WEBVTT - Making Use of Digital Strategy for Business Growth 0:00:01.800 --> 0:00:04.400 This is Bloomberg Business Week. I'm Carol Masser and I'm 0:00:04.440 --> 0:00:07.280 Bloomberg Quick Takes Tim Stanibek. We're here every day bringing 0:00:07.280 --> 0:00:09.800 you the latest news from the world of business and finance, 0:00:09.800 --> 0:00:13.640 plus technology, politics, economics, all partnising the power of Business 0:00:13.640 --> 0:00:17.119 Week reporters and editors, not to mention our journalists and 0:00:17.120 --> 0:00:19.960 analysts in more than one twenty countries. You can download 0:00:20.000 --> 0:00:23.200 Bloomberg Business Week on iTunes, SoundCloud, or Bloomberg dot Com. 0:00:23.400 --> 0:00:25.120 You can also listen to our radio show at two 0:00:25.160 --> 0:00:27.840 pm Eastern Time on Bloomberg Radio or watch us on 0:00:27.880 --> 0:00:31.360 YouTube search Bloomberg Global News. Yesterday, you might recall we 0:00:31.400 --> 0:00:34.000 talked with Peace Lamp He's the chief strategy officer at 0:00:34.000 --> 0:00:36.760 work Day. We talked about digital transformation, the changing world 0:00:36.760 --> 0:00:39.800 of how we work well embracing digital strategies. They are 0:00:39.840 --> 0:00:43.760 definitely everywhere, including a massive company best known for its 0:00:43.800 --> 0:00:46.479 industrial construction and mining machines. Tim, we are talking, of 0:00:46.520 --> 0:00:48.879 course about Caterpillar. Yeah, I'm familiar with it. It's my 0:00:48.920 --> 0:00:51.040 three and a half year old's favorite company that exists. 0:00:51.040 --> 0:00:53.880 I mean, we're talking about the world's leading manufacturer construction 0:00:53.880 --> 0:00:58.480 and mining equipment, Caterpillar. UM tractor. Well you are now 0:00:58.600 --> 0:01:01.560 Arlow's best friend a grand It's pretty cool. Let's get 0:01:01.600 --> 0:01:04.640 to Aggie red Zick, chief digital officer for Caterpillar, who 0:01:04.680 --> 0:01:08.080 joins this vias here from Scottsdale, Arizona. Really great to 0:01:08.120 --> 0:01:10.800 have you with us this afternoon. Thanks so much for 0:01:11.000 --> 0:01:13.399 taking the time. When we think Caterpillar, I mean we 0:01:13.440 --> 0:01:17.560 are talking heavy equipment, We're talking construction, we're talking mining equipment. 0:01:17.800 --> 0:01:19.880 I mean, in a sense, this is stuff that's powered 0:01:19.880 --> 0:01:22.560 by diesel, and it's the it's quite kind of the 0:01:22.600 --> 0:01:25.240 antithesis of digital. But talk to me about how you 0:01:25.240 --> 0:01:29.679 guys harness digital. Now, first of all, good afternoon, Carroll, 0:01:29.720 --> 0:01:32.600 Good afternoon, Tim. Um. I hope you're three year old 0:01:32.640 --> 0:01:36.440 would like a little moti greater than I have my kids. 0:01:36.560 --> 0:01:43.440 My kids love it, Um. Digital. Digital really enables Caterpillar. 0:01:43.440 --> 0:01:45.479 I mean, you know cateripilars history, you know, been around 0:01:45.600 --> 0:01:48.880 hundred years, kind of invented the track tip tractor and 0:01:49.000 --> 0:01:52.280 figure out how to put gasoline versus a steam engine, 0:01:52.360 --> 0:01:55.880 and and really kind of changed so many industries since that. 0:01:56.480 --> 0:01:59.840 We view digital as a big enabler for our dealers 0:01:59.840 --> 0:02:02.640 and customers to continue innovating in the new world if 0:02:02.640 --> 0:02:07.080 you're building all around us, so you know what we're doing, 0:02:07.200 --> 0:02:10.520 namely just my team. We have a team about four engineers. 0:02:11.200 --> 0:02:14.360 We collect data from more than one point two million 0:02:14.680 --> 0:02:18.480 assets that Caterpillar has out in the field. We like 0:02:18.680 --> 0:02:21.040 that data. We actually put the data in a useful 0:02:21.080 --> 0:02:24.079 information We create services on top of the data and 0:02:24.160 --> 0:02:27.640 every past uh information back to our customers so that 0:02:27.680 --> 0:02:29.880 they can operate their fleet letters. They can know where 0:02:29.919 --> 0:02:32.360 their equipment is, how hard it's working. And we have 0:02:32.440 --> 0:02:35.600 many interesting applications we give to our customers and our 0:02:35.639 --> 0:02:38.919 dealers so they can improve the operation of the fleet. Well, 0:02:38.960 --> 0:02:40.360 you know what's interesting too, And I want to just 0:02:40.480 --> 0:02:42.120 if I can just step away from some of the 0:02:42.120 --> 0:02:44.519 digital work you guys are doing, specifically because you touched 0:02:44.520 --> 0:02:47.640 about data and how that UM. You know, data is 0:02:47.639 --> 0:02:49.320 such an important part of what you do. And one 0:02:49.400 --> 0:02:53.320 of the things that we love about UM Caterpillar is 0:02:53.360 --> 0:02:56.000 that you guys are so into collecting lots of data points. 0:02:56.040 --> 0:02:58.880 And if I can just for a moment, though, tap 0:02:58.960 --> 0:03:01.960 into what the data points tell you about kind of 0:03:01.960 --> 0:03:04.480 our broader world, our macro world, which has been a 0:03:04.520 --> 0:03:07.200 theme that we have been hammering in particular over the 0:03:07.280 --> 0:03:10.560 last week or so, because we look at inflation concerns 0:03:10.600 --> 0:03:14.960 about growth, we're looking at the continued digital transformation of 0:03:15.000 --> 0:03:17.200 the world and how that can be uncomfortable as we 0:03:17.280 --> 0:03:19.760 move towards it when you look at that, and you 0:03:19.800 --> 0:03:22.000 guys are known for your data collection and what it 0:03:22.040 --> 0:03:23.919 tells us about the global economy. So if I can 0:03:23.960 --> 0:03:26.079 just step back for a moment, what does that tell 0:03:26.200 --> 0:03:30.080 us about our world right now? Well, obviously we don't 0:03:30.080 --> 0:03:33.280 really talk much about data that we dislob collect from 0:03:33.320 --> 0:03:35.839 our customers. We primarily use the data to help our 0:03:35.880 --> 0:03:39.360 customers with applications that they use day in and day out. 0:03:39.720 --> 0:03:42.880 But certainly, um, you know, we have increased number of 0:03:43.240 --> 0:03:45.840 assets out there that keep collecting the data and uh 0:03:46.000 --> 0:03:48.520 and and leveraging that or benefit to the customers. And 0:03:48.520 --> 0:03:50.120 I can tell you that, you know, the world is 0:03:50.440 --> 0:03:54.080 continuing to come along our customers. We have growing number 0:03:54.080 --> 0:03:57.600 of customers using our platforms every day, so they extract 0:03:57.640 --> 0:04:02.000 more information from mouths. They use our autonomy solution, for example, 0:04:02.000 --> 0:04:05.000 more than ever before. So there's definitely a desire and 0:04:05.160 --> 0:04:08.720 an appetite for data to be shared back with our 0:04:08.760 --> 0:04:11.240 customers in a meaningful way where they can actually leverage 0:04:11.280 --> 0:04:13.600 the applications that we built. Well, that's what I was 0:04:13.600 --> 0:04:15.280 going to ask you. You know, in terms of what's 0:04:15.280 --> 0:04:18.280 top of mind you know for your customers. You know, 0:04:18.600 --> 0:04:22.000 whether it's energy, transportation, construction, forming, which is you guys 0:04:22.000 --> 0:04:24.680 play into so much of what is our global economy? 0:04:25.040 --> 0:04:28.520 What is top of mind for them? Well, look, I 0:04:28.520 --> 0:04:30.320 mean the key for them is to be able to 0:04:30.360 --> 0:04:33.960 operate their fleet as effectively as they can. It's important 0:04:34.000 --> 0:04:36.720 for them to be able to get parts from us, 0:04:37.120 --> 0:04:40.039 from our dealers, It's important for them to transact with 0:04:40.120 --> 0:04:42.640 us in a seamless way. So when we look at 0:04:42.640 --> 0:04:45.000 the investment that we're making a digital for example, we 0:04:45.080 --> 0:04:48.640 make investment to help our customers with condition launching. So 0:04:48.800 --> 0:04:51.359 we have a team on people that build very advanced 0:04:51.680 --> 0:04:54.440 machine learning tools that it can actually take information from 0:04:54.600 --> 0:04:57.400 let's say mining truck and a mind figured out two 0:04:57.480 --> 0:04:59.560 best amounts of data that we collect from it that 0:04:59.680 --> 0:05:02.400 there's potential issue that may merge over the next week 0:05:02.520 --> 0:05:04.960 or so. And if you can get in front of 0:05:05.000 --> 0:05:07.880 that problem with our customers, save and hundreds of thousands 0:05:07.920 --> 0:05:10.680 of dollars of one plan downtime and actually get the 0:05:10.760 --> 0:05:13.120 right part, in the right service eegnuation in front of 0:05:13.120 --> 0:05:15.880 the customer and in that mind that it will be 0:05:15.960 --> 0:05:19.680 tremendously valuable to the customer. So they're looking at these 0:05:19.720 --> 0:05:22.960 digital technologies that we that we helped deploy to them, 0:05:23.279 --> 0:05:25.320 is a way for them to save on the operational 0:05:25.360 --> 0:05:27.920 costs we use the downtime. It's really important for our customers. 0:05:27.920 --> 0:05:29.960 You can imagine that each one of these mining trucks, 0:05:30.000 --> 0:05:32.120 it's tens of thousands of dollars per hour if it's 0:05:32.200 --> 0:05:36.120 not operational, uh, for for the mining operator. But also 0:05:36.360 --> 0:05:38.440 we make it very easy for them to get parts, 0:05:38.440 --> 0:05:41.400 to get service, to book service to other parts online. 0:05:41.440 --> 0:05:45.239 We we've just recently share the breed through our dealers 0:05:45.240 --> 0:05:47.320 and the network do more than ten billions of parts 0:05:47.320 --> 0:05:50.719 sales every day on our online e commerce channels and 0:05:50.800 --> 0:05:53.000 we except expect that to continue growing. So we can 0:05:53.040 --> 0:05:56.120 imagine making it very easy for our customers to get 0:05:56.160 --> 0:05:58.680 their spare spare parts, to get the spare parts in 0:05:58.680 --> 0:06:00.719 the right moment, in the right time they need them, 0:06:00.760 --> 0:06:03.280 and our dealers are there to help help customers with 0:06:03.360 --> 0:06:05.920 that transisi. Hey, is this also playing into what's going 0:06:05.920 --> 0:06:07.840 on with climate change? And I'm just curious in terms 0:06:07.880 --> 0:06:09.839 of the data points and is how is that maybe 0:06:09.839 --> 0:06:13.719 translating into helping out your customers digitally, uh and ultimately 0:06:13.800 --> 0:06:16.120 leading to more growth for them. Sure, I mean a 0:06:16.200 --> 0:06:18.480 very simple way. We have a tool we called vision Link. 0:06:19.279 --> 0:06:22.000 It's one of the fleet management tools that kind of 0:06:22.040 --> 0:06:25.600 the factor standard in the industry UM and this tool 0:06:25.640 --> 0:06:28.400 will tell fleet operators, for example, how much CEO two 0:06:28.440 --> 0:06:32.360 they're emitting. So it's very simple. If you obviously drill 0:06:32.360 --> 0:06:35.279 a little deeper, you can see how is your fleet 0:06:35.600 --> 0:06:39.000 doing when it comes to idling versus operating the engine 0:06:39.760 --> 0:06:43.080 for and clearly if you have an idle time, you 0:06:43.080 --> 0:06:45.680 want to try to reduce it because of ambitions that 0:06:45.680 --> 0:06:47.240 you're going to get with it. And also you know, 0:06:47.279 --> 0:06:49.880 you want to just make sure that you extend useful 0:06:49.920 --> 0:06:52.360 life of the asset that you have to the maximum. 0:06:52.440 --> 0:06:56.240 So there are tools that we developed in digital that 0:06:56.240 --> 0:07:00.520 actually help our customers operate those fleets more effectively. Hey, 0:07:00.640 --> 0:07:04.080 what does this do for stickiness when it comes to 0:07:04.120 --> 0:07:08.840 customers and Caterpillar machinery when they're ready to go and 0:07:09.040 --> 0:07:11.520 actually buy a new piece of equipment for mining or 0:07:11.520 --> 0:07:15.440 for construction. Does having this digital offering having the data 0:07:15.440 --> 0:07:18.800 about what they're working on. Uh, does that make them 0:07:18.840 --> 0:07:21.480 more likely to continue to buy a piece from Caterpillar 0:07:21.760 --> 0:07:23.960 rather than from a competitor? And what is the data 0:07:24.040 --> 0:07:27.160 show us about that? But absolutely total operating costs of 0:07:27.200 --> 0:07:29.560 what really matters to our customers. It is critical for 0:07:29.640 --> 0:07:32.320 us to make sure and demonstrate to our customers that 0:07:32.520 --> 0:07:35.840 operating costs of owning pieces of machinery from Caterpillar is 0:07:36.120 --> 0:07:39.000 better than from our competitors. If you look for example, 0:07:39.000 --> 0:07:42.280 I mean, I'll give you some some data. Um customers 0:07:42.320 --> 0:07:44.160 that come to us and start using our digital to 0:07:44.320 --> 0:07:47.400 digital tools to to buy parts to transact with us 0:07:47.520 --> 0:07:50.520 actually end up buying and those that just do it 0:07:50.680 --> 0:07:53.360 over the counter, and not only do they buy more 0:07:53.400 --> 0:07:55.480 of what they previously bought, but they also have an 0:07:55.520 --> 0:07:58.280 opportunity to explore more of what we offer and therefore 0:07:58.280 --> 0:08:00.440 they buy more scutes things that they have bout for 0:08:00.640 --> 0:08:03.560 and they also have much broader spectrum of solution that 0:08:03.680 --> 0:08:05.880 we can offer them when they see them in nice, 0:08:06.040 --> 0:08:08.600 nice and order digital catalog for example. So I give 0:08:08.640 --> 0:08:11.520 you some idea of how valuable we think these tools are. 0:08:12.120 --> 0:08:14.080 Well and talk to us about you know, we we've 0:08:14.080 --> 0:08:19.520 been getting into how what you guys are doing can 0:08:19.600 --> 0:08:22.800 help customers write clients in terms of their digital transformation. 0:08:23.040 --> 0:08:25.800 How does this though, the digital transformation that's happening with 0:08:25.880 --> 0:08:28.320 you guys and focusing on this, how is that translating 0:08:28.320 --> 0:08:31.280 into growth and how will it in the years to 0:08:31.320 --> 0:08:35.520 come on Caterpillar in terms of impacting top and bottom lines. Yeah, 0:08:35.559 --> 0:08:38.000 absolutely so. I gave you a data point of ten 0:08:38.000 --> 0:08:40.200 million dollars in deal with part sales per business day 0:08:40.240 --> 0:08:42.640 today and we expected that will grow fifty in the 0:08:42.640 --> 0:08:46.000 next three years. That's one data point. Another interesting data 0:08:46.040 --> 0:08:48.240 point is we've put a lot of effort and energy 0:08:48.240 --> 0:08:51.280 in our machine learning capability to give better leads to 0:08:51.320 --> 0:08:54.440 our dealers. So we use twenty different data sources. Obviously 0:08:54.520 --> 0:08:57.040 data for machine we look at engineering information and look 0:08:57.080 --> 0:09:02.160 at thematics, UH information, data from from service, and we 0:09:02.400 --> 0:09:04.960 collect all of that. We come up with a very 0:09:05.080 --> 0:09:07.760 precise recommendation to our dealers to go and visit a 0:09:07.800 --> 0:09:10.640 customer because we know that there is a particular need 0:09:10.800 --> 0:09:12.840 of going to materialize in a moment. We just started 0:09:12.880 --> 0:09:15.880 that effort three years ago. Really in two thousand and 0:09:15.920 --> 0:09:19.880 twenty one, we did about a billion dollars of closed one, 0:09:20.000 --> 0:09:22.800 so deal that actually resulted in sale and we expected 0:09:23.640 --> 0:09:27.000 already will be doing about two millions sale. But during 0:09:27.040 --> 0:09:32.320 the excuse me sorry, as as we've been seeing supply 0:09:32.400 --> 0:09:36.840 chains just you know, reach havoc upon during the pandemic, 0:09:37.000 --> 0:09:38.880 did that type of data even matter, like did you 0:09:38.920 --> 0:09:42.320 have the equipment to send those dealers? We did. We 0:09:42.360 --> 0:09:47.040 actually had the best parts availability in one. So obviously 0:09:47.080 --> 0:09:49.120 there's been a lot of hard work from many people. 0:09:49.120 --> 0:09:51.959 I know my team is you know, went all over 0:09:52.000 --> 0:09:53.560 the world to find the chips that we needed and 0:09:53.600 --> 0:09:55.600 often had to replace them with different chips. And then 0:09:55.840 --> 0:09:58.719 the engineering work to ensure that these new chips will 0:09:58.800 --> 0:10:00.680 work is effectively as the pre those chips. So there's 0:10:00.679 --> 0:10:03.880 a lot of effort that goes into it. But clearly, um, 0:10:03.920 --> 0:10:06.040 you know, when it comes to for example, parts availability, 0:10:06.040 --> 0:10:10.240 which is what matters. One was actually pretty goodyear. Now 0:10:10.320 --> 0:10:13.800 we continue to have challenges and supply changes like everybody 0:10:13.800 --> 0:10:15.840 else in the in the industry. I'm not at liberty 0:10:15.880 --> 0:10:21.280 to to predict when those will get better. But again 0:10:21.600 --> 0:10:25.200 we're doing everything that weekend and I think, uh uh 0:10:25.240 --> 0:10:27.480 are doing a reason need good job, well you know what, 0:10:27.920 --> 0:10:29.439 and just building on that you know in terms of 0:10:29.520 --> 0:10:32.360 digital transformation, you hear digital, you do think about sony 0:10:32.400 --> 0:10:35.160 conductors and chips specifically. And we've all had some really 0:10:35.200 --> 0:10:38.480 smart conversations and thoughtful conversations about where we need to 0:10:38.480 --> 0:10:40.920 be manufacturing, where we need to get our supplies, and 0:10:41.040 --> 0:10:44.080 we are increasingly hearing, certainly from a US story, that 0:10:44.120 --> 0:10:47.600 it needs to be closer to home. And you guys sell, um, 0:10:47.640 --> 0:10:49.880 I think it was it roughly about twenty two billion 0:10:49.880 --> 0:10:52.000 in North America and then I think more than that 0:10:52.280 --> 0:10:55.400 outside of North America. So when you think about where 0:10:55.480 --> 0:10:58.000 those supply chains need to be, does it make sense? 0:10:58.040 --> 0:11:00.640 We talked with the mayor of Columbus, Ohio UH into 0:11:00.720 --> 0:11:03.880 making a big investment in that city specifically to build 0:11:03.880 --> 0:11:07.680 out a semiconductor presence. Is it really smart? Do you 0:11:07.760 --> 0:11:11.080 agree that we need to be building this closer to 0:11:11.200 --> 0:11:13.800 where we're selling uh and for the United States to 0:11:13.880 --> 0:11:17.599 kind of step up and bring production home. Well, ultimately, 0:11:17.640 --> 0:11:20.080 you know, I'm probably not the expert to tell you 0:11:20.080 --> 0:11:22.000 where the factories should be, but I can tell you 0:11:22.040 --> 0:11:23.559 that would you buy, you need and you need to 0:11:23.559 --> 0:11:27.240 have access, right, It's critical, critical for us to have 0:11:27.440 --> 0:11:30.800 access to chips, absolutely and if that means if we 0:11:30.880 --> 0:11:33.680 need to do more in the United States, absolutely we'll'll 0:11:33.720 --> 0:11:37.120 be fully supportive of that. But right now, I mean 0:11:37.120 --> 0:11:39.840 we're still years away from anything in Ohio coming online. 0:11:39.920 --> 0:11:41.719 We still have, you know, short term issues if you 0:11:41.760 --> 0:11:43.559 need to resolve and those chips need to come from 0:11:43.600 --> 0:11:45.599 somewhere else. Well, I have to say it's great to 0:11:45.679 --> 0:11:47.680 check in with you. A few years ago I did 0:11:47.720 --> 0:11:49.439 a deep dive on the company, spent some time in 0:11:49.480 --> 0:11:52.120 the proving ground out in Illinois, got to drive um 0:11:52.640 --> 0:11:58.120 some vehicle attractor. But it's interesting in terms of how 0:11:58.160 --> 0:12:01.560 this company, you know, continues to brace technology, including the 0:12:01.559 --> 0:12:04.400 digital world, the digital transformation. It makes sense whether they're 0:12:04.400 --> 0:12:06.560 doing it internally or for their for their customers. Why 0:12:06.600 --> 0:12:08.280 don't we do a remote where we do this from 0:12:08.280 --> 0:12:10.960 the tractor. I loved it. Man, were a hard cool, 0:12:11.559 --> 0:12:14.000 self driving tractors so that we can go to tough 0:12:14.080 --> 0:12:16.319 mining areas so you don't put people at risk. It's 0:12:16.320 --> 0:12:19.839 pretty amazing. Aggie Redzick. He is Chief Digital Officer over Caterpillar, 0:12:20.000 --> 0:12:22.880 joining us via Zoom from Scottsdale, Arizona. Coming up, we're 0:12:22.920 --> 0:12:26.640 checking in with Steve Kase talking more transformation This is 0:12:26.679 --> 0:12:30.600 Bloomberg Business Week with Carol Masser and Bloomberg Quick Takes 0:12:30.720 --> 0:12:34.760 Tim Stinovic on Bloomberg Radio. Well, the World Health Organization 0:12:34.800 --> 0:12:37.560 out with some new research what they call invisible numbers 0:12:37.600 --> 0:12:41.120 about the impact of noncommunicable diseases what to do about 0:12:41.160 --> 0:12:42.680 them n C D s to him. You're talking about 0:12:42.679 --> 0:12:48.119 cardiovascular diseases, cancer, diabetes, chronic respiratory diseases, along with mental health. 0:12:48.559 --> 0:12:51.400 They all together under that n C d umbrella caused 0:12:51.400 --> 0:12:53.640 nearly three quarters of deaths in the world. The impact 0:12:53.720 --> 0:12:57.400 and quality of life, the global economy and global productivity, 0:12:57.480 --> 0:12:59.599 it's really massive. So we're going to take kind of 0:12:59.640 --> 0:13:02.600 a look at healthcare space, the cost, especially when you 0:13:02.600 --> 0:13:05.080 think about things like higher inflation factoring that in. Yeah, 0:13:05.080 --> 0:13:07.720 I'm really glad you brought up that inflation element because 0:13:07.800 --> 0:13:09.560 we know that health care is a significant portion of 0:13:09.600 --> 0:13:12.840 duding here in the US. About, um, what does it 0:13:12.840 --> 0:13:15.440 mean when everyone's paying higher prices for things? For that, 0:13:15.480 --> 0:13:18.280 we turned to Eileen Flick. She's senior vice president director 0:13:18.320 --> 0:13:23.400 of Health Technology Technological Technical Services. Excuse me at seageal Uh, 0:13:23.440 --> 0:13:26.240 it's a benefits an HR consulting firm. Eileen great to 0:13:26.240 --> 0:13:28.720 have you with us this afternoon. How are you good? 0:13:28.760 --> 0:13:30.599 Thank you for having me. We'll talk to us a 0:13:30.640 --> 0:13:32.880 little bit about some of the data that Carol just 0:13:32.920 --> 0:13:36.280 shared and the idea of Um. Obviously, these are preventable 0:13:36.280 --> 0:13:39.960 diseases in many cases. Uh, the question is there's the 0:13:40.040 --> 0:13:43.280 benefit the cost benefit analysis that happens here right. Costs 0:13:43.320 --> 0:13:46.400 so much to actually treat these things when people they 0:13:46.400 --> 0:13:48.560 do affect people and they end up being hospitalized and 0:13:48.880 --> 0:13:51.920 long term care facilities. How do we start to treat 0:13:51.960 --> 0:13:54.199 them earlier so it doesn't end up costing as much 0:13:54.240 --> 0:13:57.240 and so people are healthier. Um, Well, that that is 0:13:57.280 --> 0:13:59.559 the key. UM. So I mean I just want to 0:13:59.600 --> 0:14:01.600 address before I even get to that, I just want 0:14:01.600 --> 0:14:06.840 to just mentioned that that you know, healthcare is expected 0:14:06.880 --> 0:14:09.640 to increase next year and inflation is at a forty 0:14:09.679 --> 0:14:12.480 year high, so I do expect, you know, it to 0:14:12.760 --> 0:14:15.640 drive up medical costs over the next year. But there 0:14:15.640 --> 0:14:18.199 there is a lot that can be done to reduce 0:14:18.840 --> 0:14:22.440 the costs and to to treat people earlier. So, I mean, 0:14:22.600 --> 0:14:24.760 benefit plants can do a lot that. I mean, what 0:14:25.160 --> 0:14:28.640 you could do is really promote using lower cost settings. Um. 0:14:28.680 --> 0:14:32.040 You could do things like promote use of walking clinics 0:14:32.080 --> 0:14:35.320 and urgent care centers for non life threatening acute care needs. 0:14:35.760 --> 0:14:40.880 Anytime patient is using hospital owned facility for care, they 0:14:40.920 --> 0:14:45.120 generally pay warfare services. So there's you know, there's very 0:14:45.120 --> 0:14:48.240 many times maybe the only and best option, but there's 0:14:48.400 --> 0:14:52.120 capabilities and access for alternative care centers, and they've grown 0:14:52.160 --> 0:14:55.880 tremendously in the past decade. And I think with UM, 0:14:55.920 --> 0:14:59.320 with with the pandemic, there's been a lot more promotion. 0:14:59.400 --> 0:15:01.040 You know, there's been a lot more access to just 0:15:01.680 --> 0:15:04.520 UM care outside of the hospital. So the ad patient 0:15:04.600 --> 0:15:07.120 care in general has just been her tremendous lines and 0:15:07.160 --> 0:15:10.240 those poor I say, these poor urgent care centers you 0:15:10.280 --> 0:15:11.680 know who you know, over the last year have just 0:15:11.720 --> 0:15:14.080 been flooded with patients for COVID tests. I mean, we 0:15:14.080 --> 0:15:16.320 certainly have to to figure something out so they're not 0:15:16.360 --> 0:15:19.040 bursting at the seams. Hey, Elean, Um, you mentioned that 0:15:19.080 --> 0:15:21.440 inflation is take is the causing the price of healthcare 0:15:21.520 --> 0:15:23.720 to go up. We're gonna see open enrollment, I think 0:15:23.880 --> 0:15:26.200 for a lot of companies in the near future. Um, 0:15:26.280 --> 0:15:28.440 are we going to see sticker shock as employees at 0:15:28.440 --> 0:15:30.200 many of these companies when we start to see how 0:15:30.280 --> 0:15:33.960 much more our premiums are going to go up? Well, 0:15:34.000 --> 0:15:37.480 it depends on the plan sponsor. I mean, I think 0:15:37.600 --> 0:15:41.320 in plants, plants should expect on on average, and we've 0:15:41.320 --> 0:15:43.840 seen this in our healthcare costumes. Are we So the 0:15:44.200 --> 0:15:48.480 survey basically showing that medical plan costs are expected to 0:15:48.600 --> 0:15:51.160 increase at an annual rate of seven to eight percent 0:15:51.200 --> 0:15:55.560 in three Now, you know, we've seen that trends were 0:15:55.600 --> 0:15:59.080 actually they had gone down significantly because people were not 0:15:59.080 --> 0:16:01.760 were differing care. And now we're seeing between the inflationary 0:16:01.840 --> 0:16:04.360 environment and people actually using services, and now there's been 0:16:04.440 --> 0:16:07.120 enough to conservices. I think, um that you know, we're 0:16:07.120 --> 0:16:10.120 seeing that they're going up a lot. That that said, 0:16:10.160 --> 0:16:12.480 it's not at the same level as what we're seeing 0:16:12.520 --> 0:16:17.040 for inflation UM inflation, I would think the medical care 0:16:17.640 --> 0:16:20.880 is price price inflation has actually gone up just in 0:16:21.440 --> 0:16:26.640 general UM for overall overall consumer of goods, and medical 0:16:26.720 --> 0:16:30.160 price is probably a little bit behind, and it's behind 0:16:30.200 --> 0:16:33.800 because of timing and provider contracting and commercial plans. So 0:16:33.840 --> 0:16:35.920 I think that it's it's embedded in those rates to 0:16:36.000 --> 0:16:38.240 some extent, but it's probably going to increase over the 0:16:38.240 --> 0:16:42.800 next couple of years. You know, I wonder what the 0:16:42.800 --> 0:16:44.760 the right conversation is to be having at this point 0:16:44.840 --> 0:16:50.720 healthcare and the costs to society, to um individuals, to companies, 0:16:50.840 --> 0:16:54.520 just to the economy. We've been talking about this for years. 0:16:54.560 --> 0:16:57.400 II lean and I do wonder, you know, you guys 0:16:57.400 --> 0:17:00.280 are looking at how inflation is impacting healthcare costs? I mean, 0:17:00.400 --> 0:17:02.320 should we be looking at something like and I talked 0:17:02.320 --> 0:17:04.240 about n c d s at the top. I mean 0:17:04.840 --> 0:17:07.520 n c d S, which touched so many of our 0:17:07.560 --> 0:17:10.359 lives either directly or through people we know? Is there 0:17:10.480 --> 0:17:12.880 something that we can think about in terms of lifestyle 0:17:12.880 --> 0:17:15.560 preventive care. So maybe the question to be asked is, 0:17:15.680 --> 0:17:19.120 you know, how can preventive care impact healthcare costs? There's 0:17:19.160 --> 0:17:22.040 smarter conversation. We were have to turn things upside down 0:17:22.480 --> 0:17:24.960 and how we approach healthcare where we would get a 0:17:24.960 --> 0:17:27.760 better outcome in terms of quality of life as well 0:17:27.800 --> 0:17:31.080 as when it comes to the cost equation. I mean, 0:17:31.160 --> 0:17:34.520 definitely and prevented. There's definitely opportunity with preventive care. And 0:17:34.720 --> 0:17:37.880 I think we've seen even with the pandemic that there 0:17:37.880 --> 0:17:40.199 are a lot of people who didn't like to, you know, 0:17:40.240 --> 0:17:43.359 take their preventive care screenings and and there are people 0:17:43.359 --> 0:17:46.119 that are now getting you know, diagnosed with lead stage cancers. 0:17:46.160 --> 0:17:48.560 So preventive careacters is always a smart thing to do 0:17:48.640 --> 0:17:52.639 in general. And um, under you know, there's any opportunity 0:17:52.680 --> 0:17:55.879 you can you have to to get to care sooner. 0:17:56.240 --> 0:17:58.880 It is always going to catch things earlier and avoid 0:17:59.080 --> 0:18:02.440 uh you know, high cost m claim outcomes. So that's 0:18:02.480 --> 0:18:06.000 definitely a smart thing to do, alright, And so doing 0:18:06.040 --> 0:18:07.720 a matter well, you know, everyone just prevent a high 0:18:07.720 --> 0:18:11.200 cost claim and improved outcomes early on. How sticky are 0:18:11.240 --> 0:18:13.480 we only have twenty seconds left only? But how stickier 0:18:13.520 --> 0:18:15.600 healthcare costs? Like do they come down or do they 0:18:15.640 --> 0:18:19.200 just stay high? If they go higher? Um, there's there's 0:18:19.080 --> 0:18:21.199 a sticky as a plan sponsor is in terms of 0:18:21.240 --> 0:18:23.640 managing their costs, and there's lots that can be done 0:18:23.680 --> 0:18:26.399 to do that. And so I think, um, you know, 0:18:26.480 --> 0:18:28.840 plant sponsor really needs to look at their data to 0:18:28.920 --> 0:18:31.880 understand what is driving their costs and using their data 0:18:31.920 --> 0:18:35.520 they can come to affective strategies you know, to mitigate increases. Well, 0:18:35.560 --> 0:18:37.640 great to check in with you. I Lean Flex, Senior VP, 0:18:37.760 --> 0:18:40.840 Director of Health Technical Services at Seagull. There and employee 0:18:40.840 --> 0:18:44.000 benefits and HR consulting firms. She joins us via zoom 0:18:44.000 --> 0:18:46.440 from basch Or in New York. You're listening to Bloomberg 0:18:46.480 --> 0:18:50.160 Business Week with Carol Masser and Bloomberg Quick Takes Tim 0:18:50.240 --> 0:18:54.400 Stinovic on Bloomberg Radio. Well, folks, we know getting back 0:18:54.400 --> 0:18:56.520 to work for the most part, DC back in swing, 0:18:56.520 --> 0:18:58.400 and that leads us to a Bloomberg Business Week story 0:18:58.400 --> 0:19:01.719 about the massively popular video app owned by a Chinese company. 0:19:01.720 --> 0:19:04.960 We are talking about TikTok and it's charm offensive around 0:19:04.960 --> 0:19:07.760 its lottice critics you could just call it's kind of addicting, 0:19:07.800 --> 0:19:12.199 like cigarettes. It is. What's that? TikTok? Tiktoky? What's Up? 0:19:12.240 --> 0:19:15.520 Was the last segment exactly. I mean, in a sense, 0:19:15.920 --> 0:19:17.879 Facebook wishes it would have you been able to snag 0:19:17.920 --> 0:19:20.680 TikTok instead of What's Up, But that's an entirely different story. 0:19:21.160 --> 0:19:24.160 Joining us, we got Josh Brustein, Technology editor for Bloomberg 0:19:24.200 --> 0:19:25.720 Business so he joins us on the phone from New 0:19:25.800 --> 0:19:28.280 York City. Joshua, good to have you with us this afternoon. 0:19:28.320 --> 0:19:30.240 We're also gonna be hearing from Joel Webber, the editor 0:19:30.280 --> 0:19:34.040 of Bloomberg Business Week from our Bloomberg Interactive broker studio Joshua, 0:19:34.040 --> 0:19:35.399 I want to start with you as you edited this 0:19:35.400 --> 0:19:38.600 piece by Alex Branka and Emily burn Bomb. If people 0:19:38.640 --> 0:19:43.399 haven't been following the TikTok saga, just explain what has uh, 0:19:43.600 --> 0:19:49.080 you know, Republicans, Democrats and then tech critics so concerned 0:19:49.119 --> 0:19:53.920 about the ownership of the app. Sure, so, as you said, 0:19:53.960 --> 0:19:59.359 TikTok is a really popular social video app, competitor to 0:19:59.760 --> 0:20:02.960 a out of the US based social media apps, um, 0:20:03.040 --> 0:20:06.680 you know, Instagram, Facebook and so on. And in addition 0:20:06.720 --> 0:20:10.720 to kind of the general distrust of all tech products 0:20:10.800 --> 0:20:15.199 that work like this and questions about, um, you know, 0:20:15.280 --> 0:20:18.240 how people are using them, whether the algorithm is manipulative, 0:20:18.680 --> 0:20:23.080