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Sometimes the best investment ideas come from companies seeking to disrupt well-entrenched industries. That, of course, isn’t easy to do because the establishment has a well-vested interest in protecting the status quo. Health care offers a lot of opportunity for disruption, but it also may come with as many roadblocks as any other area. Dana Abramowitz and Simon Erickson join Dan Kline for 7investing Now to dig into what’s happening in healthcare disruption and the forces disruptors are coming up against.
August 16, 2021
Sometimes the best investment ideas come from companies seeking to disrupt well-entrenched industries. That, of course, isn’t easy to do because the establishment has a well-vested interest in protecting the status quo. Health care offers a lot of opportunity for disruption, but it also may come with as many roadblocks as any other area. Dana Abramowitz and Simon Erickson join Dan Kline for 7investing Now to dig into what’s happening in healthcare disruption and the forces disruptors are coming up against.
Teladoc (NYSE: $TDOC)
Apple Inc. (NASDAQ: $AAPL)
Nano-X Imaging Ltd (NASDAQ: $NNOX)
EXACT Sciences Corporation (NASDAQ: $EXAS)
Sam Bailey 0:14
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 0:26
Good afternoon. Good morning. Good evening, wherever you happen to be apologies, I froze up a little bit there. Welcome to the Monday edition of 7Investing Now my name, of course, is Daniel Brooks Kline. I’m being joined today by Simon Erickson and Dana Abramovitz. We just hit the ground running here because we have a very busy show. We asked people online, what industry they expect, is going to be disrupted. And the vast majority of people said healthcare. Simon Erickson even weighed in on our Twitter, with health care if you want to bring that up Sam Bailey, we would appreciate it.
Also a little Thank you to @GhengisAhn we’re not going to get to those companies. But he seconded Simon’s vote. And there were like 70 or 80 votes for health care, it was really exciting. So let’s, uh, let’s get to this right off the top. I’d love for you to explain Simon why you picked healthcare. And then of course, we’ll get to Dana, who could start to spell all of this out. And as always, we would love your questions and comments.
Simon Erickson 1:27
Well, first of all, Dan, I’m really looking forward to this show, because I think it’s combining one of Dana’s favorite topics to talk about with one of my favorite topics to talk about in the same show altogether. But just to set the table a little bit, disruption is all over the financial media these days. But all innovation is not disruptive innovation. And so disruption is kind of this category where you have a very large percentage of consumers in an industry, perhaps even the majority of consumers that are underserved or under represented by the majority, or the incumbents products, right?
So when we think about this kind of computing started with NASA getting these giant IBM mainframes that were just available for large government funded missions. Now, of course, we’ve got personal computers, laptops and smartphones, as the computing industry disrupted itself. And healthcare is the textbook definition of an industry that’s ripe for disruption out there, we’ve got $4 trillion, we’re spending in America alone on health care. And for the most part, medical bills are paid for or reimbursed by insurance companies. And the burden of insurance premiums is paid by either private employers who are taking care of their full time employees, or government sponsored programs like Medicare and Medicaid.
And by the way, each of those is now bringing up an almost $1 trillion annual tab. So they’re very, very expensive. And the entire system of reimbursement is also based upon the Physician Fee Schedule, right. We’re paying for procedures, we’re reimbursing based on volumes for tests, rather than necessarily the medical outcomes for the patients themselves. I know that Dana has a lot of opinions about that, we’ll get into it later on the show. But the whole the whole point is, this is an industry that as a whole is kind of rewarded. Expensive health care plans, people that can have access to the greatest doctors and the greatest health care out there. But we’ve got an underserved group of Americans, and I’m sure the rest of the world has this as well, too, that really need a disruptive opportunity, that will cater to their needs and make sure that we get good health care for everybody out there. So that’s why I voted for health care in this poll. Yeah.
Dan Kline 3:28
And it’s worth pointing out that disruption is difficult. You’re taking on incumbents, you’re taking on a huge operating system. Dana, we’re going to talk about innovation. But first, I wanted you to comment a little bit on on what Simon just said.
Dana Abramovitz 3:42
Yeah, I mean, the whole healthcare industry is adverse to risk right. It’s in their DNA, right, the Hippocratic oath, do no harm. Right. And they have a centuries long tradition of, if it’s not broken, don’t fix it. The stethoscope is the same thing that people have been using forever, right? Could it be improved, probably, but there’s no initiative, right, there’s none of that disruption. But then I think that the pandemic has really pointed out the opportunity and, and people who are not getting access to health care, and just where we can really create disruption, just so that people have more access to it.
Dan Kline 4:38
We’re only as healthy as the guy making our burrito. That’s something we’ve learned during the pandemic. Simon, before we get to data on sort of why innovation is difficult to healthcare. I wanted to get to the comment from Max Lucas, if you could read it because your vision is better than mine, as we pointed out.
Simon Erickson 4:53
Sure. Yeah. Okay, so Max says thanks again for watching Max. It says, I know people think technology can disrupt any industry. Because how well it disrupted consumer goods, but industries like healthcare and real estate are hard to disrupt due to regulatory hurdles. Dana, how convenient. You just wrote a report on can technology fix healthcare?
Dana Abramovitz 5:12
Yes, Yes, I did. And so technology can help healthcare, but it can’t be a bandaid. So if you have a technology company, we can see where the system’s broken, every time I go to the doctor, and the nurse measures my blood pressure, my temperature, writes it down on a post it note, and then turns to insert into the computer. Right. Those are opportunities to mess up. Right, and why can’t it conveniently go into an EHR? But it has to be within the system.
And then the regulatory hurdles, certainly, I mean that’s one of the biggest problems that the healthcare industry faces is that, there are all sorts of different government regulations, and it’s at the federal and state level, um, as well, as you a lot of the, Simon had talked about the insurance and who’s paying for things, that also comes from a government and, if there’s an opportunity for it to change every four years, then, we’re two to four years, it could. So it just makes it really hard for the industry to respond to all of these regular regulatory changes, which makes it difficult to make changes in the first place.
Dan Kline 6:42
It’s also worth noting that this is a very large industry, and an enormous amount of training goes into obviously, being a doctor, a nurse, a health care provider, and that tends to make you set in your ways. Like, I know, Simon, if there was a new way to look at stocks, we might be resistant to some of that logic, but I want to share a comment from Jason Bixler that that just sort of made us all laugh and let Dana talk a little bit about why innovation is slow. And here Jason Bixler, I apologize. He says healthcare, they still use fax machines for crying out loud. Even I don’t have a fax machine anymore. Dana, I know, you want to tell a story.
Dana Abramovitz 7:17
I know. So I had a story. So I’ve been working in that healthcare industry my entire career. And it’s like, 30 years now. I was talking to a head of oncology at a community hospital in Silicon Valley. So a fairly innovative hospital. And she said if you want to change healthcare spend the day in the clinic. And so I did with her, and I followed her and I watched her sign out a patient. So a patient’s in the hospital, the doctor has to sign that person out. Saying that they are okay to leave. And she had a pen and a piece of paper, and she signed, like, literally signed out, it wasn’t using an EHR, right? An electronic health record, it wasn’t using any digital means she actually had a pen and just seeing that here is this innovative organization that’s still doing things like paper charts. We have a ways to go.
Dan Kline 8:28
We’re going to take Luciano’s comment in a second. But Simon, this is actually like, they built this industry to make it not disruptable, but slowly disruptable.
Simon Erickson 8:40
That’s absolutely right. Healthcare as a whole has purposely put hurdles in place to slow the pace of innovation, right. Think fundamentally about what healthcare is think about how many years it takes to become a doctor, you are an expert in your craft. And if all of a sudden the industry starts changing at a whim, and everything that you’ve learned goes out the window would be impossible, right? You’ve got standard of care that is meant to be in place so that doctors can know what to do and how to diagnose and how to treat patients.
If that’s changing all the time, really quickly, it’s going to be very difficult for doctors to keep up. Think about medicine, as you think about it. You know how long it takes to get a new drug approved and go through FDA trials? No, it costs a billion dollars and 10 years to get anything commercialized. That’s on purpose, because you want to reward the companies that have spent the time and done the rigorous research to actually have two years of exclusive patent protection so that they can actually recognize the fruits of their labor from all the work they did out there.
And just I mean, healthcare as a whole. I think that the regulations are very good. I mean, there’s health for for good reasons, is people’s lives that are at stake here. You don’t want this to be moving as quickly as cloud computing or the internet happens. But again, we see a lot of fundamental problems. And I think that there are definitely some some big corrections that need to play take place. Again, when you’re talking about a sixth of our GDP and $4 trillion a year. There’s a lot of efficiencies we can realize out there.
Dan Kline 9:59
Yeah, it’s also steering a cruise ship, these are not easy changes to make. And I’ll give an example from our lifetime. It wasn’t that long ago that the vast majority of prescriptions were written on a piece of paper, and you brought them to your pharmacist to fill it. Now, much more common have that be done electronically. It’s not 100%, there’s still a lot of paper prescriptions and pharmacies that aren’t hooked on electronically.
Or I go to one CVS, and they sent my prescription to another CVS. And it’s there’s no interoperability there. So this can be really, really tricky. We would love your questions and comments. We’re going to talk a little bit later in the show about some of the other areas you thought were ripe for disruption. But I want to start with Simon on this one. How do you sort of separate what’s industry stubbornness, and people protecting their own piece of the pie, and what’s actually something where we should go really slowly to not sort of upset the applecart of a system that sort of works? We’re not all dead?
Simon Erickson 10:58
It’s a good question of, of what needs to be innovated the most, right. And if you look at these pockets of healthcare, which which by the way, we say healthcare, it’s like 1000, different sub segments, right, or whatever we’re talking about within this giant industry out there. But two that are, I think necessary are oncology and prescription drugs, oncologists, were spending more than 100 and $10 billion a year on the fight against cancer. And it’s very expensive.
And a lot of the times we’re just reactively responding to patients that are in later stages of cancer by stage two, stage three is maybe in stage four cancer. But what if we can proactively detect that earlier on? What if we can solve these problems that are hardwired into us as human beings whose blueprint we have called DNA to stop those problems from happening rather than reactively? responding to them? I mean, that’s one huge area that could be could be fixed.
And the other one is prescription drugs. I mean, Medicare Part D, right? I mean, how much are we spending on treating chronic conditions with drugs over decades, rather than correcting the fundamental problems, and we have opportunities to correct both of those. Now, both of these big things, I’ve got technological innovations, whether it be gene editing, whether it be gene therapy, whether it be RNA interference, a lot of the work that even Dana did in her PhD work, the technology is out there and can be applied.
But to your point about the narrative, Dan, this is a controversial field. When you say gene editing, there’s a lot of kind of controversy that people whether it’s ethical, whether it’s resistance to this for different reasons, whether it’s privacy debates, people don’t want to share their DNA, or their healthcare records out there. When we talk about the pace of innovation, you’ve got to have buy in from the consumers that are underserved. And a lot of those questions still remain to be answered.
Dan Kline 12:38
And not every solution is a pill. And I think that’s important to remember. And it’s something I’ve talked about with Dana and Max a lot. And I’m going a little off script here, but I’m gonna throw it to Dana, I could get back and drop ability. I know that I went to the doctor, and my blood pressure was edgy, it was sort of right at the edge of, of where you want it to be. And the prescription was more akin to your thoughts here on sort of non medical treatments. Apologies if I if I jump up for a second there, I’m in Las Vegas for all of you who who don’t know and the internet connection is designed to send you to the casino and it’s clearly not designed for broadcasting Dana, your thoughts on on sort of like our our quickness to give people a pill and to not say, hey, if you made these lifestyle changes, and I’ve made a lot of them, much less red meat, much more walking. Simon has sort of dared me to be here for the next 50 years. I’m trying to do that. Dana, that’s fighting against sort of an establishment, right?
Dana Abramovitz 13:31
Yeah, yeah. No, it’s it’s interesting. There’s, there was a cartoon that I saw, and it’s all these people waiting in line for that quick fix, right? And so we, as a society, you’ll have been kind of taught, how do you get that, that immediate results. And a lot of times you like taking a pill he will eat, even if you’re watching a late night commercial, and there’s an ad for a supplement that’s just gonna melt fast and fat away. A minute, right? And you think, oh, that that sounds great. Sure, it’s, connect 1099, for three months, in order to get that one month of dosage. But like, I’m gonna do that, because that’s easier.
Taking that pill is easier than changing my diet, changing my lifestyle, exercising a little bit more, meditating, sleeping more, just all the things that we know, can improve your wellness and Simon had said earlier about you moving towards prevention, right. So, you’re like moving more upstream, such that we’re not getting sick, it’s such that we’re identifying illness early, early, before it becomes expensive and difficult to treat. So if we can kind of move to that point I think that will like that in and of itself is disruption but that is disrupting us as a society and not necessarily the industry, or getting the industry to kind of help us as a society. But we got to work together on that one.
Dan Kline 15:10
It’s taking the long term investing approach to healthcare, rather than the day trading approach. And Simon, this might be a good time for you to talk a little bit about our long term approach at 7Investing and how people might become a member. And then of course, we will get right back to disruption and healthcare.
Simon Erickson 15:28
Yeah, absolutely. I love that analogy. The long term investing approach to healthcare is just changing things for the good of the outcomes. First and foremost, if you go to our website 7investing.com you get free access to Dana’s report on whether or not technology can fix American healthcare. I think it’s fantastic. Dana, like she said, has been spent three decades in the healthcare industry consulting with CEOs and she also has a PhD in biochemistry. So she’s very knowledgeable about this subject. And we’re offering her report for free on 7Investing.com. Right now, it’s only going to be available for the next week.
So I recommend anyone who’s not already a subscriber to check it out for free. If you are a subscriber 7Investing, you’ll get it. As long as you’d like this, we’re posting it to the research tab of our website. And so please continue to check it out there. But to answer your question, Dan, or you can sign up at 7investing.com/subscribe. Not only do you get access to great premium content, like reports on health care, but also our team’s seven best ideas in the stock market each and every month. I’m pretty excited. We just locked in our picks for next month, Dan, we’ve got again, a really nice slate of options, some of them being companies that a lot of us had never even heard of before. So it’s very exciting.
Dan Kline 16:37
It’s all what three or four I’ve never heard of $49 or $399 a year 7investing.com/subscribe, we’d love to have you as a member we have our new member call. Our members only call all this Friday. That is the best day of the month. It’s a busy day. It’s a it’s a multiple coffee type of day. It is a it is a marathon, but it is a ton of fun because we get to interact with our members, we get to talk about things we don’t talk about on the show. We would love more of your question, questions and comments. Luciano, I promise we will get to yours before the show is over. Dana, I want to talk about interoperability. You mentioned this word, why don’t you explain what it means and sort of how it can be disruptive in the healthcare space?
Dana Abramovitz 17:22
Yeah I mentioned electronic health records multiple times in this call. So just basically data and who has it, right. So if you go to for one doctor, you’ll see your primary care physician, and you have all your bloodwork and all of your data is in that physician system. And then see, you have a endocrinologist that you’re working with. All of you go and you have different tests, and all that now is in that doctor’s system, right? Your data does not talk amongst the different doctors, even if they’re in the same network that they may not have that. So that that is the interoperability of your sharing data, healthcare data.
My car gets better service, because I’ve always taken my car to the dealership. So when I was living in California, it was there. Now that I’m in Texas its here. And my dealership here knows exactly how my car has been treated throughout its entire lifetime. That doesn’t happen in the healthcare system, which is really unfortunate. Right? And a lot of it is who owns the data? Right? Is it your physician? Or is it the patient and a lot of times the physicians don’t want the patient to own it, because then they can go to different physicians, right?
But it ultimately is the patient’s data. So there’s a lot of discussion on who owns the data, the interoperability as a patient, you have your right to your data. So if your physician isn’t complying giving you results, you can tell them that they should. I’m a big advocate for making sure that that patients have their own data.
Dan Kline 19:12
And of course, there’s a technology aspect of that, because we have to move our data around privately. I don’t care if somebody knows that my car needed an oil change, there might be health issues that you don’t necessarily want to be public shared. Simon, you think we should actually change how some of healthcare is incentivized? Do you want to explain that one? Because I found it really interesting.
Simon Erickson 19:32
It’s a really interesting one for sure. Dan. Dana talks a lot about value based care. And we’ve we just kind of discussed already the Physician Fee Schedule, how we’re rewarding for reimbursements for procedures rather than outcomes. If you want to change the system, you kind of start with what you define success says right right now success as you complete it in test, we’re going to reimburse you for the test. Let’s move on and doctors saying hey, we’re going to cover ourselves. We don’t want a malpractice suit on us out there. So let’s run as many tests as it takes to show that we did. We’re supposed to do.
What if you can move that proactively to say, hey, really what’s most important to me is making sure that this patient is okay. And the medical outcomes are the very, very most important things. And so that’s why we’ve seen a CMS kind of pushing for value based care value based care, right. Insurers have picked up on this. United Healthcare largest insurer in America said, Yes, we want to transition where we’re rewarding the outcomes and we want to keep people healthy.
And a gentlemen, I have chatted with for several years named Donald Brown used to be CEO of a publicly traded company called Interactive Intelligence that was running a new running a new company called LifeOmic which is trying to encourage exactly what Dana mentioned earlier in the program. Keep people healthy. 50% of health is just your, are you staying physical? Are you taking care of yourself? What are the activities that you’re doing, but it’s really, really challenging to change lifestyles for people.
And even he who started a company to try to encourage some of these behaviors has said to me, Hey, this is a really, really challenging problem. It’s very personal, you can tell people eat healthy and go jogging every morning, but it’s still up to them to do that. Now, the interesting part is going to be if you start rewarding financially, the people who are insured, if you give them rewards for staying healthy, or doing things that they want to nudge you to live a healthier lifestyle, I think that’s one thing that might change the equation a little bit when it comes to the insurers and payers of this.
Dan Kline 21:14
So Dana, one of the things I do is I share my my Fitbit app, or whatever data with my trainer, and he sort of makes suggestions and tells me things to do, are there ways we can sort of incorporate health in that type of monitoring in a non privacy violating way, with our healthcare providers, where maybe I actually lower rates because I have lost 20 pounds, and I do walk 10,000 steps a day, and, and all things I’m doing not, so I look better, but so I actually live longer? Like, that’s my goal.
Dana Abramovitz 21:47
Absolutely, yeah. So we have wearables, and there are insurance programs, where they’ll give you a your insurance company, or your company will give you a health fitness tracking device whatever it is, and incentivize you to do different activities, there are also different wearables that will share reports to your physician, so that you’re collecting data and that’s not just your steps in your physical activity, but now there are wearables that can monitor blood pressure, heart rates like a whole suite of, of bio life biomarkers that you can share with your physician to help you track your health. And like we did talking about the data interoperability, there is that the data protection, right, so there’s HIPAA laws, which is the portability of data, right, and there is a privacy component of that, right, so you can share data, but you can’t, your personal medical information has to be separate, right. So an anonymized heart rate, or blood pressure doesn’t necessarily mean anything, but that it belongs to me and where I live and what my phone number is, and that obviously, that’s more personal. And so that’s, that’s the, the PMI that you might hear, when people are talking about the complaints.
Simon Erickson 23:28
If I might add to that, too, Dan, we have seen as investors a lot of flops, when it comes to consumer facing healthcare, especially for medical devices. And if it was not a good investment, right 23andme kind of got exposed that it wasn’t medically actionable, right, Under Armour tried to do Map My Fitness and have, devices you put on, that was a big flop and a waste of money for them.
We’ve seen a lot of failures in this, because it was all just kind of this this fun need to have data that was you can go out and you can track how many steps you were doing every day or what your heart rate is. But it wasn’t something that was really tied into your doctor that was being reimbursed by the insurance. And I think that the necessary step to kind of make this more personal make this more tied in with your insurer, with your employer, I’m starting to see those happen, where we didn’t see those maybe five, seven years ago, when a lot of these companies were trying to frontward run where this industry should have been heading.
Dan Kline 24:19
And it has to get better. Dana, I’ll go to you in a second. My Fitbit needs to know that I’m walking, not moving my arm a lot during a show, which it doesn’t know. So like that is absolutely an issue. Dana, I stepped on you there. My apologies. It’s fine.
Dana Abramovitz 24:34
So a lot of times with these devices, and this is the problem is that it’s a shiny object, it’s new, and so you want to use it, but then after a while, you stop using it and then ends up in your drawer, right. So and this is why a lot of these businesses weren’t great investments because they were great and new at the beginning but not great for the long term because people weren’t using it for the long term because there wasn’t that long term lifestyle changing. So back to Dan’s comment on, like, how do we get healthcare to be more of a long term investment, rather than, just a day trade or, just like a short term a couple of weeks until we get bored, and something else new pops up, and we want to try that.
Dan Kline 25:20
10,000 steps a day is better than walking 200,000 steps once a month, there’s a lot of benefit to that I want to make a comment from Bill Pilock, because it speaks to something Simon wants to talk about. We don’t need talk about the specific companies. But he says screening companies seem to be the most disruptive Simon, you want to talk about how identifying things really early on, you’ve alluded to it earlier. But this could be I don’t want to say the holy grail, but a major part if we catch cancer on day one instead of day 200. That makes it easier to treat.
Simon Erickson 25:53
Yeah, sure. And so that speaks exactly to one of them that Bill brought up here, right, EXAS is EXACT Sciences Corporation (NASDAQ: $EXAS) which is doing an at home diagnostic for colorectal cancer, I mean, that’s something that’s a lot different than having to go into the hospital wait for results. And so you can basically just send by mail, a diagnostic test like that. Nano-X Imaging Ltd (NASDAQ: $NNOX), same thing, trying to trying to do things that are more disruptive to the system. Right now, the system itself wants to move slowly, you’ve got to show progress, we still need to look at the right metrics as investors to show that these companies are executing well, but I think that they’re heading in the right direction. I mean, if we really are going to have consumer facing health care, let’s have consumer facing companies who are innovating that field,
Dan Kline 26:30
Could we disrupt the basket, some magic through this couple of times, this is like one that is gonna be public demand a better easier way to do this, I’m being silly a little bit because obviously, that fairly invasive procedure, but there’s a lot of room with a lot of these to do blood testing to do other genetic marker testing things where we can figure it out beforehand, we appreciate your questions and comments, Dana, feel free to jump in.
Dana Abramovitz 26:57
I can comment on that. Right. So there’s a lot of the regulations so you have that basic gold standard, right, so a colonoscopy, if you have a screening test, and the company shows that it can provide that same level of standard as a colonoscopy that can become adopted. Right. And, and we are doing that a little bit, with some tests you get screened, and then like, if you get a negative result, or like a questionable result, then maybe you come in and have the more invasive test. But we are actually getting to that point, and I’m thankful for that, as I’m getting up in age.
Simon Erickson 27:48
So what diagnostics data, like you said, it’s all about selectivity and sensitivity, right? You don’t want to have false negatives, nor do you want to have false positives, or a false negative is saying, you know, hey, we missed it, you know, you’re fine. There’s nothing there, when there really is or a false positive or they identify something that really is not a concern. Obviously, both of those are really bad if you have the wrong diagnostics. It’s super important, even if it’s cheaper to keep the same standard.
Dan Kline 28:12
Yeah, and we’ve seen a lot of that with COVID testing where false negatives gets people locked in their hotel rooms until a better test comes out. I want to talk about one of the disruptors we’re already aware of, and that’s telemedicine and Simon you can take this first has telemedicine already proven to be a disruptor?
Simon Erickson 28:31
I think parts of it are Dan, in terms of somebody who really nerds out on disruptive innovation, I would not consider this to be by the by the book disruptive at least for for telemedicine. It is great. We want to move people to their homes and just have the calls with their doctors take place at home rather than having to go to the to the hospital. The downstream of that to pharmacies is very important, too. I know that Dana chatted a couple of weeks ago for our podcast with someone who is delivering prescriptions directly to people’s homes. All this is very innovative.
The disruptive part to me, though, is actually in the wearable devices themselves, who can collect data points and send that to your doctor so that you can proactively diagnose things and say, Hey, red lights, something’s out of whack here, let’s come in for an appointment or do a telemedicine appointment rather than retro actively say, Hey, I don’t feel good. I come in and then you diagnose the symptoms. So I think that’s kind of connected to telemedicine, but it’s it really more of the wearables segment of that, at least in my opinion. This is this is the disruptive part of it.
Dan Kline 29:31
Danny, your thoughts here?
Dana Abramovitz 29:33
Yes, I think, for me, the disruptive part is the convenience to patients. Right. So getting the healthcare industry to treat patients as consumers, right. And I think that that’s what telemedicine does. It gives people access to a doctor conveniently when they need it. If you’re sick sometimes you call your doctor And they can’t get you in right away. But you call your book an appointment on Teladoc Health (NYSE: $TDOC). And then you get notice you’re like, hey, Doctor is gonna call you in 10 minutes, make sure you’re ready. Right. And so like that convenience and so disrupting the healthcare industry in a way such that it’s more like we expect other retail, or other types of industries that we interact with and that convenience that we get from it. So, that’s just a different way to look at the disruption I think.
Dan Kline 30:33
And telemedicine a lot of times solves a problem. We already knew the answer. My son had allergies, he needed eyedrops telemedicine made a lot more sense than going to a minute clinic. I want to take two comments, one from Daniel Delgado, one from Luciano assignment. I’ll let you read those and sort of lead the discussion there.
Simon Erickson 30:49
Sure. Yeah. So if you can put one of those up, and I’ll read whatever you put on the screen. Okay. Yeah. Daniel, fellow Houstonian. Thanks for watching the program. Apple Inc. (NASDAQ: $AAPL) Watch tracks a lot of health information for individuals, especially when walking. They are so much at my fingertips. I use the info to achieve my health goals. I do show my doctor my Apple Watch health activities. And my tracking results. Great info to share Dana that sounds like A+ from Daniel, that’s what you’re trying to achieve out there. Right?
Dana Abramovitz 31:14
Yes, yeah. No, I have an Apple Watch. I love it. And yeah using it, and having that reminder, sharing that information with your doctor, and then you it really just becomes a lifestyle thing, right? I mean, the nice thing about these smartwatches and how Fitbit has expanded is that it’s not just tracking steps. It’s not just a phenomena, but it incorporates other things so that you might be more apt to wear it. And then if you’re more apt to wear it, then you have this reminder on your wrist or wherever it is that, Oh yeah, maybe I should walk, take the stairs instead of the elevator or park my car a little bit further away, or just just be a little bit more active. And the Apple Watch has little reminders to stand up every so often or to breathe. If you get a little bit stressed. It can sense all those things. And those those are good things to promote that that whole wellness. well being.
Dan Kline 32:18
My Fitbit is nearly as much my boss as Simon is. I often have to walk around the room because of the Fitbit.
Simon Erickson 32:28
Dan does it does it talk to you in my voice or it’s telling you to do things yet?
Dan Kline 32:31
It doesn’t talk. And I bought all of the devices and I’ve struggled with what the right one is. So if anyone on the team wants to try a device, I have more than a few I could send her out. Why don’t we take Eb capital’s comment, which is of course our friend Todd. Simon if you want to read that
Simon Erickson 32:52
What’s the best wearable innovation? Maybe automated insulin devices okay. With pumps replacing some of the existing standards out there any thoughts on that one Dana?
Dana Abramovitz 33:02
So my boyfriend has type one diabetes, so I am up close and personal with the CGM nowadays. And yes I have friends who have been dealing with diabetes for their lifetime. And it certainly helps. Um is it’s 100%, like, there’s still, calibration that you have to do. There are still times when sugars high sugars too low. I don’t use one personally, but, my boyfriend does and from his experience, yes and no in terms of good.
But like, certainly giving freedom for parents of children with Type One Diabetes, absolutely. Just the fear of a child having a low and going into a diabetic coma, I mean, these are real or serious things. And I’ve heard stories of parents, sleeping in their child’s room, because they’re not sure that they’re going to wake up just because of their blood sugar. So, absolutely, that has helped and that’s a chronic disease, that people have been, living with for generations, and I’m happy to support those organizations that are working on their research and helping to make that better.
Dan Kline 34:44
Dana are we on the cusp of more meaningful health monitoring, like everything from blood pressure to, to insulin levels to whatever else you might need to track on a regular basis in a meaningful medical way.
Dana Abramovitz 35:00
Yes and no. I mean, so with CGMs, and we’ve talked about this before. If it’s a medical device, right needs to be treated and regulated as a medical device and make sure that you have the testing, to know that it is meeting your gold standard, especially if people’s lives depend on it.
I think that for my Apple Watch, if my heart rate is a little bit off for the most part, it’s not gonna matter, but like, if I have an arrhythmia, then, like that and it’s sending mornings to my doctor, then if it’s off, then that could be a bad thing. So I mean, we’re getting better, but a lot of the commercial recreational trackers, it’s a fine line between being a medical device, and just being for fun.
Dan Kline 36:07
Dana, can the anecdotal information be useful? I tracked my heart rate, too. And I prefer the Fitbit, which gives me a daily average, rather than the sort of real time data that can be valuable, right?
Dana Abramovitz 36:19
Oh, absolutely. Yeah. I mean, and there have been studies that have talked about like having, like heart rates, your blood pressure, just having all of that information and to tracking it and, and how that provides that overall view of your health. And going back to the the prevention, right,
Simon Erickson 36:43
Oh it cut out for a minute.
Dana Abramovitz 37:01
Oh, sorry. Yeah, I know, if that, if you’re tracking over time and that change, adjust, then that can be an indication that something’s, something’s different. And you should look into so I do think it’s a good thing.
Simon Erickson 37:15
Yeah. If I can add to that, too, I mean, just think about what we said 50% of health is lifestyle, right? And who’s collecting more data about you than anyone, then the smartphone makers, so we’re talking about Apple watch or your iPhone that’s in your pocket, they already know, your web browsing history and where you are, if you have more apps that you download from the app store that gives you gives now information about how you’re sleeping or your heart rate or blood pressure and things like this more and more, we’re feeding these devices, information that could be useful.
And you’re starting to see kind of a decoupling a lot of these companies is why Apple keeps talking about healthcare as its final frontier, then once your probes if you’ve already got the data, the next step is how do you get the algorithms? How do you get the AI, that’s going to fine tune that to say, hey, you’ve got a risk right now. And we’re going to tell you, you need to go to the hospital, you want to make sure that you’re right, that you’re not sending people unnecessarily, and we’re causing a lot of confusion out there. But if you can crack that, that’s the trick to being proactive to healthcare. This is why you see device makers, not just wearable device makers, but smartphone device makers, so interested in healthcare.
Dan Kline 38:17
So you’ve actually seen Apple Watches tell people your heart rate is doing this go to the doctor. Simon, is this a slow disruption, because Apple knows where it wants to go. But it’s not going to get there for like 5-6-7 years, maybe?
Simon Erickson 38:32
Again, the pace of innovation depends on how embedded it gets with the hospital. Right? We are already starting to see companies that are working with, with hospital provide with health providers, with health networks. We won’t talk about those too much here on this show today. But you’re already seeing hospitals saying yes, I am embracing that you know how to use AI on this data that you’re collecting out there? That’s going to be the question Dan. It could could be a couple of years. It could be five years seven, it could be two years, we’re already starting to see it. I know that as a patient of any hospital that I go to. I want the hospital that’s going to be right, and is going to be proactive. And we’re starting to see some of that out there already.
Dan Kline 39:10
Yeah, the hospital that’s wrong. Most of the time is not a successful hospital. We’ve got a couple of more comments. We were gonna do more on the show, but I think we’re just gonna keep it to healthcare. We’ll get to all the other things we wanted to share later this week. But Simon, you want to take Luciano’s comment?
Simon Erickson 39:26
Yeah, like this one. I mean, Luciana writes, “Is disruptive a word that’s thrown in to market a company or a stock? Seems like this nowadays.” And that’s so true, right? I mean, so many people are just identifying being disruptive with doing something differently, right. I remember hearing Chipotle a was completely disrupting the restaurant chains when it was offering a new menu that wasn’t out there. disruptive is a very specific thing.
You need to look at what management is doing rather not that the marketing fork of a company or promoting your company is being disruptive is very different than if they’re actually going out. an underserved segment of the industry. And if they’re making progress in this very difficult to topple environment that’s been owned by the incumbents with their higher margin products for years. I mean, that’s what’s disruptive out there. I would agree with you, Luciano. It’s being used way too often in the media these days.
Dan Kline 40:18
Yeah, replacing food with like a nutrition pill is different than making a burrito more efficiently. Dana, did you want to weigh in here?
Dana Abramovitz 40:26
Yeah. So, I work a lot with startups as well. And it seems like every startup in their pitch is talking about how they’re being disruptive. So I totally agree that that word is often overused.
Dan Kline 40:42
We’ll let Bill Pilock have the last comment here before going to Simon and Dana, for a wrap up, Simon, if you want to read that comment, I’d appreciate it.
Simon Erickson 40:49
Yeah, thanks, Bill. My new TempurPedic bed sends me alerts about my sleep patterns. I’m not sure about its accuracy, though. Your wife says you snore more than it says. funny comment on that one to Bill. But uh, yeah, that’s great. You’re starting to see the apps pick up out there.
Dan Kline 41:03
It’s important to remember that these are not diagnostic tools. These are tools we might use to identify when we need diagnosis or proper tools that a sleep study in a hospital cannot be replaced by your Fitbit or your bed. And that is important to note, Simon, let’s just wrap up a little bit some overall thoughts on healthcare and disruption, then we’ll let Dana do that. And then of course, we will hit our finisher.
Simon Erickson 41:27
Yeah, again. So I mean, when I look at checkboxes, back to full circle, your question of which industry is in need of disruption out there, I see that healthcare, we’re spending $4 trillion a year on it right now, the majority of the system is reimbursing based on procedures and volume rather than on patient outcomes. And you’ve got a large percentage of the population that is either underserved or has to figure out health insurance on their own if they’re not employed full time.
This is in concert with the gig economy where a lot of people are taking on side hustles and doing part time work or consulting as well. And so we’ve got a huge challenge, it’s not going to happen overnight, we’re not going to fix healthcare. And, and this is just going to snap our fingers and fix it. But I think that there are some pockets of very disruptive innovation that are taking place, whether that’s in the technologies themselves. And we talked about gene editing, whether you’re talking about disruption in the payments, space of how we’re reimbursing things like that, or whether we’re kind of just encouraging people to be more consumer involved, and taking charge of their own lifestyles and their own health too. And all of those are very disruptive from where we stand today. It’s fascinating industry, it’s one has a lot of my attention. And I know it’s one of Dana’s favorites topics as well,
Dan Kline 42:39
Dana, solve healthcare, you have 45 seconds.
Dana Abramovitz 42:43
I’m working on it. I’m working on this, one of the reasons I went to business school, it’s just I had told my doctor, I’m like, I want I want to change the healthcare industry. And I’m trying, right, and and I’m not alone, thank goodness, it’s not something that just one person can do or teams of people, but we are making progress. There is innovation both at the government level and in different hospital systems.
We’re seeing that in value based care, I’ve written some stuff about that, as well. Simon can tell us whether or not it’s publicly available. But yeah we are making progress. As consumers of healthcare we have the opportunity to, to disrupt it just by the things that we do, considering our health, the health of our community, entities, taking care of our bodies, listening to our bodies, moving our bodies, feeding them well, letting them rest when they need to do all those things and being proactive like doing all those screenings and all those unpleasant things. Those are things that we need to do in order to kind of be prepared.
Dan Kline 44:10
Getting information out there is really important. I’ve made a lot of meaningful changes, because of Maxx and Dana, like, that’s not how it should be happening. It should be delivered from somewhere else. This is totally unrelated. We appreciate the healthcare discussion. But the finisher is usually something we post on Twitter before we figured out our topic. So I apologize that this is completely unrelated to the topic at hand.
Sam Bailey, if you want to pull up our finisher and Simon I’ll let you read it. Sure, yep. Maybe we’re having some technical glitches there. That seems pretty much right for the day. So not a big deal. We could skip this one Simon. Why don’t you read Daniel Delgado’s comment to close out and then tell people how they can get in contact with us.
Simon Erickson 44:56
Oh, bear with me one second here, Dan. I can pull up our finisher even though we can’t The screenshot of it itself. If you do bear with me one second, it says that you asked which entertainment company has the biggest upside, Netflix, Walt Disney, WWE or Comcast. And the overall winner Dan on that one was Walt Disney got 70% of the vote. I think that it’s probably you would be the best one to speak about that.
Dan Kline 45:21
Yeah, it’s overwhelmingly Walt Disney. A lot of people wrote in at Viacom, CBS. And here’s the reality. This is an IP game, and Viacom CBS has done a really good job with monetizing, but they don’t own any good IP. Their best IP is like Star Trek and SpongeBob not great. Disney is number one. Comcast is like number 17. That’s how different this industry is. So yeah, overall, Disney has dozens, if not hundreds of exploitable hits and going forward, they are going to be the absolute winner. Simon, how can people get in touch with us?
Simon Erickson 45:57
Yeah, great. So thanks again, for everybody attending this show. This one was a lot of fun for me. I know that. This is a topic that I get pretty excited talking about Dana as well. So she spent three decades in a career in healthcare. I think that if anybody really wants to invest in healthcare, I really again, encourage you to check out Dana’s report. It’s right on 7investing.com. And see right at the top of our homepage is can technology fix American healthcare, we’re going to feature that only for a few more days. So if you’re not already a 7investing subscriber, go check that out.
Dana not only has a great report, but has seven things we need to diagnose, to fix in healthcare, and then even three stock ideas at the bottom of it too. So really, A+ on Dana’s report, go check that out at 7investing.com if you have not done so already.
And if you want to see our recommendations from the team, not only the content we’re providing, like those reports, but also the actual stock recommendations, each advisor on this team comes up with our very best idea every single month. We lock those in, and then we release them on the very first of each new month. And so we got a couple of weeks until the first of September kicks in here, Dan, but I’m pretty excited about the team’s ideas and you can check those out at 7investing.com/subscribe.
Dan Kline 47:09
And if you’d like to get in touch with us it is info@7investing.com that is questions about the service questions about your membership, anything you want to know from us, but of course, don’t ask us to research like some penny stock we’ve never heard of. That’s a little bit over the line. But you know, questions if you’re a member we’ll funnel them into the member call if they’re on pass recommendations. And if you want to interact with us publicly, we are @7Investing. That is the number seven investing on Twitter and we are always fun to follow. Apologies for any internet issues. I know Dana had some I know I had a couple. I don’t know why the internet doesn’t work better. So for Sam Bailey for Simon Erickson for Dana Abramovitz. I am Dan Kline. I’m in Las Vegas. I will be back on Wednesday. We appreciate so many of you watching. Thank you.
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