Bloomberg Audio Studios, Podcasts, radio news. This is Bloomberg Business Week, insight from the reporters and editors that bring you America's most trusted business magazine, plus global business, finance and tech news as it happens. Bloomberg Business Week with Carol Masser and Tim Stenevek on Bloomberg Radio.
It is Bloomberg BusinessWeek. That's Carol Master. I'm Tim Stenevek preparing for cold here in New York and across the country over the next week. Sot us Paul Brennan reminded us when I was complaining about this earlier, it's winter. It's January, is what he said, Yeah, exactly. Then he got us to move on to the next thing. Thumbs up from Paul. Hey, here's something interesting. Elon Musk talks about this, or used to talk about it. Never know what he's talking about now. The birth rate in the
US and population collapse. Here's some numbers, Carol, US births declined in twenty twenty three to their lowest level in more than forty years, and continue this two decade trend of Americans having fewer children. Birth rates and countries around the world have been declining, mainly in wealthier nations, as economic instability and uncertainty over events like the pandemic discourage people from having children.
Yeah, while countries including France and China have taken measures to try to encourage couples to have children, US birth rates have been stifled by forces including a lack of paid family leave and skyrocketing health costs. I hear this from a whole younger generation. Oh and people don't forget are living longer. These are and as a result of all of this, she added up, there's some serious economic implications to it, like GDP per capita In many countries, tim are taking a pretty serious hit.
It's the focus of a new report out today from the mckenzi Global Institute. It focuses on this new demographic reality. Olivia White is senior partner at mackenzie and Company. She's also director of McKenzie Global Institute. She joins us from New York. Olivia, good to see you. I think a lot of people are familiar with what's happening in Japan and China. I just mentioned some troubling US stats. I think people get that too. Where else is this happening?
It's happened. So in two thirds two thirds of the world's population lives in countries where the birth rate are called the fertility rate is below what we call replacement, and replacement is the birth rate that you'd need in order for each person to replace themselves.
So I got a wife and two kids, so that's essentially a replacement rate.
You're doing your job.
Well, But am I though I'm only doing the replacement right part, I'm not actually doing growth?
No, well, let's let's start with with with just the question of how society works and this sort of economics associated with them.
Tim, let's start with the basics.
Fair enough, go ahead, I think you're doing your job there. The basically, society is built upon populations that expectations. Societal expectations are built around populations that stay stable or perhaps grow.
And part of that is because people are kids, they're supported by their parents, their parents are the workers, and then ultimately, at some stage you move into retirement and you're supported by the people who are working, and the basic social compact is supported on mechanics that looks like that.
But what happens when people on average start not replacing themselves, having fewer children than them, you start to have more old people than you have workers, and all of a sudden, either you're in a situation where old people actually have to work, they don't have nearly as much money, etc. Or you're in a situation where there is a bigger burden placed upon the people who are working, so they have to work more productively or more hours, or perhaps
you have to figure out ways of getting more of them. And that's why it really matters.
You know.
The one thing that helped me out here. I understand that global birth rates are going down. Individuals, women are having a lot less children than they did seventy years ago. I mean, I'm one of seven, I have one, so that's a big change in one generation.
Having said that, there's more people on earth, and I, you.
Know, I wonder in emerging economies, like I don't know what's your concerns about all of this, and like I understand the growth implications, but technology sometimes makes us more productive. So I'm trying to understand, like, what do we need to be worried about?
Well, I don't know if we need to be worried about anything per se, but I think we need to recognize the reality of what's happening, and make sure it is the very least that we're adapting in order to accommodate it. First on the country level. Then if you think about the global level, and the adapting at the country level is a little bit what I talk about now.
If you think about the global level, because I think the right to go there, Carol, what we actually see is call it three waves of countries, the developed countries, including China, where we're already at a place where we're starting to get inversions of as we call it, inversions of population of more older people than there are younger people.
You then have this second wave of countries, and that's a huge swath of most development countries in the world where actually the birth rate has already fallen below this replacement rate, but it's happened reasonably recently, so you still have a lot of young people going to be workers, and they're going to get to where we are in the developed world in twenty thirty forty years, depending on the country. And then at this stage you have sub
Saharan Africa plus a couple of additional countries. Afghanistan is in that group. Pakistan is in that group where birth rates or fertility rates are actually well above replacement. But what's notable even there is that they are falling, and they're falling relatively quickly and faster than people thought. We might be okay, but the situation of falling birth rates is something that's rather unprecedented and something that at least so far, countries don't have experience in turning around.
In the US, it's like the easy explanation that my generation talks about is lack of federal paid family leave and the high cost of childcare. But what struck me about this report is that, like you said, it's happening in two thirds of countries, many of which we would look at as being sort of models for having really lax policies when it comes to family leave. Is it too simple? Is my explanation for the US too simple?
Yeah? I think there are a lot of reasons to say. Look, things like family leave, thinks, things that help families get some form of economic credit. Those are helpful, right, Maybe they even mean that birth rate doesn't fall as quickly. But as you said, if you look globally and you look over time, it seems really quite compelling to believe that that's not enough and that's not all that's going on. So just you know, give you a sense of the
sweep of time. In nineteen fifty, which is the first year the UN started keeping data on birth rates, ructure found fertility rates Luxembourg was already below replacement. It went up a little bit in the subsequent years and then went back down. But you then had coming after a large number of countries in Western Europe and then finally the US in the fifties and sixties and seventies where
birth rates actually fell below this replacement. Right, So looking and pointing just at things that are the case right now economically purely misses something fundamental in the explanation.
Why should we be talking about this now? Just got about a minute left Olivia, and I think about no, no, no, I don't mean it as you know, but I do think watching significant trends. I think Elon's perspective is that, you know, civilization is going to die out.
Mars.
But the importance of why we need to talk about this.
Yeah, So what one thing we did is we said, look, suppose that societies want to continue to keep their GDP per capital growth rate of the past fifteen years or so. That's basically, what sets our ability to have our living standards, to support our older people, to do our best at pulling people into a place of impoverm excuse me, of no poverty and empowerment. If we want to do that, given where birth rates are going in the US, for example, productivity growth has to go up by a factor of
about two all else being equal. Labor force participation needs to go up by a factor of about three percentage points all else equal, or some combination of ross things. So that's why it matters, and it matters right now.
Yeah, I mean thirty seconds.
I mean, could technology along with all of us kind of living longer and maybe working longer, you know, could that.
Make up for it again just quickly?
For sure? Right, So this is sort of a call for innovation that helps drive productivity and that helps productive is probably not enough in all places, but in the US it might be. But making sure that we do that in a way that maintains the social fabric that.
We want interesting, which maybe means you're way mow makes a lot of sense.
Yeah, you don't need that person who would be driving you will do something else.
Right exactly, Olivia White, Thank you so much. Always Fun, senior partner over at mackenzie and Company, Director of the McKinsey Global Institute.
Carol, it's already that time of year.
I know, Davos.
Davos, she's rubbing your hands together. She's so cold. Yeah, you know, thinking about that trip to Switzerland. Yeah, now you'll be colder here.
I'm going to be here. It's going to be really cold.
Hey.
At the World Economic Forum. Issues there are also top of mind for us generally, and when we talk about healthcare, certainly the cost an aging population, pandemics, AI and other innovation when it comes to treating and preventing disease, A new US president, what it means for regulations and more we've got with us. Robert Garrett, CEO of Hackensack Meridian Health. The organization called itself the quote largest integrated healthcare network
in New Jersey. Here are some numbers. Eighteen hospitals, seven thousand physicians, more than thirty five thousand employees, and more than five hundred facilities that provide care for patients.
It's a lot.
Robert Garrett joining us here in our Bloomberg Interactive Broker Studio to have you back.
Happy New Year.
How are you I am great.
Happy New Year to both of you.
Great to be back.
Thanks for having me tell me.
You know, it is a massive system. There's a lot going on.
There's a lot coming at us, every executive, publicly held private companies, institution, a lot of questions about twenty twenty five, and a lot of it has to do with what we get out of Washington, right.
What's top of mind for you when you think about the incoming administration?
So you know it kind of it's kind of from a healthcare perspective, I believe it's a little bit mixed.
So what I look forward to is and you know, I know that the confirmation hearings haven't happened yet, but if RFK Junior gets in as our secretary for our Health and Human Services, certainly his focus on reducing chronic disease and on making the food supply more stable, safer, Like even yesterday the FDA right took action and said, you know, red dye number three needs to be removed from our food.
I threw away some sprinkles when I got home. Yeah, yeah I did. It's like, okay, well I guess you're meeting me exactly. Yeah, it would have been could have been nice that it brought to my attention. You know, thirty years.
Ago they banded for other reasons.
My wife just like it's one of our top.
Questions, were like, you banded years ago for X y Z, why not just get rid of it all?
But exactly a bigger question.
But you know, if there's a focus there drugs, I think that's a positive thing because you know, look at part of our mission is to transform healthcare, keeping people healthier. We want to reduce chronuct disease. What I worry about, you know, with the new administration is I want to be sure that policies are made based on science, whether it's vaccine policies, whether it's are you.
Nervous it will not be under if RFK is.
Indeed, I'm concerned, you know that, And my message would be, please, you know, follow the science, because look at what vaccines have done, how many millions of lives they've saved across the world. Look at the research that's been done by the National Institute for Health for example, and uh, you know, we've we've eradicated some diseases, we redo the cancer mortality rate, we're on the verge of a cure for type one diabetes that all started with research that was funded through
the NIH, the National Institute for Health. If we don't have that research, then what then Then it falls on the private sector to continue that research. And that's always that's always very very difficult because organizations, whether it's pharmaceutical companies or healthcare systems, you know, there's there's multitude of priorities. I think that public private partnership that has existed with the NIH is the is the way to go, and I think the results have been good. And look at
you know, is the CDC perfect? Is the NIH perfect? Probably not so. But let's not necessarily throw out the baby with the bath or water. So that's that's my message. So I think there's some some positives that could come out of this, but there's, you know, some cautions that we need to watch closely.
Do you think that other people in your positions around the country share that same level of trepidation with certain parts and that is actually being expressed to the administration.
Well, I actually participated in the Wall Street Journal CEO Council meeting which happened down in Washington about a month ago, and we did send a list of from the healthcare perspective. We sent a list of our priorities to the incoming Trump administration, and one of them was please follow the science, please support research. So that was on that was part of what we considered a priority for the new administration.
So I would have to say, based on that conversation that happened down in Washington, that you know, many of my colleagues do support that, particularly those that are in the academic health system arena, because academics is about education, it is about research.
Do you anticipate, though, that you might have to someday in the near future have a conversation with Elon Musk, who is looking at the efficiencies of government and especially when it comes to various health issues or the NIH and so on and so forth.
Yeah, I mean, I think, you know, at some point I would welcome that conversation because you know, listen, I think there are some great ideas that are coming out of the industry to make healthcare, you know, more efficient.
More affordable.
But I also think there are some basics there that we have to watch and we don't want to again, you know, really reinvent the entire system. I think there are some good aspects of American medicine good aspects of American health care. It's not perfect, and I would welcome a conversation with Elon Musk.
Interesting. Okay, let's I want to talk a little bit about priorities when it comes to the new year, when it comes to sort of the next generation of healthcare, we talk a lot about technology. If there's been sort of one theme that's just dominated our lives and the lives of public investors over the last couple of years, it certainly has been AI. We're told the big promise is in healthcare, drug development, pharmaceuticals. How are you thinking about it?
I think that AI has come a long way in healthcare over the last couple of years. We as an example, at Hackensac Meridian Health, we have over three hundred use case pilots going on right now around promise, either use case pilots or AI algorithms that are in development. So around AI, yes, anything that's actually being used right now. Yeah, So let me give you a couple examples. You know, in the area of disease identification, which is really, you know,
I think such an important area. We have a use case pilot, an algorithm that's been identified that will help physicians identify advanced and chronic kidney disease earlier. So what that might mean is if they can identify it earlier and start either prevention or start early treatment, it might it might mean avoidance of years of dialysis or even a kidney transplant. So that's one example. Another good example
is in the area of precision precision treatment. So we have a pilot going on that radiologists are using to help identify breast cancer. And sometimes, you know, a scan does not identify certain types of breast cancer, but with the help of an AI algorithm, they can take the scan, take the information that's being given by that algorithm, and then say, hey, this patient really is at risk or this patient really does have breast cancer, and we need
to treat that patient. So you know, in that sense, I mean, if you know, if you had me here two years ago, we wouldn't have been there yet. But at least we're starting to see some real efficacy. The other piece that I would say, you know, and you guys know this pretty well, there's a workforce shortage in healthcare physicians, nurses, and we're seeing still a lot of burnout.
And when we survey our doctors and nurses. The reasons for the burnout is they're doing a lot of tasks that take them away from the bedside, and AI can help with those tasks. They can as an example, they can summarize notes and they and that's been very effective.
Why is it still so tough to see a specialist? I'm not using your hospital system as as an example by any means, but by the way, careful what you wish.
We had a colleague who had a doctor i think a week or week and a half ago order a test, called back and booked the appointment, and when she called back to confirm, and she's like, oh, that doctor's already gone and left the practice.
Like there's just so much movement or.
People leaving, or just there's a lot of stuff, or you can't even get in to see it in another case, like it's three, four or five months.
Yeah, I mean there's definitely a shortage of primary care physicians. There's a shortage in certain specialty areas. I mean, we're seeing why across the country. Well, it's I think it's a variety of reasons. I do think that medical schools have not really incentivized physicians in the past to go
into primary care. Sometimes it's for economic reasons. The reimbursement for a primary care physician is a lot less than a specialist, and the cost of medical education is so great that they a lot of students feel like, well, when I get out, I need to specialize in something. Plus our system, the US healthcare system has been very focused on treatment rather than prevention. But we have a medical school at Hackensack Mariti and we are doing just
the opposite. We're incentivizing students to go into primary care, to go into psychiatry.
How do you how do you fret an incentive for them if they're going to be paid, you know, a third of what specialists are.
We have a we have a tuition forgiveness program, We have scholarships that are available if they if they go into those special.
It's hard because the salary difference is so different between these specialists and these PCPs. I mean we're talking like could be like five hundred thousand dollars per year difference, right.
And that's where more that's where we have to shift. And you know, in some European countries, like in Switzerland and Germany, where they've been more effective in prevention, there you see that primary care physicians are being are being paid compensated, either by government or by the private sector, a lot more than specialists.
Hey, we heard from United Healthcare earlier today. This was the first time they spoke publicly about the killing of Brian Thompson back in December. How do you feel in a position like that about the reaction to that killing, the sort of populace revolt that we saw in the wake of that, the idea of this sort of you know, folk hero being somebody who took someone down. Listen.
You know, we as a provider, we've had differences with insurance companies, but I would never ever, you know, advocate violence to resolve that. We sit down, and you know, it's disturbing to me that there is that kind of reaction. I understand people's frustration with insurance companies, healthcare insurance companies, but honestly, we need to work on those problems together. I don't think the answer ever gets solved through violence or or even making somebody into a hero because they
murdered another human being. You know, I think about it. You know, I didn't really know Brian Thompson, but you know, he had a family and kids and you know, you know, my heart goes out to them because that was just terrible. I think the better way to resolve this is to to try to change policy, try your to work in a in a collaborative way, and I think I think there are opportunities to do that.
How do we How do we do that?
Because listen, Robert, you understand the system so well, and I think increasingly I just see it in our around the newsroom, you know, talking with friends and family. I mean, I think, oh, it just feels like, over and over it's getting more expensive. And even if you've got a great plan or you call in for coverage, and if you want to stay in the network, again, you're waiting months to see someone.
It's it's problematic.
Well, I think I think that's where you know, again, a public private partnership could come into it.
But what is that? What is that?
What I mean is what I mean is have have government, have government policy makers make it a priority to get let's get insurance executives, let's get healthcare providers together with with policy makers, and let's let's understand, you know, some of the issues behind the cost. Again, I would love to have the opportunity to talk about prevention, to talk about getting at some of the social determines to help some of those social factors that are causing chronic disease
that's driving up the cost. You know, ninety percent of the healthcare costs in America are related to chronic disease, right, And eighty percent of what keeps a person healthy has to do with these social factors, talking about transportation to and from doctor's offices, stable housing, food, having access to fresh fruits and vegetables. Those social factors are eighty percent of a person's health.
So you do wonder if the GLP one drugs are going to be very significant longer term. We will find out ten twenty years from that, right, if they're still in use and there's no serious side effects, whether or not that changes kind of the longer term healthcare.
I mean, that could certainly have a profound effect. So I do think that you know, a better way is to collaborate to these have these discussions and let's get at some of these issues. And even even with respect to some of the issues that you know are frustrating patients, like pre authorizations and deny old denial of care, Let's get at that let's say I would welcome a summit between healthcare providers, even patient advocacy groups and insurance companies.
Fingers crossed yes, because everybody's got a story and it's unfortunate.
Robert, thank you so much.
Save Travels, thank you so much.
Great to see you guys.
Always appreciate having you stop by. Robert Garrett he's the CEO of Hackensack Meridian Health.
I've been there. I've been to the system and Hackensack many times, so just full disclosure. Joining us here in our interactive broker studio