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Speaker 1: Now America's healthcare sector is it a bit of a crossroads.

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Speaker 1: The US spends almost twenty percent of its GDP on healthcare.

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Speaker 1: It's nearly double the OECD average. But there is pressure

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Speaker 1: to cut wastage, and this of course has implications for

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Speaker 1: the big healthcare players who've all been reporting over the

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Speaker 1: last little while. Sam Dickey from Fisher Funds is with

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Speaker 1: US evening.

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Speaker 2: Sam, good evening. Hey, can you give us a little bit.

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Speaker 1: Of detail on the big picture here and what the

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Speaker 1: government is trying to do about it?

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Speaker 2: Yes, this ties into what you and I were talking

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Speaker 2: about in June. So remember US government debt to GDPs

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Speaker 2: one hundred and twenty five percent versus say New Zealand

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Speaker 2: at fifty and healthcare spinning is an obvious target. Like

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Speaker 2: you say, almost twice the OECD average as a percentage

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Speaker 2: of GDPs spent on healthcare, which is five trillion dollars,

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Speaker 2: and at least a trillion dollars of that experts says wasted.

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Speaker 2: So how's that wasted? Administrative bloat is massive? So the

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Speaker 2: US has an incredibly convoluted patchwork of public and private

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Speaker 2: insurers with thousands of different insurance plans and big hospitals

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Speaker 2: for exams, dedicate entire departments with hundreds of employees just

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Speaker 2: to hand all the insurance claims, the denials, the resubmittances.

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Speaker 2: Then there's the middlemen that distributors everyone with their handout

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Speaker 2: clapping the ticket and to feed all those mouths. US

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Speaker 2: drug prices are extremely inflated versus the rest of the world.

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Speaker 2: So take the EpiPen or ozepic for example, that the

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Speaker 2: popular weight loss drug. They sell it ten times the

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Speaker 2: price in the US versus say the UK or Ossie.

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Speaker 2: So that's the problem, but it's really really hard to fix.

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Speaker 2: So in twenty eighteen, Warren Buffett, Jeff Bezos, and Jamie

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Speaker 2: Diamond set up a joint venture to tackle this bloat.

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Speaker 2: So think about those three guys. You probably couldn't get

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Speaker 2: three more capable people on Earth together in a room

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Speaker 2: to solve a problem. And they failed. So the joint

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Speaker 2: venture quietly dissolved, defeated by the sheer amount of greed,

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Speaker 2: vested interests and massive political clout of the healthcare players.

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Speaker 1: So, as I said earlier, we've had some of these

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Speaker 1: big healthcare players reporting over the last little while. What

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Speaker 1: if the result told us about.

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Speaker 2: This that's right. So companies like Boston Scientific, Danaher and

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Speaker 2: Chield of Surgical, and Icon of all reported results. So

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Speaker 2: in Chield of Surgical that we've spoken about this one before,

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Speaker 2: the leading soft tissue robotic surgery company, they sell their

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Speaker 2: robots to hospitals and they said on the result that

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Speaker 2: hospitals not just in the US but around the world

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Speaker 2: are tightening the purse strings. Danaher, who manufactures the tools

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Speaker 2: that big farmer companies used to develop a mass produce drugs,

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Speaker 2: said it's big farmer customers like Pfizer continue cutting costs

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Speaker 2: as government pressure mounts to reduce drug prices. And Icon,

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Speaker 2: who are a outsourced clinical trial company that tests drugs

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Speaker 2: for farmer companies, has been under immense pressure.

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Speaker 1: What does this all mean for investors, Well, the good.

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Speaker 2: News is both Democrats and Republicans support cutting waste. So

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Speaker 2: you've had the Inflation Reduction Act in twenty twenty two,

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Speaker 2: which reduced prices the government pays for drugs, and Trump's

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Speaker 2: Most Favored Nation policy aims to tie US drugs to

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Speaker 2: the lowest prices paid by the developed countries. But as

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Speaker 2: an investor, it's critical to determine whether the healthcare company

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Speaker 2: you own is contributing to the problem or helping solve it.

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Speaker 2: So big farmer companies charging excessive US drug prices are

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Speaker 2: right in the cross. Heirs as are distributed as a middlemen.

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Speaker 2: But Boston Intuitive and Icon, for example, they're part of

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Speaker 2: the solution. So Icon's clinical research expertise can complete drug

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Speaker 2: trials twelve months faster and up to twenty percent cheaper

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Speaker 2: than than their farmer customers. Boston reported forty percent higher

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Speaker 2: patient throughput at its cardiac or heart centers, they reduced

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Speaker 2: unnecessary patient stays by twenty five percent and cut procedure

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Speaker 2: times by fifteen percent over the last few years, and

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Speaker 2: Tudors robotic systems massively speed up surgical backlog. So make

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Speaker 2: sure you're part of the solution as an investor heator,

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Speaker 2: But tread carefully generally, because if the bloated supertanker that

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Speaker 2: is the US healthcare system is finally turning, you do

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Speaker 2: not want to be in its path.

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Speaker 1: A very good advice, Sam, Thank you so much. As always,

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Speaker 1: Sam Dickie Fisher Funds will talk to you again sooner.

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