Why U.S. Health Care Systems Weren’t Prepared for COVID-19

Week on iTunes, SoundCloud, bl Bloomberg dot com. You can also listen to our radio show at two pm Eastern on Bloomberg Radio every weekday, or watch us on YouTube by searching Bloomberg Global News. Let's talk about where we are when it comes to the virus, and especially given the backdrop, Carol, of the broader healthcare crisis. We've been in the midst of a broader healthcare crisis for a long time now, and we're in a very specific one here. Let's get into it with Vivian Lee. Dr Vivian Lee,

president of Health Platforms over at Verily Life Sciences. She joins us on the phone from New York. She's the author of a book The long fix solving America's healthcare crisis with strategies that work for everyone. Man, if this pandemic hasn't laid bare everything that you're writing about, Dr Lee, I don't know what does. First of all, congratulations on the book. Tell us what you're seeing out there and sort of how it fits in what we're experiencing right

now fits into your longer term thesis. Well, thanks so much for having me. And I think you couldn't have said it better. This is like a giant stress test for our healthcare system, and I think we're having some pretty serious chest pain. You know, we're pretty much struggling on almost all fronts except for one, which is I have to say that I think that the heroic measures

that are frontline healthcare workers have been demonstrating. I think that that is something that we should all continue to celebrate. But in terms of the system itself, I think we we are seeing, as you say, so many of its flaws right now. All right, so listen, vision that we have a strategy session right of all the great minds in medical community, global medical community for that matter, and we can make this system better. What would be the

three things you would change from day one. Well, for the for to start with, we have to really change how we're paying for healthcare and what we're paying for. Right now, we are paying in a fee for service model for things to be done to us regardless of

whether they make us healthier or not. And that fee for service kind of model means that our health care systems just live from fee to fee, and as you can see with COVID, as many of them have been having, you know, empty clinics and empty hospitals, they're actually being forced to shut down or even lay off people in so many in so many different parts of the country, especially rule parts of the country. So first is we really have to change the way in which we are

paying for healthcare. The second thing is we really have to um take advantage of the new technologies. Telehealth is one example. We're seeing a lot greater use of that more digital health solutions so that people can look after their own health in their homes, in their in their workplace environments for example. But those have to again be used in a way in which they're paid for generating better health, not just for doing more things to people.

So take advantage of more of the technology. And then the third is. I think we need a lot more transparency about what it is we're going to have to pay for, how much it's going to cost, why it cost, what it does, so that we can really start to link up the costs with what we're actually getting for those dollars. And so, dr Lee, part of what you're talking about. A lot of what you're talking about, especially

in that description, goes against some very entrenched economic interests. Uh. There are a lot of folks, especially big companies on the managed care side, on the healthcare system side, on the pharmaceutical side, they and maybe they wouldn't admit this in the cold light of day, they kind of like the way it works. They're making a lot of money. How do you essentially make the case to policy officials, many of whom hear from these companies through lobbying. How

do you sort of make this change? How do you break the system in a way that people might be okay with? Well, there's no question that changes hard. But I think you'd be surprised at how much support there is for change, especially right now. So when you talk about managed care, companies are insurers. They actually really want people to stay healthy. The healthier people are the less they have to pay out and the better they do.

Most health care systems, most people who come into health care, physicians, nurses, therapists, we want our patients to be healthy. We are not hoping for them to be sick. But what we want to do is to have just better alignment, so we're paid for them to be healthier. You know, right now, we just have the wrong incentives, right we are only

paid if they're sick. But actually in some cases, like some clinics that are working in a Medicare advantage model, and there are these clinics that are all over the country where they're just paid a fixed amount of money to keep their UH seniors healthy, and they get paid that fixed amount no matter what happens, they actually are are doing much better. They're actually spending more time with patients, there's less burnout, the patients are hospitalized much less, and

so they actually do better. So there really are some some strong incentives right now for moving to what we call it paying for better health or paying for outcomes model. But we just have to get it all aligned at the same time so that we all make that transition together. Dr viving Lee, we have about a minute and we'll do some news and then we'll come back. But in a minute or so, can you say, who's not buying into this whole idea of let's just keep people well

and that's a smarter system. Who's not buying into that. I'm not sure that anyone's not buying into it, but I think that we have to make it a little bit easier to make that transition. It's almost impossible to live in a world where you're getting paid for doing a lot of things to people and then Soto getting paid for keeping them out of the hospital at the same time. That's almost impossible. So we have to make that change pretty decisively and help those systems change. But

I think most people are supportive of it. We do want to bring you a little piece of an interview that our David Weston did with Dr Anthony Fauci. Check it out. Everybody, if you're talking about a medical question, listen to the medical experts. That's the advice, and you won't get it. You will not get a conflicting message from the medical experts about things like hydroxy chloroquine, about what the results of the vaccine trial aw or what

the results of monoclonal anybody. So when it comes to pure public health medical things, listen to what the medical experts say. All right, and we've got a medical expert with us. Dr Vivian Lee still with us, President of health Platforms at Verily Life Science, former CEO of the three and a half billion dollar healthcare system University of Utah Health, still with us on the phone in New York. So, Dr Lee, you are a medical expert. I'm a assuming

you agree with what we heard from Dr Fauci. What would you say then, is the right thing to do when it comes to reopening schools and colleges and universities. You know, we are in such a difficult situation right now because we need to keep our economy going. We actually need to invest in our future, which is I think a big part of why we need to get

our universities back up this fall. Those students need to continue study because there are future and at the same time, we have this massive upswing in COVID across the country and we have to keep healthy. We have to keep everyone healthy, So there's a tension. I think it's pretty clear that wearing masks social distancing, hand washing, making sure that if you're sick or have been exposed that you isolate UM that these precautions or these measures do work

UM for college campuses. We actually just put out a paper last week recommending putting forward a series of four recommendations for reopening our college campuses, and I'm happy to just go through those very quickly. UM. The first is that we're really recommending that on top of all of the social discigs and mask and everything, this is specifically

around COVID nineteen testing. It's recognizing that so many people, especially and including college aged kids, UM, are asymptomatic even though they may be COVID nineteen positive and may be able to infect other people. And so as a result, testing is really central to our strategies. So first, we're recommending that everyone get tested before they really engage back in the college campus, so either before they arrived back

or right after they arrive. Secondly, we're recommending that they get tested about a week afterwards to pick up those people who might have gotten sick along the way or whose tests were inaccurate, because there are sometimes people may have the exposure but the test might not be positive. Then we recommend everyone who does become symptomatic get tested of course, and then finally we're also recommending that at least a sub set of people who are asymptomatic get

tested regularly throughout the semester. So those are some of our recommendations. And so how feasible is that, I mean, you understand the business side of this very well, doctor Lee. How feasible is it for a regular, sort of everyday college or university to to really execute that plan? Yeah. I think most universities have been spending a lot of their summers not on holiday and not on break, but really studying this problem and figuring out how to manage

their campuses. And I really have to have to give them a ton of credit for all the work that they've been doing. Um, there's the practical aspect of it which is challenging, but they all have student health services. There are a number of companies, including our own Verily, who are working on in these areas to try to support this effort. A lot of the lab testing companies have really stepped up as well to offer these services. In terms of the financial impact, the cost of the

tests are coming down. There are a number of different companies that are in the space now and that's helping to increase competition and reduce the costs. So it's financially you know, I've estimated in this paper that we wrote maybe about five dollars per student for the semester for the testing, and you know, that's less than a couple

of weeks of unemployment pay. So just sort of weighing up the trade offs, I think it is definitely worth that investment, but it sounds like bottom line, just got twenty seconds here, doctor Lee, that we need to have tests that are readibly available so we can almost every day, every week be taking them and quickly get the results. That's what it comes down to. That's right, until we have a good treatment or a vaccine, as we heard, we need tests that are available and turn around times

that are quick. There's we can't wait weeks for the turnaround and needs to come back right away so that we know how to act and how to respond. That's a critical part for sure. Great to catch up with you. We hope you'll come back and spend more time with us.

Vivian Ly, president of health Platforms that Verily Life Science, is also the author of The Long Fix Solving America's healthcare Crisis with strategies of work for everyone and giving us a strategy for back to school that it sounds like a lot of people maybe following our Thanks to her, we do have Joel Webber with us, of course, the editor of Bloomberg Business Week. He joins us from Massachusetts, along with Shelley Banjo, senior writer for Bloomberg. She's down

in gorgeous Asheville, North Carolina. Lucky her, and she's got a terrific story along with Mark Bergen in the issue this current issue of Bloomberg Business Week. It's on the terminal and online today. Joel t this up. This is such an important topic. We've been talking so much about big tech and this is a slightly different twist but goes to so many of the big issues around big tech. So, you know, a week ago now, big tech sort of

got grilled in front of lawmakers virtually. UM, and I think that it was part of uh something that we're going to see in a conversation that we're going to

continue to have in the weeks and months ahead. UM And for Google SpeI typically that conversation is gonna be a lot about anti trust and what Mark and Shelley did in this story was not not so much to take the anti trust conversation head on, but to look at a corner of Google's business search ads that's literally what makes it such a power house and for certain small businesses, especially those in the service world, and get this in the middle of the pandemic, the ones that

Mark and Shelley were wise to look at. Specifically, we're therapists and mental health professionals who have actually felt the impact of of Google's pricing power in a way that really resembles attacks. And I think this is gonna be something that will be fascinating how much lawmakers want to look at that. So, Shelly, what what are the nuances that you and Mark discovered as you sort of dug into how much power and dominance Google has in the

search world. Yeah. The craziest thing about the story is that, um, you know, as these things go, is that we didn't actually sit out to right shut out to write an antitrust story. We were kind of curious with all these ads that kept popping up during the pandemic around mental health.

I wanted to figure out like someone profiting off of this pandemic from like a mental health perspective, and we just started talking to therapists, and every big, single time we spoke to a therapist, it was Google, Google, Google, Google and UM. Particularly the one that we UM end up featuring the most in our story is this therapist UM named Ellen Ross who said, UM, you know, you can't have a business, my kind of business without without

Google search. It's UM. You know, it's just like you know, she goes through her list of monthly bills and it's you know rent, uh, you know, heating or air conditioning, power and and Google. But what you noticed, Shelley, this is such a great story is that during the pandemic, UM. I think you know, you guys know in your story that the prices for regular keywords UM sharply And this is kind of a key way of getting noticed uh

in the online world. Right, So during the pandemic, everything else shut down except for the Internet, and so UM that was really the only way for people to find you UM. And all of a sudden, searches for online therapy shot up as people started to realize, oh, shoot, like this is not something that's going to be over quickly. I'm going to need some help with this, UM. And it just became prohibitively expensive for um, some of these therapists to keep putting Google search ads and keep paying

for them. That the problem is if you don't pay for the search ads, you're not going to get touch the customers. And Google's really pushing this. I mean you you have some great anecdotes about you know, the sales reps calling up you know, these therapists and and kind of putting the hard sell in them and using the economics and the economics of crisis really uh in many

ways to to drive the business. Yeah, I mean, it's an interesting nuance because it's there's something wrong or illegal about making money especially during um, you know, pandemics or natural disasters. Every Bloomberg uh story regarding natural disasters will look into who's making money off of off of these

kinds of things. Um. But at the same time, these people have no other choice, and Google can kind of take advantage of that by pushing things like automation um um, you know, not having as good as customer service and thinks that these people really rely on because there's no other place to go. And so the question is, once you become that monopoly and you have so much power, does it become then an antitrust issue, and so play that out a little bit, Shelly, Where where will lawmakers

put their gaze? Um? And how does how does all of this fit together in the weeks ahead? Yeah, So, I mean search dominance in itself is not illegal, UM, And so the issue for lawmakers is trying to take her out. UM. Is Google actually abusing that power? And so one other part of the story that we look into is this idea of Google directing people to certain places that make the most money for them. So with therapy for example, now if you type in therapists, it's

going to go up to UM. You're you're gonna spit out some UM therapists near you that on Google Maps that have paid for these services, and so UM, you know, just Google then take take over UM healthcare and search and and those types of things that previously might have gone UM to to other businesses. Are they going to be abusing that power? And what law lawmakers need to find out is, you know, does it go beyond just being big? Does it go beyond just UM having power?

It's what do you do with that power? And UM is that part of that illegal? And so should we be you know what the Google conversation is one that is um obviously uh, something that the latmakers will probably focus on more more so than other big tech companies even perhaps, and and that that power that they have.

When you actually talked to the small business owners and and the therapists that are in the story, you know, the thing that I found sort of so fascinating about it was like, at the end of the day, this is the option for them, right, So what other options do do they feel like they even have? Yeah, I mean when you ask about being which is the second church engine, the therapist would just laugh, honestly, they would just beee like that's not a thing. Um, we we

only have Google. Um. And the interesting thing is that Google likes to paint this big picture of competition. Would add, oh, there's Facebook, and there's um all sorts of different companies that even television and billboards like we fight with everyone. Um, but you know, uh at Amazon, but like as we point out in the store, like nobody's going on Amazon to search for a therapist, but at least not yet. And um, and so for these service providers, um, you

know they really there really is no other option. And so you know, Google can talk about all the different competition that they fake, but in a lot of industries they're really the only game in town, and it's up to them to to, you know, kind of keep coloring in within the lines or or not, and if they don't, then the government can go after them. As as one source in your story, it's this says, the bigger question is whether Google is abusing its power. It really comes

down to that. It's a great read. It's the cover story of the magazine. Shelley Banjo, thank you so much, senior writer at Bloomberg News, and thanks to Joe Webber, editor at Bloomberg Business Week. Well, and what's interesting is check out that story because it also points out that, you know, people are also taking advantage of YouTube owned by Google, and maybe they're doing a therapy session on a Google meet. So you know, this all encompassing nature

is really something worth expoy. It's a great story by Shelly Panjo. Are thanks to her. Let's check in with our pal Emily Chason. She is back with us to talk a little bit about the world of green that is her vi is Sustainability editor for Blueberg, joiningus on the phone from New York City. Big green mortgage dilemma. All right, I know about a big green egg Emily Chason, I love grilling on that, But big green mortgage dilemma.

This is a whole other thing. Talk about what's going on when it comes to mortgages, because people are thinking a lot about that right now, especially with right solo. Yeah, well it's interesting. You know, you go out and finance your mortgage today and it has nothing to do with

how green your home is. And this is the thing that has actually happened more in the multi family housing market for apartment buildings and stuff, is that you can get lower race than your refinance or something if you're going to do um green improvements to your building as a landlord. But it hasn't quite made its way into residential mortgages. Yea, so um. This is a big question for banks in particular because when they look at trying to figure out the climate impact of their loans, um

mortgages are sort of a big question mark. You don't really know which houses more energy efficients than others. So is it banks just not on board? We need the government to incent banks to do it, Like I feel like, you know, this is where tax policy right can be very persuasive, um, in terms of getting people to do something.

So where's the breakdown, Emily? Yeah, Well, you know, Europe is further ahead, of course, as they normally are in this stuff, but they have an energy efficient Mortgages action plan. Their COVID nineteen green recovery plan could include you know, billions of euros a year and grants and guarantees for stealing up draft fee buildings or offering green mortgages. So, um,

there is thf that can happen. What was really exciting this past week was that Fanny May sold its first um single family home green bonds, which could create a market for banks to sell green mortgages in the future. All Right, so if I May, I'm going to shift gears because I'm obsessed. Probably hungry. Are you hungry? I'm a little hungry. Um foe meat. Uh. I love impossible.

In fact, I love impossible and beyond. In fact, on my way into the office this morning, I grabbed the Impossible sausage from Starbucks, which I have to say, I've said it on this program before. This is not a product endorsement. Impossible sausage at Starbucks better than the Beyond sausage. At Duncan. I've tried in both, trying to both multiple times,

very tasty. We also know, Emily Jason, you know better than I that the venture world they see something work and they're like, hmm, is there anything else where we can invest in related to that? That is definitely happening when it comes to the so called alternative protein market. Yeah, I would say that, like sustainability companies in the market

right now are super hot. Beyond Meat was one of the best performing I p o s in decades, right, um, So venture capital firms really want to see if they can repeat that, and they've basically doubled their bet on alternative protein makers this year, raising over a billion for startups that focus on everything from lab grown meat too,

protein that comes from volcanic microbes. Um. Just this week there was on the actual meat side, there was an I p O of Vital Farms, which is like a sustainable butter and eggs company and sustainable agriculture and just that whole area. It had a huge pop of like in two days of training. Yeah, that's pretty cool I p O And I think it was that was it twenty two and it's now at forty and change. Um,

so yeah, it's really it's really popped up big time. Yeah, I know, should we anticipate there's gonna be a lot more? I feel like that's kind of a no brainer, right, Yeah, there's gonna be a ton more an alternative meat. And I was talking to an investagor the week to focuses on alternative protein and says that meat is so boring. We've already figured out all the ways to make that efficient. And there's so much new stuff in um, sustainable meat

and alternative meat. There's every you know, everyone wants to know what the flavor is, what the taste is, what's this kind is the other kind? So it's just more interesting for consumers. Everyone likes variety. So um, there's some big raises like Blackstone just did um a big bet on Totally, which is the Mills maker where the craze this morning. Yeah, valued the company at two billion. That

was earlier this year. UM. Impossible Foods, which you were talking about earlier, they raised five million to support expansion globally. But there's also you know, smaller companies like Memphis Meats, which grows like lab grown meat. Um, they raised one fifty one million this year and um. Another company is called Nature's Find which makes this alternative protein developed from

a volcanic microbe they discovered in Yellowstone Parks. They were looking for how NASA could develop protein um on Mars or something like that in the future, and they discovered this protein and now they're they're making uh food from it. Like, who needs to go to Mars? We can do it right here, all right, Emily Chason, thank you so much. She's our sustainability editor at Bloomberg and he's joining us on the phone in New York. Took out her work and took out all of the work that Bloomberg Green

is doing. It's really a cool vertical. It's a broad brought worst. Yeah. I was gonna say, didn't you say? You went, oh yeah, the beyond me. Beyond that was the sausage, the like the Lynk sausage, right, like did you sort of like grilled her frien too. It's really good. This is broad worst that we did with Sara craud Like, it was really good. I mean, Emily is exactly right.

It is all about the taste in many ways. And I think if you if you find something that tastes good and then you feel like it's better environmentally and it's better for you physically, Like you're gonna go with that journal. Yeah, but you let me drive? Oh no, no, no, I want to try. Just drive the question trying. This is the drive to the globe. Give me thanks. We'll

drying us to dawn on Bluebird Radio. We've just got about eleven minutes left in today's trading session bouncing around, but we've got a rally underway, in particular, the dow up about one in a quarter percent. Let's drive to the clothes with Larry Pittkowski. He's co founder and portfolio manager at Goodhaven Capital Management, joining us once again on the phone in Millburn, New Jersey, which is where he is based. How are you. I am pretty well. How

are you, Carol? Doing okay? Doing okay? You know, life is certainly abnormal. Uh, And we continue on. I am curious, um, how you see the second half? Do you see things improving? I think investors, Larry, right now are trying to figure out what's next. You know, Carol, I'm going to share with you one of the most important phrases in investing, which is I don't know and and I'm not I'm only I'm really not being facetious. Uh, I don't know.

And I think the important thing is is to be able to find a couple of opportunities and ways to allocate capital when you don't know exactly what's coming. And I think the way you do that, you know, you need to look for where there are sectors that have not really participated in the rally, and you need to find things that appear undervalued. Even if we have a you know, very uneven economic situation, and this is an

unusual period. I mean, even for those of us that have been around for a while and have seen a lot of different crisis is the last six months were some of the most unusual ever. Um So. But I think at good Haven we had a solid second quarter. I think we're about the nice oaks at live Or keep telling us we're near the top of our category. And I think we've still own a lot of cheap stocks that I think have plenty of upside, and I

think we did some good buying during the downturn. But the range of economic outcomes from here is still very wide, um and I think that should play well for stock pickers. Yeah, I mean, Larry, it's interesting to hear you say, you know, relatively cheap, because we were talking earlier in the show about a report at a Bank of America essentially saying, look, you need to be buying stocks ahead of a vaccine

whenever that comes. Because even as we look at an SNP that may hit record levels, even as as Carroll just mentioned, we have the Dow up plus one percent or better right now, Um, you know, we are still looking at a market that if the economy does start to rev at all, there could be some opportunities for specific names. You know, Jason, I'm I'm the I'm the wayward child of a somewhat biblical family. So I'll leave,

I'll leave you. I'll give you a biblical comment. You can't start building the York when it starts pouring rain. It doesn't work that way. You know, you need to have laid out a thesis ahead of when the rest of the world is discussing it. As a as a very smart friend friend of mine likes to always say, you can have cheap stocks or good headlines, but you can't have them both at the same time. Okay, So, for instance, you know, one of our biggest holdings is

a gold miners Barrick Gold. Okay, nobody thought that was such an interesting idea a couple of years ago when we were making it a big holding. I mean, we've got questions and we've got you know, Snickers and whatnot. Well, you know, it's worked out very well. It's not really the thing I really want to talk about. But you know, you need to be looking for things that are not what everybody thinks today are the greatest idea because those

are where the opportunities are. So does that mean you don't want to be in those big tech names at all that have just run up. I mean, they are so much the market right and there are so much the market momentum um. I know what you say about look for those sectors that haven't participated or those names that haven't participated in the rally. But you know, if you do that, you miss on some miss out on

some tremendous gains. Well, I think there's a difference between saying this is something where I want to back up the truck today and versus it's something that I own that I'm I think that still has upside. You know, Alphabet is a one of our top three holdings. Now we've made many multiples of our money on it. The price is not in any way, you know, ridiculous compared to what the earnings might be a year and a

half from now. I mean, I think I'm I'm not looking at the numbers, but I think it's probably exiting out the cash probably four times earnings a year and a half out. You know, that's that's hardly a ridiculous number for a company that should get back to growing, uh, that has a really dominant position. So there are areas that The interest thing about the current environment is you

have pockets of euphoria, you have negative investor sentiment. Somebody just sent me the AI readings, which it's you know, the bullish sentiment is low. Okay, but yet you have pockets of euphoria, and yet you have certain sectors that have really not participated. So you know you need to if you own a great quality growing company like an alphabet. Okay. One of the mistakes to make in life is thinking, oh, you know, you have to sell it and realize the

gain just to find something a little bit cheaper. Not necessarily. It doesn't mean there's not moments where there aren't better buys. But that doesn't mean you have to sell it and find something else. But you know, we have found areas lately that appear to be more attractive places for cash. So what are you just altogether avoiding at this moment?

Larry Well, not to be facetious, but I always avoid things that I feel like I don't understand where the business is headed within a range, okay, and that's I think really important. I mean, it's it's important to buy things that attractive valuations, but if you don't think you understand what the business is going to look like a little bit down the road, I think you should avoid that.

And by the way, I think the uh, you know, what you've seen lately is an acceleration of all kinds of trends that were happening anyway from a business model. Since um so there's plenty in the world of investing our allocating capital. You should pass on a very high percentage of the things you look at because you don't understand the business, you don't understand where it's going, or you know, you should just keep looking for the couple of things a year that you think you have an

edgine understanding and our priced attractively. M hm, yeah, no, it makes sense. It's very logical, you know, in terms of looking at the market. All right, Larry, thank you so much. Good to check in with you. Larry Pitkowski, he's a founder portfolio manager at good Haven Capital Management. On the phone in Millbourne, New Jersey, which is where they're base, Jason, that's exactly right, great to New Jersey. I feel like it's well represented here, you know, from

Larry Pikowski to Bruce Springsteen. You cut it all here at the Garden State. Uh. Yeah, we are looking at a little laughter or sarcasm and all of that, and you're making fun of idea what you're talking about? Are you making fun of New Jersey? You really get your hackles up when anybody says anything about New Jersey. It's sort of like when I question your knowledge of sports and you immediately don't make fun of the girl, and in reality, I'm just making fun of you. Oh I

feel so much better. Where's Debbie when I need her? Oh? Boy? Yeah? She was carocious on the texting today. Yeah, sending you picks and programs from one like it's like blackmail material. Yeah it is, it is. Yeah, I don't know. I don't know about that. Brooks brothers back in the day.

Thanks so much for listening to Bloomberg Business Week. Download the podcast on iTunes, South Cloud, Blueberg dot com, but wherever you get your podcasts, and of course you can always listen to our radio show at two pm Eastern on Bloomberg Radio or watch us on YouTube by searching Bloomberg Global News.