by Keith Fitz-Gerald, Money Morning
Money Morning Article of the Week
The Best Company to Buy If You’re Nervous About Healthcare (and Privacy)
Healthcare is rapidly being “weaponized” against us. As I quipped during a recent appearance on Fox Business Network:
“Eat that extra donut in the morning and watch your healthcare premiums go up that afternoon.”
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After the laughter died down and the chuckling stopped, things got serious.
The big story is that companies can have all the data they want, even if you’d rather they didn’t. And the regulators are totally complicit in making this happen.
Which means you’ve got to think about healthcare differently.
Especially when it comes to profits.
Many people, for example, are surprised to learn that you do NOT own your own cells.
In fact, companies can harvest them, and the data that goes with ’em, for commercial purposes. Then use that information to do any number of things, from calculating your mortality, to jacking up your life insurance premiums, even designing ultra-expensive prescription medications.
“No way,” I’ve heard more than once.
Yet, it’s true.
A 1990 California Supreme Court ruling determined that a man named John Moore didn’t own the cell line that had been created without his knowledge over a seven-year period by UCLA. They were working on commercializing the treatment for the hairy cell leukemia he had, using tissue harvested from his spleen after the hospital removed it. Dr. David Golde, who’d recommended removing it, even went on to receive a U.S. patent on Moore’s tissue line!
It’s a similar story for Henrietta Lacks, who famously had her cervical cancer cells harvested in 1951 without her knowledge or permission. They’re STILL grown perpetually in a Johns Hopkins laboratory as “immortal cells” – the first cell line of its kind.
And that’s not even the worst part!
Your medical information is worth an estimated 10 to even 20 times what your credit card number is on the black market, according to various sources. Perhaps even more, as the level of detail increases and the “sharing” that’s supposedly in our best interest accelerates.
The medical community is only the half of it.
We’re now handing the bulk of our most intimate personal details over voluntarily. No theft involved.
Heck, there’s not even any good old-fashioned deception.
If you check into a hospital, that three-inch thick pile of paperwork you sign is very likely to include a waiver that gives the hospital, your doctor, and all the institutions with which it interacts permission to use your data for research in perpetuity.
Fancy one of dozens of wearable fitness trackers?
Three guesses who’s selling that information to advertisers, drug companies, fitness equipment, and medical device makers. First two don’t count, incidentally.
Amazon.com Inc. (Nasdaq: AMZN) just announced that its Alexa Team has created a “skill” that’ll work with Omron Corp.’s (OTC: OMRNY) blood-pressure monitors. It’s being sold as a benefit – naturally – that you’ll be able to ask Alexa how you’re doing … but gimme a break!
Apple Inc. (Nasdaq: AAPL) wants to get in bed with you. The London Times recently reported that Team Cook has developed the iSheet – a “smart” duvet that tracks breathing, your heart rate, temperature… even how often you squirm around.
No doubt you can see where this is going.
We are rapidly approaching the point at which you will be denied health insurance or have your premiums jacked significantly higher, based on readings from seemingly benign appliances and instruments.
Insurance companies love this idea, of course.
Some, like UnitedHealth Group Inc. (NYSE: UNH), are even offering a hefty cash discount or credit if you meet your “goals.”
My fear is that increasingly it’ll be “their” goals, though.
Offering cash to sweeten the pot is something data companies do when they want to harvest information that will – mark my words – ultimately be used against us.
Company execs don’t see it this way, of course. This kind of information will be used to cut back on your premiums, to lower healthcare costs, and better implement care they counter.
Puuuulllleeeease!
My wife and I have been competitive athletes all our lives, and State Farm actually had the gall to charge us more money for life insurance premiums because she was “too thin” and I carried “more muscle” than the typical sofa hound. What’s more, they’ve never given us cash back for being healthier.
Aetna, Cigna, Humana, John Hancock…. they’re all in on the con.
You’re going to be charged more money for less service and your body – for better or worse – is going to form the core of the data that will be used against you.
Sadly, there’s not a damn thing you can do about it.
… except get even.
The obvious plays here include a trifecta of stocks we talk about frequently, including Microsoft Corp. (Nasdaq: MSFT), Amazon, and Alphabet Inc. (Nasdaq: GOOGL) – the ones who will control this invasive healthcare technology. There’s nothing you can do to “beat ’em,” so you should join ’em by taking advantage of the current sell-off to stake your claim.
I know that’s an appalling thought given the conversation we’re having today, but to paraphrase something Jeff Bezos said about Google – and which applies to all three of these companies – “treat [Google, Microsoft, and Amazon] like a mountain. You can climb [it] but ‘you can’t move it.'”
The healthcare data revolution is going to be woven into our society in ways that we cannot yet contemplate. Moreover, the data will create an entirely new generation of services.
Which brings me to your money.
The best way to play that is VMware Inc. (NYSE: VMW).
The company has a healthcare segment that provides a cloud-ready platform for medical records, patient services, and all sorts of data.
Revenue jumped 13% during the first half of 2018, while net income tacked on 144%. Further, Q3 numbers increased 13.4% year over year to $2.2 billion, which trickles down to a very positive growth of $1.56 in adjusted earnings.
Moreover, the global growth slowdown that seems to concern many folks right now seems not to be an issue. In fact, VMware CEO Pat Gelsinger just raised annual guidance to $8.882 billion and adjusted net income to $6.22 per share, up from $6.14.
I first met him at Intel Corp. (Nasdaq: INTC), where he served as Chief Technology Officer, and where he drove the creation of now-industry standard technology, including the USB port and Wi-Fi. He knows his stuff, and I have every confidence that he’ll do what he sets out to do.
Speaking of which, I think VMware stock doubles from $166, where it’s trading right now, to at least $322 within the next 12 – 24 months as personal data accelerates.
I’m not alone, incidentally.
Corporate activist Carl Icahn, whom I normally regard the way I would a fox in the proverbial chicken house, sees a slightly more conservative $300 a share based on the $34 billion competitive tie up between International Business Machines Corp. (NYSE: IBM) and Red Hat Inc. (NYSE: RHT) last October.
So, strap on that personal health monitor and smile.
Chances are your insurance company knows you’re doing that…
… all the way to the bank.
.
