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A House Divided Against Itself

|About: Berkshire Hathaway Inc. (BRK.A), BRK.B, Includes: AMZN, JPM, KHC, KO
Summary

Berkshire Hathaway harbors inconsistent positions wanting to lower healthcare costs and with major investments in the very processed food businesses that are the root cause of our health crisis.

The contrast of research on the GEICO health plan and the Haven Health participation are a case in point.

ESG investing should grow up already.

Recently, I wrote about Haven Healthcare, the new not-for-profit healthcare j/v of Amazon, Berkshire and JPM Chase and I received various interesting comments, including some interesting private communications. For many, it remains hard to see how this eventually will apply to investing in the space. However investment is happening, and, as with all transitions, it is going to be full of opportunity, but messy. As some commented, short ideas seem more obvious than long ideas, for now. As always, that's only in the eyes of the beholder. Long term, there is a total transformation of healthcare and the food sector that is only just getting under way. Whenever there is cataclysmic change in the air, opportunities exist on both sides of the equation. One just needs to look at the changes in the supermarket, or the upcoming Plant Based World Expo at the Jacob Javits center, or where the new investment in the food industry is headed, or indeed the current troubles at Kraft Heinz.

Berkshire Hathaway (NYSE:BRK.A) (NYSE:BRK.B) is in an interesting position with their involvement in Haven Healthcare, alongside Chase (JPM) and Amazon (AMZN). Amazon in and of itself seems to have a problem, being they have quite a reputation as an abusive employer, enough so one should wonder about the seriousness of their commitment. The clear conflict for Berkshire however is that they have major positions on the side of the legacy food system - KraftHeinz (KHC) and Coca Cola (NYSE:KO). Processed food is one of the major causes of our health problems, yet Berkshire wants good health also as a matter of cost control and undoubtedly to retain the best people. Increasingly voluminous research points the finger at processed foods in general as a cause for many chronic diseases, see this recent report from France in the Guardian and this study on the damage "ultra processed foods" do to your body.. 

Warren Buffett personally dines on hamburgers and Coke, and on a good day apparently a 22 Oz. T-bone steak. Meanwhile, in particular the GEICO unit of Berkshire has been a leader in the area of reducing health care cost by helping employees achieve a healthier lifestyle, and with interesting results. So the participants in this program at GEICO are being taught not to eat processed food and meat or dairy, but rather fresh fruits and vegetables. By all accounts, there is no indication that any of this experience is being operationalized in the context of Haven Healthcare.

Meanwhile, in New York, the Plant Based World Conference & Expo is in town, and deal making is in the air. It is an opportunity to see the future of food, and, for that matter, the future of KraftHeinz and it will be interesting to see to what degree they are working on seriously repositioning themselves.

The GEICO Studies

Here are some of the major studies on the GEICO experience with improving health outcomes through lifestyle changes, including adoption of plant-based diets:

The upshot of "the GEICO study" of 2013: 

RESULTS:

Mean body weight fell 2.9 kg and 0.06 kg in the intervention and control groups, respectively (P<0.001). Total and low-density lipoprotein (LDL) cholesterol fell 8.0 and 8.1 mg/dl in the intervention group and 0.01 and 0.9 mg/dl in the control group (P<0.01). HbA1C fell 0.6 percentage point and 0.08 percentage point in the intervention and control group, respectively (P<0.01).Among study completers, mean changes in body weight were -4.3 kg and -0.08 kg in the intervention and control groups, respectively (P<0.001). Total and LDL cholesterol fell 13.7 and 13.0 mg/dl in the intervention group and 1.3 and 1.7 mg/dl in the control group (P<0.001). HbA1C levels decreased 0.7 percentage point and 0.1 percentage point in the intervention and control group, respectively (P<0.01).

CONCLUSIONS:

An 18-week dietary intervention using a low-fat plant-based diet in a corporate setting improves body weight, plasma lipids, and, in individuals with diabetes, glycemic control.

and "the GEICO Study" of 2015:

RESULTS:

In an intention-to-treat analysis, improvements in impairment because of health (p < .001), overall work impairment because of health (p = .02), non-work-related activity impairment because of health (p < .001), depression (p = .02), anxiety (p = .04), fatigue (p < .001), emotional well-being (p = .01), daily functioning because of physical health (p = .01), and general health (p = 0.02) in the intervention group were significantly greater than in the control group. Results were similar for study completers.

CONCLUSION:

A dietary intervention improves depression, anxiety, and productivity in a multicenter, corporate setting.

In simple lay terms: don't eat or drink the processed foods of KraftHeinz and Coca Cola, or any meat or dairy, but eat fruits, vegetables, whole grains instead. KraftHeinz faces a slide into oblivion as new food consciousness takes hold. Notice that on Friday June 7th, Dr. Neal Barnard, who was behind the GEICO studies will speak in Manhattan. https://www.pcrm.org/events

The Whole Foods Story

Whole Foods is one point of light in the Amazon camp. I cannot find good documentation on the story of the Whole Foods health plan. I heard a John Mackey presentation about the success of the program in terms of managing healthcare costs at a 2016 conference, but it was more general and did not present detailed data. At some point in their tenure with the company, people are sent to a total immersion program in the Whole Foods, Plant-Based diet - which they call just the Whole Foods Diet. By now, CEO John Mackey has published a book about it also, titled unsurprisingly The Whole Foods Diet. There are no (public) studies of the Whole Foods health plan, like I found about GEICO, so I will leave it to your imagination. Still whatever the success really is, Mackey is positive about it and Haven should probably be taking notice. It would appear that Whole Foods came a long way in this area since the time when it was severely criticized by employees about its healthcare plan in 2009. Here is his letter to the Wall Street Journal at the time Obamacare came about.

Again, it's another alternative health plan that exists under the roof of Haven healthcare's partners. John Mackey's book has a preface by Dean Ornish, and what's more the recent study published in The Lancet about diet and health in 195 countries, makes it clear that diet has become the primary cause of premature death world-wide, but America is certainly in no great shape, being in 43rd position with near third-world life expectancy. We should  note that Ornish's programs have been reimbursable by Medicare since 2010.

Food, Nutrition are the Issues at Hand

Here's an interesting video that contains a discussion about the health of the presidential candidates of 2016, Trump and Clinton, starting with some interesting points made by Pam Popper, N.D., followed by Baxter Montgomery M.D and then the conclusion by Dr. Michael Klaper that there's only one disease, and it's the food, but all the specialists, like the blind men and the elephant, see parts of the problem and prescribe their medications, which is how people end up on multiple medications, when instead there's only one problem. Another beautiful corollary to it is in this video clip with the editor of The Lancet, who emphasizes the blockbuster importance of this 195-country report about diet as the primary cause of premature death. No doubt when the opioid crisis is counted properly as an iatrogenic illness, doctors are on well their way to becoming the second leading cause of premature death (for the last fifty years doctors were in the #3 position).

The issue is relatively easy to understand historically. For anyone who wants to delve into it, the book Rockefeller Medicine Men will open your eyes. Essentially, allopathic medicine and the pharmaceutical industry arrived at an effective monopoly or near monopoly based on the success of trauma medicine and the fighting of infectious disease, but the leading causes of death are no longer those, diet is. The food industry is. Processed food, dairy and animal products are the tobacco of the 21st century and with the emergence in force of Lifestyle Medicine, medical practitioners are now catching up to that reality. Nutrition is moving center stage in medicine, and so far there is no sign Haven is even remotely aware of these developments, in spite of the two in-house pilots within their constituent companies discussed above. Not only that, California is on the move with introducing whole foods, plant-based diets hospitals or prisons and now schools. Similar initiatives are shaping up in New York. If you want to see what real change in medicine looks like, you can check out the work of Dr. Robert Graham and his organization FreshMedNYC in New York, or Dr. Joel Kahn in Michigan and many others around the country. You will see that they are busting the existing healthcare model and patients are embracing it.

The Conflict

I referred to Warren Buffett above - interestingly Prof. Aswath Dasmodaran delivered a recent SA article of Kraft Heinz, that among other things made the point exactly of how this hapless merger was a combo of two companies that represent yesterday's tastes - indeed, the shift in consumer tastes is being felt in the supermarkets. The offerings are changing drastically. Buffett would eat meat, processed foods from Kraft-Heinz, including an addictive food called cheese, and drink Coke, all of which the people in the lifestyle medicine programs at GEICO and Whole Foods would be advised never to eat, since they are the causes of all of our chronic illnesses today. The bulk (86%) of healthcare dollars are being spent treating the chronic illnesses that result, from heart disease to diabetes, to rhumatoid arthritis and cancer. 

The plant-based lifestyle is a radical change, and some number of people will gladly embrace it, others need to be prodded, but plant-based nutrition education is slowly trickling into the school system see the One Meal A Day for the Planet program and initiatives in California and New York. Many people will not entertain the diet change unless and until some doctor tells them it is a matter of do or die. And some won't change even then. I am familiar with the case of a cancer patient who is given whole foods by a charity associated with a cancer clinic and gives it away to go eat hamburgers. Often times it is like the smoker who lights up again after recovering from lung cancer. Old habits die hard. You can lead a horse to water... but, many are happily embracing the change.

The Whole Biosciences Paradigm must change

The idea that Haven Healthcare would not want to really rock the boat is not surprising, though I still find it disappointing. The vision they promulgate on their website is years behind the times. It is not as if all that is going to change is a greater focus on nutrition and other lifestyle issues, and for the rest we continue to practice medicine as before. The entire medical paradigm has to change, and that includes the bio-sciences and the complete drug approval process, which is completely upside down. The pharmaceutical industry builds houses from the chimney down instead of from the foundation up.

The reason for it is simply that the entire economic incentive is to treat disease, and as Dr. T. Colin Campbell has developed in The China Study and the follow-on book Whole, it is the reductionist research framework which produces mass confusion and contradictions in nutrition, but the same applies in medical research. The reductionist approach takes a given condition and investigates the effect of one or a very limited few of nutrients or pharmaceuticals on a given disease process to validate their effectiveness by demonstrating (hopefully) statistically significant changes in outcome. A big deal is being made about peer review, and repeatability, but the paradigm itself is meaningless, so all we are doing is group-think with a lot of window dressing to fool ourselves into believing that this is scientific.

Around the Whole Foods, Plant-Based nutrition and Lifestyle Medicine, everyone is focused the fundamental health of the patients to maximize their ability to prevent or reverse chronic illness. The focus is to maximize health, and maximize the body's ability to heal itself, more than "treatment of the disease," since many of the treatments are unnecessary in the first place if lifestyle changes can be made. It is based on valid, evidence based outcomes, and there is a constant stream of studies that confirm the principles, beginning with the #WFPB nutritional paradigm itself.

The current poster child for these developments is probably Dr. Saray Stancic and her MS story as told in the Code Blue Documentary. Dr. Stancic went from being an MS patient and close to seeking a disability pension based on traditional medical care. She was on a dozen medications and still unable to work and ready to file for disability while she was an intern, to a complete recovery on a Whole Foods, Plant-Based diet and being MS free and free of Medication. Meanwhile the reality is that most of the population eats junk food - the so-called Standard American Diet - and people think that it is normal in their retirement years to worry about nothing else but drug interactions and side effects. Here experience coincides entirely with the ideas of Dr. Klaper cited above - never mind a dozen pills, it's all one and the same condition - it's the diet

The new research paradigm will have to always ask first, what happens when we control for diet? In three days of #WFPB the entire intestinal flora changes and the body stops making TMAO, which is a cause of inflammation that drives a lot of disease processes, three weeks and three months are important mile stones as well. According to some clinicians 85% of diabetics can be off insulin and most other meds within 3 to 6 months, as the story of Brooklyn Borough President Eric Adams confirms. When he was hospitalized his A1C was 17.1, and he was going blind in one eye, and told that he might lose his vision altogether. He went to Dr. Esselstyn in Cleveland and started on a #WFPB diet, and three weeks later had his vision back and in three months his A1C was in normal range again. Then, in 2018, his 80-year old mother repeated the same process, after having been insulin-dependent for nearly a decade.

In other words, once the principle of controlling for diet become accepted, the vast majority of medical interventions, pills and procedures will become superfluous, from statins to stents and from antacids to baby-aspirins, not to mention insulin. Antacids would have no reason to exist once people switch to a proper plant-based diet. The drug approval process itself is founded on an obsolete scientific paradigm. Our healthcare crisis is a manufactured crisis, a completely self-inflicted wound. Many of the organizations that are beginning to adopt lifestyle medicine are private, but the impact of these changes will completely transform the healthcare field in the next one or two generations. Single payer or Medicare for all is a red herring issue, for if we do not shift to prevention and true health maintenance instead of more disease treatment first, nobody can afford our type of healthcare system, which is good only for the pharmaceutical industry.

Until this changes, we'll be stuck with a medical industrial complex bilking us for all we are worth and acting like the blind guys with the elephant, while the Lifestyle Medicine practitioners can see the elephant, and patients are getting increasingly fed up with drug interactions and side effects once they see there is a better way. Even if Haven does not explicitly incorporate the insights of Lifestyle Medicine into its programs, the change is going to come in via the back door, for insurance companies are slowly waking up. The Dean Ornish Lifestyle Medicine program is being accepted by insurance companies increasingly ever since Medicare started it in 2010. Several organizations are working on Lifestyle Medicine protocols that are becoming reimbursable, for they provide better results at a fraction of the cost. Disease reversal with lifestyle medicine is FAR cheaper than the medical route it can save millions for every single heart patient who chooses lifestyle medicine over the medical route. What's more, doctors experience new satisfaction in their work, as opposed to becoming legalized drug peddlers.

Conclusion

Berkshire is hopelessly conflicted in respect of seriously addressing healthcare change, Amazon's position is at least somewhat suspect, Chase does not seem to have such overt conflicts. The signs we get from Haven are not encouraging, the agenda they profess sounds a bit trite - a little more tech, a little better primary care, and so on. Not like any kind of a breakthrough. Haven is exhibiting no meaningful analytical understanding of the healthcare crisis, and Berkshire will have to learn the hard way from a continued slide at Kraft/Heinz and Coke. This is even more bizarre, once you realize that AMA, ACC (Cardiologists), ADE (Endocrinologists), and ADA (American Diabetes Association) are now all endorsing the whole foods plant-based ("healthy vegan") diet - which is an indirect indictment of our processed food industry. Look no further than the upcoming Plant-based World Expo to realize that KraftHeinz and other traditional food companies are being left in the dust. Deal making is in the air.

In future I hope to explore these trends further in the pharmaceutical field. Statins are already becoming a major battleground. Eventually, we will be able to track these changes in drug sales, but nothing will really change until the model is shifted from disease treatment to health management. 

Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.