and Apple (NYSE: AAPL) see healthcare as a major source of opportunity. All three have made major moves in that space with devices, fitness programs, and efforts to test major healthcare initiatives using their own employees as a test lab.

Dan Kline broke down what’s happening and what may happen on the April 12 edition of 7investing Now with help from Simon Erickson.

A full transcript follows the video.

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Dan Kline: But with that, I’m going to talk about the third key healthcare giveaway takeaway. And that is can Amazon, Apple, or Google disrupt the healthcare market? So here’s how I look at it. You have a lot of insurance companies whose interests are keeping things the same? They they might go incrementally and and maybe they’ll make some little changes, like paying for a teledoc appointment, they might rotate in different drugs that they’ll cover and different things that they want.

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But they don’t want to disruption. They don’t want to disruption, because they are the thing being disrupted. So if you look at Amazon, they have every incentive to say we are spending X amount of billions of dollars a year on employee health care. How can we build something for our employees that then become something we can roll out to other companies and that’s what they’re doing. So they have a system they piloted in Seattle, where if you wake up Simon and you don’t feel well, you have the the sniffles, or maybe your your stomach’s not feeling so great.

You can have a teledoc appointment. And if the doctor decides you need it, Amazon will dispatch a nurse to your house. And that nurse will take vitals, maybe take a blood sample, maybe take some other unfortunate samples, whatever it is, you need to be giving, they’ll do that. So you’re having the sort of hybrid approach where you’re getting full on care. And that can be cheaper than actually going through a health insurance company because there’s not necessarily a middleman. And now it might be a contracted model.

Amazon uses a lot of contractors to supplement its workforce. Like you know the same way it’s the janitor might be a contractor working for third company, the nurse and the doctor might work that way as well. But they have the heft to figure this out. Google, Amazon and Apple also all have health care devices. So I am wearing my Apple Watch. And my Apple Watch tends to terrify me because I see way too much information about my heart rate. So my my resting heart rate is in the 60s. But when I’m doing this type of rate, it goes up to about 104. That causes me to Google, what’s a normal heart rate? And should your heart rate go up this much just from talking? And so but it also gives me all sorts of information.

Did I move enough today did I did I stand? There’s a device from Amazon that will actually give you like sleep patterns. And the same thing with Fitbit, which is a Google product where you can wear it and it will tell you you’re not sleeping enough you’re not getting enough REM sleep. All of this is going to sort of filter into being able to disrupt healthcare.

One of the things Apple asked for you to do when you wear the watch is can we aggregate your data? So there’s an AI into this I’m we’re going to talk about AI with Steve on Friday show based on someone asking us on Twitter. But so imagine if they go and notice a trend of people who are Simon’s general health Simon’s in, in good health, he he’s in good shape. He he works out, you know, all of those things, oh my god, they have a predilection towards some form of cancer, or they get ALS at a higher rate or who knows what it is.

But there’s data you can’t necessarily aggregate across doctors and platforms that you can through devices like the Apple Watch, or the Fitbit. So I think there’s going to be massive disruption in this space, as they learn more data and can just say, hey, why is there a cancer cluster in Houston, and maybe they’ll find out that there’s something wrong with the water or there’s something environmentally causing it. We’re going to get actionable changes. We’re also going to get much more ability.

You know, we’ve talked about the insurance company, I think Steve uses it, that you let them monitor you’re driving and if you prove to be a safe driver, you pay a lower rate. A lot of insurance companies use some form of that. But that particular company is actively monitoring. You might get Hey, Simon, if your watch says that you’re you know, you’re getting the proper exercise every day, we’ll actually charge you a lower rate and same thing if you know we see that your your food intake is better.

We’re gonna see a lot of that and it’s really going to upset the status quo. Again, not a lot of incentive for the CVSs and the Walgreens and the Aetnas and the insurance companies of the world to want this type of change, but we’re absolutely going to have it. Sam Bailey there’s a question from our very own Maxx Chatsko.

Let’s take that one as I think Apple’s ongoing privacy push is not so subtle indication of its health ambitions. Privacy and health information go hand in hand. I think you’re right. And Apples been very careful to say that if I let them use my health info, no one’s gonna know it’s Dan Kline health info. It’s just going to be put into a group of 47-year-olds lives in Florida still can lose a little bit of weight, you know, but is active and works out whatever the group they decide. It works a lot like television ratings, like, like with television ratings, we don’t actually know what Simon watches.

But we know what people like Simon watch, and that that sets advertising rates, we’re gonna see that with health care. Simon Erickson, I know you want it to weigh in here. Aside from my being a little bit silly about your particular aggregating information, what did you want to add to the topic of tech and health?

Simon Erickson: Well, I agree with you, Dan, this is a big trend that we should be paying attention to. And, you know, we know that hospitals are overcrowded, especially primary care, physicians are overcrowded. But the system as a whole is kind of stressed out. And there’s got to be a more proactive predictive way to improve healthcare.

This is a way to do it. Right? All the companies are using AI, all the tech companies to do it, this exact same way of monitoring, you’re driving if you’re if you’re living a healthy life, to get better rates. And in my opinion, I think this goes to the employers. You know, I think that the way that you actually provide the incentive, because there’s a lot of privacy concerns, like you mentioned, people are kind of, I just don’t know, if I want to have those tech companies have access to all my data. But you know, if you’re working for a company that picks up the tab for most of your health care insurance, and they say, hey, if you sign up for this program that we have with Apple, we guarantee your data is safe, and your privacy is safe.

And you’re going to get a bonus and incentive of $5,000 a year to do it. And we want to encourage as many people as want to to do this. And if you don’t, that’s fine, too. It’s an opt in program, I think you probably wouldn’t get a lot of people who would say yeah, I’ll take the money. And I’ll be healthier, and I’m comfortable with this. So we’ll see how it plays out. It’s definitely an incentive, not only for the system as a whole, but those tech companies.  Healthcare is a new frontier for them.

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Dan Kline: Yeah. And the reality is, these tech companies are so big, that it makes sense for them to say, okay, we’re spending whatever the number is 7000 per year per family of employees, because your health insurance at these companies are really good. Like when I was a contractor at Microsoft, so I wasn’t on their health care plan. But I was privy to what it was. And it basically it didn’t quite cover 100% because if you cover 100% people take it that don’t need it that have health insurance options from elsewhere, but it covered basically everything. And they realize things like paying for your gym, or you could buy a piece of exercise equipment every year that actually improve the health of their workers.

We’re seeing in the U.S, a change to the attitude of healthcare, I think if there’s one thing, oh, there’s a few things the pandemic has taught to us. First, you want the guy making your burrito to have paid sick days, because the last thing you want is him to come into work and infect a bunch of people because he was worried about getting paid or not getting paid. The second thing we’ve learned is that if Simon’s not feeling well, maybe he can do his meeting over Zoom. It’s not that important to be in person.

It’s nice, I miss in person. But we understand the sort of risk reward of it. That’s going to allow companies to experiment, we’ve seen this on sort of a private level, there are a number of let’s call them faith based that there were people of the same religion are banding together, paying money in and essentially hiring doctors. And basically, all your healthcare needs are free, and you’re buying, you know, disaster insurance in case something wrong happens and you need to go to the hospital.

So there are all sorts of models and the the breadth, the scale of an Amazon. Imagine if Amazon decides when they are partnering with other companies. But if they say, hey, any company in a state Amazon has distribution in you can buy into this and all of a sudden a small company like Seven Investing can offer Amazon concierge healthcare service. Like that would be a massive, massive benefit. And right now we’re a company that has employees in multiple states. It’s really, yeah, multiple countries, which which not an issue there because Australia has universal health care. So Anirban does not need that.

But the rest of us it would be tricky for you to find healthcare that could operate in each state, it becomes very much like sales tax, which is unbelievably difficult to figure out as you’re selling around the country. It’s why you don’t do it. It’s why the computer programs do it. So going forward, I think this is what’s going to change. And people ask me all the time, you know, do I think

Apple can go from a trillion dollar company to a $4 trillion company like and I think they can because healthcare is massive. And I think it’s all going to be different. The one thing I would tell you to sell. don’t own insurance companies. I don’t think the future is bright for things we don’t like that don’t perform well. How many of you have had a sick relative If I have to fight for medicine? I have a cousin who has lifelong will be battling leukemia, and they found a pill that would work for him and did work for him for a number of years, he’s on something else now. And it was they wouldn’t cover it, and they had to fight it.

And eventually they did approve it. But that’s a system people don’t like I liken it to cable, we all got cable from our cable provider and watched our bills steadily go up while the service went down until we didn’t have to. And we’re going to be in a case with healthcare, where we don’t have to.

Simon Erickson: Well and Dan to say to that, too. I mean, I think that that is something that needs innovation, right? We talked, we chatted about value based care earlier in the program. And the insurance companies are on the same page, they don’t want to just be spending a ton of money for you know, something that’s reactive, they want to be proactive and keeping people healthy, too. I think that’s going to kind of show you know, who is ahead of the curve on changing this system.

And we talked a lot about also kind of the fitness side of this, the basic health, the primary care side of it, this is kind of more of a nudge, right, eat healthier, be healthier, sleep more the things we kind of already know. That’s a very, very different topic than the what I would consider like the really big things that we really should know about. Right? Like, say we’re talking about genomes earlier, say that I am predisposed with a gene that I can see through is through a DNA sequence that I take that I’m predisposed to develop a certain form of cancer.

But if we can correct that really, really early on, I wouldn’t get it, I wouldn’t have to go through all the treatment later on in life. That’s a much, much bigger problem than just saying, hey, Simon you need to sleep more. And so like the diagnostic side of this, especially in oncology, and the more expensive, more serious conditions, that’s going to be really where people are going to say, hey, AI, get this right, make sure you’re right, we can’t be 95% sure, we need to be 100% sure that this is what you see. And this is how we treat it. That’s a that’s $100 billion plus per year that we’re spending on cancer drugs alone. Nevermind the time the treatment to it’s a huge opportunity for somebody cracks this.

Dan Kline: Yeah. And you don’t have to be 100%. Right. So let’s say what happens is, you run all your markers, you do all your genetic testing, and Simon, you are more likely than most to get a certain type of cancer. But if you avoid these things, you’re less likely to get that cancer. You can make not painful, proactive steps that, okay, maybe you drink less coffee, or you know, or whatever, don’t, don’t don’t have as much red meat or whatever it is. Well, those aren’t major steps and they’re going to be beneficial even if it turns out, you beat the odds and don’t get that type of cancer.

So I think we’re going to have two things. We’re going to have an absolute medicinal overhaul of how we deliver drugs, how we test drugs, and then we’re going to have a disruption to the system of, you know, years ago, I would have said it would have been governmental where we all understand the idea that we’re paying X amount of billions into health care, and a lot of it is getting wasted. And we should probably just all have healthcare that’s become so politicized. I don’t expect that to happen. I do think companies which have a lot of power, because they’re spending a lot of money on health care, are going to look at how they’re spending money and create or find a better way.

And then I don’t want to say benevolently because there might be a markup on it, they are then going to make that available to other companies and scale is going to matter. So I’m really excited about this. We’re going to be talking about this with the whole team. But most specifically with Dana with Maxx. I’m looking forward to it.

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