- High U.S. healthcare costs make many individuals and families less financially secure.
- Our team analyzes medical costs and access as ESG issues affecting human well-being and sustainable economic development.
- We believe treatment innovations can help improve patient outcomes and financial impact for millions in the United States.
In our work as sustainable investment researchers, we have a long-term focus on analyzing the connection between healthcare and financial security. We integrate relevant ESG issues in our investment process, and look for companies that are improving current systems and shaping the systems of the future.
We want to share highlights from our recently published 2020 Impact and sustainability report about the potential impact of innovation.
Costs burden household budgets
According to the Centers for Medicare & Medicaid Services, healthcare spending in the United States grew to $3.6 trillion in 2018, or almost 18% of GDP (Source: healthaffairs.org). In 2019, an average American family of four with an employer-sponsored healthcare plan incurred annual medical costs of over $28,000 (Source: milliman.com). These costs can be even higher for self-employed individuals or those employed by small businesses.
Chronic diseases increase costsOver 30 million Americans currently have diabetes and another 84 million are believed to have pre-diabetes (Source: cdc.gov). Costs of chronic diseases are stunning: The American Diabetes Association estimates that Americans with diabetes have 2.3x greater healthcare costs than others, which results in an estimated $237 billion in annual direct medical cost.
Innovation can have positive impactWhile the U.S. healthcare system is effective at treating acute conditions like broken bones and cardiac surgeries, successful management of chronic conditions such as diabetes, obesity, and hypertension often benefits from a more hands-on, continuous approach to care. Several healthcare innovations may better support this approach.
Theme 1: Digital health platformsDigitally enabled healthcare platforms are helping to improve patient outcomes and lower total costs of care through improved patient adherence and fewer surprise trips to the emergency room. Livongo Health is an example. The company works to help people better manage their chronic conditions by providing live coaching and digital “nudges,” which encourage choices like daily activity and healthier eating. Peer-reviewed studies have found that these services have achieved meaningful improvements for people in terms of blood glucose levels, coronary heart disease, stroke, and weight loss.
Theme 2: TelemedicineOther solutions focus on improving access to care. Teladoc Health is a leading telemedicine platforms that enables patients and clinicians to connect virtually in a secure and HIPPA-compliant manner. Through the end of 2019, Teladoc Health increased the utilization rate of members using telemedicine services to over 9% (Source: Teladoc). If the U.S. population were to mirror this same adoption rate of telemedicine over time, nearly 30 million visits could be offered virtually, saving both time and resources.
Theme 3: Reducing ER visitsThere is also room for improvement in how people interact with primary care providers. One Medical (1Life Healthcare) aims to transform access to care by offering a membership plan that allows for same-day primary care appointments and quick turnaround on testing services. The company has been able to demonstrate a 41% reduction in emergency room visits for its client populations.
Theme 4: Expanding capacityBuilding clinic capacity in more user-friendly locations is another way that some companies are helping to improve access to care. Walmart has begun to introduce clinics attached to existing retail stores that offer a range of primary care, dental, vision, and psychiatric services. Ninety percent of the U.S. population lives within 10 miles of a Walmart store, and about 140 million customers visit U.S. Walmart stores every week (Sources: walmart.com and sec.gov).
We see a variety of ways that healthcare innovation can improve both health outcomes and financial security for millions of people.
As of March 31, 2020, Livongo Health, Teladoc Health, One Medical (1Life Healthcare), and Walmart accounted for 0.64%, 2.61%, 0.21%, and 0%, respectively, of Putnam Sustainable Future Fund and 0%, 0%, 0%, and 2.34%, respectively, of Putnam Sustainable Leaders Fund.
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