The Vitality Institute has provided a persuasive and well documented call-to-action which should be read by everyone involved in health policy and the business of health — well, come to think of it, that means every one of us.  The policy experts at Vitality call for a new era of public-private investment in the greatest challenge to health in our time: prevention of non-communicable chronic diseases, such as heart disease, diabetes, respiratory disorders and cancer, which hamper economic productivity and require trillions in annual health expense.

While the report may underplay the importance of continued investment in the treatment of infectious disease, the greatest and growing unmet need is preventing rather than treating metabolic and cardiovascular disease.  Advice on diet, exercise and smoking cessation has been a part of every physician office visit for decades.  Only smoking has seen significant change and that is likely the result of public policy campaigns and social pressure, not patient compliance.  The report calls for research on ways to improve compliance with these and other healthy behaviors, and in particular translate those behaviors into the workplace.  Chief among the steps advocated: developing standard metrics on workforce health reporting and integrating those factors into overall financial reports.  At the same time we argue that policy must support improved health education, diet and exercise for children in school and at home (or via the internet and various media) intervening early when unhealthy habits start as well as attempting to improve fitness in the workplace.

The call for public investment in disease prevention science and practice through fitness is persuasive, albeit the current appetite for government spending seems tempered at best.  Prevention is, in the long run, cost effective.  In the short term, however, it can be perceived as a substantial expense on top of the billions already spent annually on health care.  Generations of Americans who were subjected to little more than good advice are now suffering epidemic levels of obesity, diabetes and cardio-vascular disease. One can only hope that public policy makers will invest for long-term returns associated with these efforts, perhaps modeling the economic benefits as the better way of reducing national debt and seeking near-term spending cuts elsewhere.  The authors rightly call for research in how to accomplish such behavioral change through expansion of prevention science and the use of personal technology.  Is it found in gaming  stocking up on reward points like frequent traveler programs?

Or is it penalizing workers who do not work at achieving fitness with a higher co-pay requirement on their insurance premiums?  Far too little is known at this point to risk the future of health costs on a national program.  But we need to finance the research and experimentation to reinforce an understanding around prevention as a critical investment that could offer high-yield returns.

Private investors face a similar dilemma on the merits of short vs. long-term thinking and putting near-term funds at risk given the likely long learning curve for the creation, adoption and uptake of such programs.  Assuming those investments would be in technologies that assure incentives for healthy behavior, healthy food choices, prevention oriented workplaces or new fitness-focused insurance programs, investors could experience a long and risky path to returns.

The private investor’s advantage is that they needn’t wait for that long term reward to arrive, but only for the market to see the possibility of that outcome and then re-price the asset.  It is probably to the benefit of the investor that this re-pricing often occurs unexpectedly (even prematurely) and if so, allows some room for immediate action.

Market skepticism for long payback initiatives (think of Jeff Immelt’s Ecomagination initiatives at GE or Indra Nooyi’s healthy snacks bets at PepsiCo) seems universal and high quality assets may be bargain priced in the near term.  That skepticism is too long lived and unpredictable to be played by the speculator who is experienced in going long or short over quarterly earnings misses and beats.  The fundamental investor looks to longer term value creation, and can tolerate delayed value recognition.

In that vein, a trove of so-called Healthy Tech products may be worthy of consideration.  For instance, Apple’s forthcoming iWatch is rumored to be loaded with fitness features, and companies that support fitness would seem a great place for patient investors.  Companies can be encouraged — and markets cued — by adding the right questions to investor management dialogues.  There is a growing body of impirical research arguing that a more systematic understanding of broad “management quality” has contributed to competitive financial returns reflected in some SRI/sustainability indices.  This approach might offer yet another incentive for private investors to follow this path.

 

John Schaetzl is an Independent Consultant & Adviser and  Lead Director of SustainAbility, a think tank focused on sustainable business practices.