Building Wealth Doc's note: I don't know anyone who understands the health care market better than Tom Carroll. Tom comes from a health care family and spent his early career working in health care finance for hospitals and managed care centers. He studied at the Johns Hopkins Bloomberg School of Public Health, lead health services research at Legg Mason, and started his own fund to invest in health startups.
Today, Tom works at Stansberry as our "pot stock" analyst, but he also offers much more insight into the financial workings of health care. He spoke at our Stansberry Research Immersion Week at the Canyon Ranch Wellness Resort in February, and today, I asked him to share some of the content of that talk with my readers.
There is nothing like a global shutdown to prove my point: People need to better understand the health care system.
You see, your health is your most important asset. And that means you are your No. 1 advocate – not your doctor, local hospital, or health insurance company.
Besides tending to your physical, mental, and spiritual well-being... you need to appreciate the structure of our massively complicated system.
Why? Because it is the one part of the economy in which we are all customers. It is crucial to have a baseline understanding.
The "product" you must purchase could mean the difference between living with a chronic illness or understanding how to fix yourself. It could mean personal bankruptcy or the knowledge of how to navigate irrational costs. Understanding it may even mean the difference between life and death.
Despite attending graduate school at the Johns Hopkins Bloomberg School of Public Health, I'm not a clinician. That said, my entire career has been devoted to studying the health care system, educating investors, and investing my own capital into innovative startups.
In my experience, most people have little to no knowledge of what to do when they are thrust into the system... be it elective, involuntary due to an accident or injury, or a disease like a cancer diagnosis.
The world is proving my point right now.
The novel coronavirus, also called COVID-19, has shut down the globe. It has done so for several reasons – it is a highly infectious disease threatening human health with few treatment options and no cure.
The cost will be (and already has been) tremendous: Global GDP will decline significantly this year... Small businesses will go bankrupt... People will lose their jobs and homes... Many will lose their lives.
If all of this isn't convincing enough, on April 20, 2020, a West Texas Intermediate crude oil futures contract closed at a negative price. That's right – free oil, in a manner of speaking.
It's the first time in history this has happened. And it's all in reaction to the massive decline in oil demand due to the COVID-19 shutdown.
Health care is clearly the world's No. 1 asset. We are paying an immense price for it right now.
But this too shall pass... though not soon enough. So what better time to start educating yourself and your family on how to best navigate the health care system? It will save you frustration, lots of money, and perhaps even your life.
That's why back in February, I spoke during our first Stansberry Research Immersion Week at Canyon Ranch in Tucson, Arizona...
The presentation I made was one I've given many times: "The Five Things to Do Today to Make You a Better Health Care Consumer." And it's always a crowd-pleaser. That's not because I'm a great speaker, but because the information is so valuable... It sheds light on a topic that most people just don't understand. Additionally, every time I've given this talk, my five tips often change. That illustrates how fluid the system is. There is ALWAYS something important to be educated about.
That's why it's so important that you learn more about the health care system. So today, I want to share two of these tips:
1. Understand the health care dollar.
This means we all need a better understanding of where our dollars go. The average family of four spent over $28,000 on health care in 2019. Where does it go? Insurance companies? Drugmakers? Doctors?
You might be surprised to hear the biggest piece of the health care pie: Hospitals.
Between inpatient and outpatient care, these important institutions account for about 50% of total health care spending every year. If we do not address this major driver of costs, it will be very difficult to lower annual health care inflation.
2. Stay out of the hospital at all costs unless absolutely necessary.
Besides being expensive, hospitals are also dangerous places to be.
Why? Simple – hospitals are where all the sickest people are. Despite best efforts, its difficult to keep bacteria and viruses at bay within hospitals.
Hospital care-associated-acquired infections impact 1.7 million people annually and kill 99,000 of them. That is almost a 6% mortality rate. That's far higher than the mortality rate of COVID-19, yet it continues to happen.
Moreover, physicians and other clinicians are humans – they make mistakes. A 2016 study found that every year, between 250,000 and 440,000 deaths are directly related to a provider mistake. This makes physician error the third leading cause of death in the U.S.
So avoid the hospital whenever possible. That's never been truer than in a time of pandemic where our systems are taxed.
While you are social distancing in your home, I suggest you spend some time each day reading about health care topics. Use this time to educate yourself and prepare for the inevitable. It may save you a lot of money. It will support your investment objectives.
It may also save your life.
Happy living and investing,