Healthcare 2030 (Part 5)

Healthcare 2030 (Part 5)

In our last blog, Healthcare 2030 (Part 4), we dove deep into the weeds of our conversation and we introduced a new term, Age Dependency Ratio (ADR).  The issue highlighted the impact on Japan for over the last two decades, as well as Europe for over a decade, and how it is now beginning to impact the United States.  We blurred the lines between economics and healthcare, and we discussed why we believe that healthcare is the best and the most resilient industry in the United States, today.

In our recent podcast, Key Healthcare Subjects and Technology, we deeply discussed the expected growth in healthcare cost, as foreseen by U.S. government economists, through 2030.  The numbers are stunning, and they are likely to be near 25% of GDP around 2030.  How will the economy handle such a burden?

Recently, U.S. presidential candidate Senator Elizabeth Warren unveiled details of her “Medicare for All” (M4A) proposal.  We will more thoroughly examine her proposal in a future blog and podcast.  We would like to note, however; the projected cost is $52 trillion over 10 years, and we do not think that it is feasible for several reasons.  We believe that the cost will not only be much higher than projected but will also lead to a tectonic shift in how healthcare is provided to most Americans.  We also believe it will have an impact on the healthcare infrastructure, with catastrophic damage for hospitals and providers.

Now that we have everyone’s attention, we can talk about how we can make investments today to mitigate some of the guaranteed escalation in healthcare cost for the next decade.

As noted at the end of our last blog, we see a few emerging trends that should reduce cost, all while improving quality.  Those master trends are universal electronic personal health record integration with IOT devices, broader and better use of telemedicine, and the use of machine learning and AI to do predictive analytics.  Additionally, we see changes in the relationship between providers and consumers, along with changes in the payment models; furthermore, we see a clear path to more managed-care options, and open contracting of medical providers, along with price transparencies.

Until recently, healthcare was driven by payers, employers and government regulations.  Today, the single biggest emerging trend in healthcare is its educated consumer, also known as consumerism.

There is little doubt in reducing the crushing cost increase in healthcare we must improve the use of better technology, improve the healthcare delivery system and use this more effectively to empower consumers.  These consumers are not only the tech-savvy trailing edge of the Baby Boomers, but also Gen X and emerging Millennials who are now either materially engaged in healthcare or entering healthcare consumption as they enter their 30s, 40s and 50s.

If you question the problem or our solutions, remember that from 1965 to 2019 healthcare portion of the GDP has increased from approximately 5% to today’s 18%.  What makes us think that it will not continue to increase or even accelerate based on the numbers we have discussed in our previous blog?

Today, General Motors spends more money in healthcare than steel for each car it produces; and Starbucks correspondingly spends more money on healthcare than the cost of its coffee.

We sincerely hope that this analysis provides background as to why we think that an aging population and the associated cost of healthcare is the most immediate problem facing the world today by impacting governments, industries and the growing number of people over the age of 65.  We can also see this as an opportunity for those working in healthcare for the next decade and beyond.