The employment statistic that has concerned us most over the past number of years is the labor force participation rate which stood at only 61.7% as of last week’s Employment Situation Summary. Our view is that the labor participation rate will only shrink over time as the global economy continues to become more Technology and high-end services driven, thereby causing further structural unemployment.
Companies mentioned: Allscripts (MDRX), Amazon (AMZN), Apple (AAPL), Athenahealth (private), Berkshire (BRKA), Cerner (CERN), CVS Health (CVS), Google/Alphabet (GOOG), J.P. Morgan (JPM), SS&C Health (SSNC), Walmart (WMT)
Technology in K-12 Education and Training for Adults
We have previously published our thoughts as to how technology companies and state and local governments may work together to deploy training programs geared toward adults. We’ve also covered the subject of Technology companies becoming more engaged in education.
Healthcare Is A Head-Scratcher
The Healthcare sector should be every bit as robust as the Technology sector in terms of it being a long-term growth engine for the U.S. economy. Sadly it isn’t. It’s growth is bloat, the result of insurance lobbyist-driven anti-competitive legislation that limits competition within states. Most legacy healthcare systems are performing poorly, victims of the system they operate in with leadership that is not qualified to radically change the service delivery model.
Until we move to a market-based healthcare system where consumers have portability/choice nothing will change at scale. However, we will continue to see legacy care providers lose share at the margin to urgent care centers and neighborhood clinics where the out-of-pocket expense to consumers is less than a traditional co-payment. This under-the-radar disruption provides a glimmer of hope.
To really move the healthcare needle we need large scale efforts such as Amazon’s “Haven” joint venture with J.P. Morgan and Berkshire to be successful. The three companies have a sufficient-sized employee base to create a customer roster large enough for a dedicated healthcare ecosystem. If Haven proves to be effective as a closed system we believe that a version of Haven will eventually be offered to the general public. Thus far Haven is off to a rocky start. It’s first CEO was a surgeon out of Boston with little operating experience. He predictably resigned in May 2020 and Haven remains without a permanent CEO (the company has suffered other senior executive departures as well).
Walmart is as well-positioned as anyone to disrupt healthcare with its WalmartHealth effort. CVS Health will fail to disrupt healthcare. The CVS Aetna post-merger integration hasn’t gone well and is indicative of CEO Larry Merlo’s lack of operating prowess.
Independent healthcare technology providers such as SS&C Health, Athenahealth, Cerner, Amazon, Apple, Google and Allscripts would thrive were we to remove anti-competitive regulation from the healthcare ecosystem.
Americans could also practice better preventive maintenance which would greatly lower the cost of healthcare and significantly reduce the amount of leverage pharmaceutical companies have.