Weekly Reads - July 10, 2023
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Rising medical costs are putting healthcare affordability back into the spotlight and now managed healthcare companies are left to figure out a way to balance premium pricing and creating a more efficient health care system.
PwC’s Health Research Institute projects medical costs to rise from 5.5% in 2022 to 6% in 2023 and to 7% in 2024. This trend is being driven by shortages in the U.S. clinical workforce, aging technology & infrastructure, and rising pharmaceutical prices. These headwinds are adding more costs to an already struggling U.S. healthcare system dealing with rampant inflation. Hospitals are currently dealing with staff shortages as many health professionals exited the market due to burnout from overwork during the pandemic. To entice these professionals back salaries are expected to rise, forcing hospitals to negotiate higher rates with health plans. Drug prices are also on the rise with the many new drugs in the pipeline post pandemic which expects to push pharma pricing high single to low double digits over the next two years. These headwinds are unlikely to be solved in the next few years as shortages in health professionals could take multiple years to solve and drug pipelines continue to grow due to accelerated approvals of new cell and gene therapies. To prevent an affordability crisis managed health companies are increasingly utilizing value-based care models to offset these headwinds. Managed health care companies are banking on the growing popularity of biosimilars and out-of-hospital care to help deflate costs. Biosimilars prices on average are more than 50% lower than their branded counterparts making them cost-effective solutions for chronic diseases. As hospital care is notoriously expensive, pushing more procedures and medical visits out-of-hospital reduces cost of care for creating a much more efficient healthcare. The question remains how quickly can value-base care models scale and will it be enough to offset most of the upcoming medical cost inflation over the next few years.
The overnight success of Threads shows the value of Meta’s network of apps and its ability to leverage its established user base to create a frenzy behind new product launches.
Meta’s Threads is officially the fastest growing online platform of all time surpassing 100 million sign ups in 5 days dethroning ChatGPT who broke the record just last year. Threads is officially a threat to microblogging giant Twitter who as of last year had 240 million daily active users. Since the launch of Threads Twitter’s traffic has been down -11% over the prior year. Threads is not the first platform to challenge Twitter, but it’s the first rival platform to reach a critical mass of users. Smaller rivals like Mastodon have under 8 million users with less than 2 million actively using the platform daily. The shocking success of Threads has come despite the lack of crucial features such as a desktop version, direct messaging, hashtags, and keyword search functions which are important to businesses, individuals, and advertisers. Meta’s strategy around Threads is to keep steadily adding features and not monetize the platform till they reach 1 billion users at a minimum. This is likely to pressure Twitter to respond with changes to their monetization plans to keep users from splitting their time between both platforms. Meta can play the long game and keep Threads un-monetized since Facebook and Instagram generate billions of dollars in profits annually unlike Twitter which has struggled to turn a profit historically. Meta has shown its propensity as an industry copy-cat with the creation of Instagram Stories and Reels in response to the growing popularity of Snap Chat and TikTok. History is repeating itself here once again with Meta replicating Twitter by strengthening its family of apps network and increasing their value to advertisers and users across the globe.
The practical uses of ChatGPT today might be more limited than originally thought with a majority of its user base interacting with the app on a surface level rather than utilizing its entire functionality .
ChatGPT is having a tough week losing its crown as the fastest growing platform of all time to Meta’s Threads and losing users for the first time in its history. Traffic to ChatGPT’s website fell by nearly 10% in June according to web analytics firm Similarweb. Just in the U.S. traffic declined by over 10% and the number of unique visitors to ChatGPT also fell by 5.7% month over month. One reason behind this drop in traffic could be the fact that children are on summer vacation. Most people believe that the common ChatGPT user would be adults in technical roles yet some data point to children being one of the largest demographics for the platform. Some of the most prominent queries on ChatGPT include “ChatGPT essay”, “ChatGPT Math”, and “ChatGPT history” which indicate a significant portion of ChatGPT use is around homework. According to data scientist Sam Gilbert homework is the second most popular application of ChatGPT behind job applications as measured by US Google Search. This data indicates that the common PC user is not utilizing AI or ChatGPT outside of small niche applications and the overall adoption of the platform is slowing down. It is easy to forget that a significant majority of the U.S. and global population struggle with computer literacy and new innovations such as AI are likely to see much slower adoption than many people realize. AI still remains a novelty in the eyes of most users, and it will take time before we start seeing AI used on a widespread basis regardless of the market believes.