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Friday, October 20, 2017

Wellcare: The Future of Healthcare

Founder and CEO, Dacadoo, Peter Ohnemus

“Why am I excited about standing here today? Because I feel like 95. I don't mean the age of 95, I mean the year of '95. That’s when the TCP/IP protocol came into the business. Healthcare is the world’s largest industry. We will spend 7.8 trillion dollars on health care this year, and it's completely analogue. Otto von Bismarck invented health insurance 130 years ago because he couldn't get people to work for the German government. That was the beginning of healthcare as you know it today.

After the Second World War, the Americans couldn't get employees so they created corporate benefits; things such as life insurance. We are now moving into the third wave of insurance or health care, they hang very closely together, creating the world’s largest industry. We spend about 2.5 trillion dollars on food, and we spend 7.8 trillion dollars on health care. But the health care industry has not become digital.

I was just in China where you're seeing an explosion in both life insurance and health. Right now health insurance is growing around 14.9% in China. Life insurance is going to have its biggest year ever in China with 19.1% growth this year. We are seeing a very strong interest for digital health in China, for artificial intelligence – meaning that you navigate people to a healthier life and of course for digital health insurance.

Health care originally came from the South of Germany and Northern France about 200 years ago. They had what they called Apotheken, which were people putting together different things against different diseases. Out of this came a very large industry which was symptom-based. If you had pain in your throat, then you would go to the doctor who would say, "You take this pill once every day for seven days."

Over the last 15 years, we moved into the second wave of medicine, which is cohort based. It means 15,000 other people had the same red throat as you. They took this pill and they were not feeling bad after three days.

The future of healthcare is very different. It's called wellcare. That's the word that I think, describes it very well because everything we have done in health care so far is based on the premise that you needed to get ill. You needed to get treatment. As you know, you have this balance between the insurance company and the client and the people that sell the drugs. In the future, it will be algorithm based. It will be mathematical based. I believe over the next 20 years cancer will not exist as a disease anymore. We will encipher cancer just like a mathematical model.

Based on a global study on health insurance 80% of all health insurance companies worldwide agree that over the next five to seven years we will go completely digital. We never had anything this big. Just think about it, the media went digital. The whole world went crazy about digital media but actually, the media industry is only a trillion dollar industry. Now you have 7.8 trillion dollar industry. We know the new five-year plan in China is all about health care. We know that China wants to go into digital health. I am speaking next week in Chicago for all McKinsey clients and their latest study is that they can take out, with digital healthcare, between 25 to 35% of all cost in the healthcare industry.

The healthcare industry today is static. It's based on actuary models. If you are 50 and you live in Shanghai you cost this amount. When you turn 60 and you live in Beijing you cost that amount. There is a serial relationship to your lifestyle or to your health. What we have invented is a Health Score, just like you have an ETFE index or capital markets, so we calculate your health in real time. The Health Score is globally patented. We have filed over 90 different patents in China and we have over 20 different patents on Health Scoring alone. So, why am I excited about this? Because on our way to this rich lifestyle we all became obese; I am not a skinny guy. We eat too much. We drink too much. The biggest problem is inactivity, a “sedentary lifestyle”. There are more people now dying of sitting than of smoking. This is a reality. We need to get people to start walking again. We need to stop buying frozen pizzas, cheap sausages. All this is full of “saturated fat”. That's why we could keep the food so long in the supermarket.

When you look at the way we developed the world, first we needed to secure the food supply so we will kill each other to get access to that deer and then kill the deer. Then we started making nice lines of rice. We made industrialisation of rice fields, of legume, etc. That was the second movement. The third movement, that's where Nestlé and all these guys came in. We started adding colour. We started adding chemicals, all this unhealthy stuff. Then, over the last ten years, people have started thinking, "Maybe we should get back to healthier food." Which is what Chinese food is all about. Then we move up to preventive health care, not just react [to illness].

The second problem – and it's an opportunity for all of you as you are entrepreneurs like myself – is of course, the Z and Y generation. I have five lovely beautiful daughters and all they do all day is look into their phone. I call them zombies. We need to catch the zombies. Now health has zero digital interaction. About 53% of all people worldwide are digital. We don't have a healthcare product for them. We don't have an insurance product for them. That is, of course, very expensive.

Last year I spoke in Japan and before me was the president of Generali. Generali is the world's fifth largest insurance company. He was giving his vision for his company. In 2007 Generali spent 70% on treating people. Then in 2012, they lowered that treatment by 10%. You remember McKinsey’s model that you can take out at least 25 to 30% based on digital? His goal is by 2025 to only spend around 35% on treatment. The rest would be spent on prediction, diagnostics, and monitoring.

In China the average hospital cost is around $1,100 per day. In Switzerland it's about $2,750 so you can stay at a five-star hotel in Zürich and it would still be cheaper for the healthcare system. [We need to] take people out of expensive hospitals. We need to make it digital. We need to make it assisted living. We need to make people understand their health. I am very big on the platform economy. Uber doesn't own a car. Amazon has zero stock. Facebook has zero journalists. As companies in the healthcare sector you need to become a platform company. That's why we've built a Health Score platform which is completely agnostic to blood testing, to devices, to IoT devices, etc.

What’s going to happen in the next 100 years? My kids say, "Artificial intelligence is going to take away all the jobs. There will be no more bankers. There will be no more lawyers; there will be no more doctors." I say that's not true; because in every previous generation, new jobs were created. Artificial intelligence will help us break cancer because we will understand how the cells are moving. We will train the artificial intelligence based on deep learning, and then we will have medicine that completely destroys that specific cell.

I think Blockchain is the biggest economic chance I have seen in my lifetime. I am 52 years old, I've done four IPOs, and what is coming now with the Blockchain is bigger than the internet. The internet enabled us to put something on a digital transportation layer. But the internet is highly unsecure. I can hack any bank, any telecommunication system within a few hours. I am not a criminal, but I will get access to the information that I need.

In the future that information will be encrypted, put into secure containers and those containers will be owned by the people that originated that content and then, by what you call opt-in, opt-out they would be economic models. This is going to give us an economy you cannot imagine.

The last thing is, of course, Health Scoring. And I’m not just doing advertising for my company. In the future, we can say a health score of 520 in Beijing costs us $2,700 per year, for example. We can say, a health score of 730 in Switzerland costs us $5,280, Why is that important? Because now we can start comparing costs and decide where we want to put or employ our people, because health cost is 20% of your operational cost.

We score people's lives in real time. We predict cancer risk models. Heart attack risk models, etc. When you look at it, it all comes together into a digital environment.

The healthcare system is becoming digital. One: You need to have a Health Score. Everybody in the world has a credit score. That's [the same as] a health score for financial data.

Two: I believe the largest overall opportunity in the health care system is lifestyle navigation. We have a billion people using car navigations every single day. We have 8.7 billion people on the planet. I promise you that at least 25% will have some kind of navigation system; and don't forget how powerful voice is going to get.

Last but not least, in a Blockchain world, it becomes a lot more difficult to cheat because everything is documented. There is always a ledger that documents where the data came from, who was the originator and that can never be changed.”