Wiser! #18 (Premium): BigTech has eyes on the US Healthcare market. It's expensive, inefficient and broken.
Insights: Premium Content
Apple, Amazon and Google are pursuing different strategies with the same end goal: GROWTH!
Disrupting a $9.7 trillion market
The global healthcare market is estimated to hit $9.7 trillion by 2023. By any measure, it’s a huge industry. And one that’s ripe for change.
Which is why BigTech have their eyes on a piece of healthcare pie.
In this week’s WiserIn5!, I look at why Healthcare is an attractive target for BigTech.
And what Apple, Amazon and Google are all doing about it.
For Apple, it’s all about the Attention Economy and getting more of yours.
For Amazon, turning their biggest costs (such as employee healthcare) into sources of profit sets them apart.
For Google (Alphabet), the key is an order of magnitude better use of data.
For BigTech to be disruptive, they need to do 2 things…
(a) disintermediate the traditional supply chain and take a service or product directly to the consumer (think Amazon home delivery cutting out the High Street),
(b) deliver that product or service with a 10x improvement (think free next day delivery of the toothbrush you ordered at 9pm last night!).
So, when you look at industries to find our which one's are ripe for disruption, you look for key indicators from a macro perspective. One of these is customer satisfaction.
Namely, a low Net Promotor Score as a key indicator of fertile opportunities.
Which industry stands out when it comes to low NPS in 2020 (in the USA)?
Skyrocketing US healthcare costs
The amount of money that the USA spends on healthcare is almost twice the average for the wealthiest nations.
Across the OECD nations (which excludes the poorest in the world) the average spend is 8.6% of GDP. However the United States spends almost twice that at 17% of GDP on healthcare.
This equates to a per capita spend that is just over $11k compared to an average across the OECD countries of under $5.5k.
In the spending list, Switzerland comes 2nd at $7.7k per person.
And it's getting worse. Almost of a fifth of the US economy goes on healthcare and it is forecast to grow even more at 5.5% per year for the next 5 years.
Ironically, even though the US spends relatively more on Healthcare than any other nation, it does not mean better health outcomes.
According to the OECD, average life expectancy is almost 5 years longer if you live in Switzerland compared to the US.
Child mortality at birth is 5.8/1000, which places the USA 5th in the league table of OECD countries.
In the calculation of Potential Years of Life Lost (this is a measure of preventable premature death), the USA is 4th in the list of OECD nations behind Mexico, Lithuania and Hungary.
This is partly explained by the significant proportion of US spending on administration. According to the OECD, the US spends over 3x MORE per capita on Administration than any other wealthy nation.
And yet it spends 3x LESS on long term care than The Netherlands, who spend the most of Long term Healthcare per capita.