Buffett and Bezos Wrestle with Healthcare
The healthcare sector is one of the most challenging areas to invest, a labyrinth of complex interactions between thousands of hospitals, practitioners, and patients. There are complex rules about who gets what coverage and reimbursement, with the rules changing all the time.
Berkshire, Amazon, and JP Morgan are all dominant in their respective industries, so investors in healthcare stocks trembled when they heard these companies were joining forces to come for theirs.
However, we’ve heard nothing of their project, ‘Haven,’ for months, except now that its chief executive has bailed. What’s going on?
Atul Gawande took the best part of a year to hire, but now he resigns to a passive chairman role. ‘Haven’ will need a new leader, not least to rekindle belief in its big promises to use technology to make healthcare cheaper. The venture has “had underwhelming success so far,” and will need to rely on more than pomp and ‘progress by press release’ to seriously worry incumbent healthcare investors.
With the Buffett-Bezos-Dimon threat averted, the majority of analysts in this space are raising their price targets. The virus is going to abate, but the presidential election between President Trump and Joe Biden is a choice between no reform and little reform, respectively.
This is good news for investors, who can extend their investment horizons and reduce ‘risk premiums’ holding back their stocks from post-corona highs. The Invstr community is now 93% bullish on mega health insurer, UnitedHealth, so while change will come one day, there may still profits to be had in this arena for now!
