There was big news this week. News about big names and the big stocks that tanked once the headlines started to hit.
Apparently, Jeff Bezos, Warren Buffett, and Jamie Dimon are throwing in on some kind of healthcare company. A non-profit, of all things.
While the announcement was heavy enough to sink healthcare stocks (including Express Scripts, CVS, Cigna, Anthem, and some biotechnology companies), details were light. A lot of blind speculation and head-scratching followed.
Don’t bother digging around to see if anything anyone said or wrote about the new venture is particularly enlightening. I already did plenty of digging, and no one’s even close to figuring out what they’re planning.
But I know.
Bezos, Buffett, and Dimon’s Real Endgame
First, it makes sense that these three giants are collaborating on a healthcare business model.
They have the resources, after all. They are three of the most successful, highly valued companies in the history of the world, with a collective market valuation of more than $1.6 trillion. Besides that, they have a million employees between them.
That’s a sizable petri dish to run healthcare experiments on.
The announcement of their plan to set up a new independent company that is “free from profit-making incentives and constraints” was misread by almost everyone.
Sure, the new company will be independent. At least, to the degree that these three iconic business visionaries who head their respective companies will let it be independent. History shows they have always put their indelible imprint on every aspect of everything their companies do, so we’ll see about that.
But non-profit? Forget about it.
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“Free from profit-making incentives and constraints” is Jeff Bezos-speak for “we will build the business, whatever it costs, as long as it takes, not worry about turning a profit, or what anyone says or thinks.”
Then, when they’ve proven their genius (as Bezos did with Amazon), the company will sell its profit-proliferating products and healthcare programs to consumers and investors for hundreds of billions of dollars, in perpetuity.
That’s what these guys do.
The end game is replacing every aspect of what doesn’t work in healthcare with a completely new model based on data. And I mean insane amounts of data, with more data every second of every day. First, they’ll guide individuals, then physicians, caregivers, and health coaches, then onto pharmaceutical companies and supplement companies. Finally, they’ll have their reach in hospitals, clinics, and “wellness centers.”
It’s all about data.
What hasn’t worked in healthcare is throwing one-size fits all pharmacological wonder drugs at everyone. None of those drugs, initially, have ever been tested on enough people to determine their efficacy across a global population. They work on test subjects enough to pass muster and get put to use.
They don’t work for everyone, and they certainly don’t work all the time.
But, they work in the system.
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The “system” is an insurance-based, litigious, not-so-merry-go-round.
Physicians (for mostly malpractice insurance reasons), too often prescribe approved drugs (approved means defensible for insurance) based on streamlined diagnostic models (once again, enough to satisfy malpractice insurance) and move on to the next patient in the waiting room.
It’s not a system physicians ever imagined. It’s a system they hate.
But it’s the system most of us have to conform to. It takes time to completely test, correctly diagnose, re-test if necessary, re-diagnose if necessary, determine prognosis and treatment protocols, monitor compliance and efficacy of treatment protocols, adjust those protocols based on results, and repeat as necessary.
Who does that?
Physicians want to, but they can’t. The system, the insurance industry, the pharmacological industry, the costs, and constraints that bind the system don’t allow it.
Data can and will change everything.
Having a million “test subjects” who will be better monitored and tracked means that outcomes will be better understood. They will be incentivized to participate, to get physicals, to lend their diagnostic data, their treatment data, their compliance data, their exercise, eating, and social habits. All of which will be converted into billions of bytes of data.
And that will lead to different inputs, which will create new sets of test subjects, whose health and outcomes data constructs will be measured against all the other test groups and the general population of all employees, and so on, and so on.
A giant petri dish, for sure.
I know what they’re about to start doing because I know that all of it is already being worked on.
I don’t hide that I’m an investor in a few start-ups that are designing and creating building-block data models – testing, diagnostic, treatment, and compliance models – based on where healthcare has to go.
Because what we currently have is not working, and we won’t be able to afford it in 10 to 20 more years.
Where healthcare is going, and how it’s getting there, has already started. And while we’ll be looking for healthcare company winners to invest in here, there are going to be a lot of losers.
I’ll be keeping you up on what Bezos and Co. are doing, who the winners and losers are going to be, and how to profit from both.