It's hard to know what to make of Andy Kessler's latest book, The End of Medicine. The former research analyst and investment banker spent 20 years on Wall Street analyzing and investing in the latest and greatest technology. He ran a successful tech hedge fund from 1996 to 2001 with Fred Kittler.
In his last outing, Running Money, he served up investment advice, but not here. Instead, he paints a futuristic Silicon-Valley-meets-medical-technology scenario that he's convinced will open fabulous investment opportunities — someday.
Kessler is witty and sarcastic in the kind of way that makes you want to sit down for a pitcher of beer with him to shoot the breeze
Kessler has observed medicine and technology for a long time. "Working on Wall Street, I'd listened to plenty of pitches for the latest miracle drug or medical device. But every time I looked at health care, costs were going up, not down."
If new technology could fix runaway health care costs, he mused, he wanted in. The key: a seismic shift in medicine from chronic care to early-detection technology, from a service business to a product.
"Doctors hold the expertise," he explains. "It's embedded in their brains. Today, you need a doctor for a blood test, a procedure; even drugs are controlled by their prescriptions." In other industries, it is increasingly embedded elsewhere — in software, silicon, cellphones or search engines, for instance.
Change is coming, Kessler is certain. He bases this theory on his rounds with doctors and radiologists. He gets poked, prodded and scanned, watches mice twitch away in boxes, visits cancer centers and state-of-the-art clinics. He visits with CEOs of pioneering medical research companies. He observes new scanners providing high-resolution 3-D images of the heart and computer-aided diagnostic software analyzing mammograms.
His prowl is triggered, presumably, by his itch for the next great investment. "I've trained myself to look for quantum leaps, entire industries that are created overnight from some new technology."
He just "wasn't finding it in computers or cellphones or even consumer electronics." But he knew, "It just had to be out there."
"I had the time, I had the energy, I had the desire, I had the resources — just had no good ideas."
Then he started sniffing around in health care, and he had a feeling. It had something to do with being 46 and going in for his first physical in 20-odd years. The three months he had to wait to get an appointment and the $600 bill for a "measly eight minutes" of the doctor's time and a lecture on cholesterol set him off. His rant ranges from the absurdities of U.S. health care to what he calls a "cholesterol conspiracy" and a "cancer conspiracy."
Billions are generated by hospitals and pharmaceutical companies treating patients, he complains. "Early detection," he writes, "gets shortchanged in the process."
Kessler's outsider's conclusion is that if "health care budges even slightly from chronic care to early detection, the waves of change rip through medicine like Cat. 5 hurricanes."
The result will be a huge economic growth area. "Investors will swarm like killer bees" to buy into companies with early-detection products, he predicts.
Kessler is witty and sarcastic in the kind of way that makes you want to sit down for a pitcher of beer with him to shoot the breeze and talk about skiing white powder in Utah, which is how he starts his account. He jokes that when his doctor asks if he drinks, he answers "constantly." But don't get him wrong. He continues later: "I drink only on days that end with a 'y.' "
Underneath the banter and anecdotes, however, Kessler is no bumbler. He's an intelligent researcher not afraid to ask truly brilliant medical researchers dumb questions. And he is lucky enough to have access to some of the best minds.
By taking readers through the back doors, he provides a glimpse of some of the mind-blowing work that is being conducted under the radar of Wall Street and mainstream medicine.
That said, Kessler's tale, while thought-provoking doesn't provide anything for eager investors to latch onto right now.
In the world he envisions, doctors will go the way of travel agents, bank tellers and Wall Street traders, as their knowledge becomes embedded in software and silicon.
And once technology such as molecular imaging becomes mainstream, what kind of bizarre world will we be living in, he wonders?
"Maybe 90 will be the new 75. It's not so much about living longer, but being healthy enough to enjoy it," writes Kessler.
Can't wait for it to happen.....Today's health system in the U.S. is totally mad. As an early boomer, I might just be able to benefit from what I hope will be vastly improved way of health care, especially with much stronger focus on prevention.
Just viewed an interesting interview with Steve Case on Charlie Rose. His Revolution Health venture seems to be right up your alley. Check it out.
Posted by: Joe Buhler | July 24, 2006 at 03:44 PM
Revolution Health--can not beleive Franklin Raines is on the board, he must be facing even odds of be convicted of finanical malfeasance while at Fannie Mae and taking $20,000,000 plus in benefits while cooking the books????
Posted by: jeff | July 25, 2006 at 12:09 AM