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Western healthcare is broken and cannot be fixed, says Bellevue’s Major

03 July 2019

The manager of the BB Healthcare Trust says there are tools available that can bring the likes of the NHS into the 21st century – but they are not currently being used.

By Anthony Luzio,

Editor, FE Trustnet Magazine

The western healthcare system is “fundamentally broken” and cannot be fixed unless it is completely rebuilt to face the challenges of the 21st century, according to Bellevue’s Paul Major.

Major runs the BB Healthcare Trust, which means he should in theory be a major beneficiary of changing global demographics such as economic growth – due to a strong correlation between GDP per capita and health spending – and an ageing population.

Population demographics and impact on healthcare spending

Source: The Office for Budget Responsibility and the UN

However, the manager said that while everything looks rosy from a demand point of view, there is one small problem: we can’t afford any of it.


To illustrate his point, Major pointed to a chart showing healthcare cost inflation in the US consistently drifting above CPI, with this trend set to continue or deepen in the foreseeable future.

Inflation in US healthcare and CPI

Source: CMS for US healthcare costs and IMF for US consumer price index

“We've reached a point where if you look at the tension between voters, consumers, politicians and companies that pay for private health insurance, everybody is unwilling to pay more,” he explained.

“And the reason we're in this mess is really an abject failure of forward planning. We were always going to get to a point where this happened, because if you take a step back and you look at the human race, evolution stops at the age of the menopause: once you can't reproduce anymore, you can't pass on any beneficial traits you may have.

“So not surprisingly, if you look at people's health, once they get to their late 40s and early 50s, it starts to decline quite rapidly.”

Major said the problem with western healthcare – particularly the NHS – is that it was built to address the needs of the 20th century. What is making the issue worse is that all of the political discourse on the subject – whether that is on drug pricing in the US or the lack of hospital beds in the UK – is backwards-facing, preventing it from moving on.

The manager added that politicians would be better off focusing their efforts on the intersection between the doctor and patient, which is the driver of the majority of healthcare expenditure, and pointed to GP appointments in England as an example.

“It is £150 per appointment, one in four of them are not medically necessary and 13 million were missed last year,” he said. “You can't carry on with a system like that.

“If you think about the last time you went to the doctor, that conversation probably started with ‘what do you think is wrong with you?’ And I don't know if you have a medical degree, but most people don't, so it's an interesting starting point.

“Generally, they will treat your symptoms, they will make your symptoms get better to the point where you go away. So that's basically how the system defines success. Very rarely is it curative. Most of the time, it just alleviates your symptoms. And you're expected to follow a treatment regime for a fixed period of time.”

Major said the problem with this is that humans are fallible and often won’t take their medicine or exercise, while continuing to drink heavily and smoke, for example. As a result, the symptoms will inevitably reappear, bringing the patients back to the starting point.

“Sometimes, unfortunately, you come back in the back of the flashing blue bus rather than walking in,” the manager continued.

“And once you're in a hospital bed, the system has failed you. And every day someone spends recovering in a hospital bed, it costs the NHS £800.”

For any reader who is sceptical that Major is just another already-wealthy fund manager hoping to profit from the privatisation of the NHS, you needn’t have worried. He is not a fan of the current government, saying “it has not covered itself in glory in the competency stakes”, but one thing he gives it credit for is asking the NHS how it would like to spend extra money it has asked for, rather than basing healthcare policy on “what some politician read in The Daily Mail over his cornflakes”.

The organisation responded with the NHS Long Term Plan, which said it expects the existing model of care to look markedly different in 10 years’ time.

“The NHS will offer a ‘digital first’ option for most, allowing for longer and richer face-to-face consultations with clinicians where patients need it,” the paper explained.

“When ill, people will be increasingly cared for in their own home, with the option for their physiology to be effortlessly monitored by wearable devices. People will be helped to stay well, to recognise important symptoms early, and to manage their own health, guided by digital tools.”

It is companies that will allow the NHS and other healthcare systems to meet these targets that Major’s portfolio is exposed to. For example, his second largest holding, Teladoc, offers a range of services that are expected to drastically cut the number – and cost – of GP appointments.

The first way it does this is by providing a FaceTime equivalent online in lieu of a GP appointment.

“It can then set up a range of appropriate services for you, so perhaps if the doctor does need to see you it can book an appointment straightaway,” Major explained.

“Or if it thinks it does know what's wrong with you, but needs a blood test to be sure, it can book that for you, meaning you will have one appointment rather than two.

“But often it is administrative stuff, like if you need a prescription renewed or whatever it is, so that frees up time for the GP to do other things and prevents unnecessary medical costs.”

Major said that what is just as important is the digital footprint that patients create when they use Teladoc. Returning to his point about patients who fail to attend appointments, stop taking their pills and generally ignore the advice of medical professionals, he described the data highlighting the extent of this problem as “amazing”.

“Even in my local hospital, there's a chart on the wall in the X-ray department showing the percentage of people who got lost between casualty and radiology,” he said.

“So you've gone to hospital because you're injured, you've sat down with the doctor who has told you that you need an X-ray. And then you've left – I can't imagine in my mind why that happens, but it happens quite often.

“If you've created the electronic footprint, you can chase these people, you can make sure they go to their appointments and if they're not going to appointments, you can find out why.

“It may be too far away from them or whatever. But you can change something and you can make it work better.”

“But as I said, the important thing is it creates this digital footprint. So everyone can see all the relevant parts of the jigsaw fitting into place so they can give you the care that you need.”


Major said that just 1 per cent of patients around the world are electronically triaged and case managed. However, the major healthcare systems he has spoken to, whether that is the NHS or the major private insurers in the US, say that two-thirds of all patients will ultimately be dealt with in this way.

“So here's a market that's going to grow 60 or 70 fold in size over the next 10 to 20 years, all the while saving huge amounts of money for everybody because it lowers the cost per GP appointment by 20 to 30 per cent,” he finished.

Data from FE Analytics shows the BB Healthcare Trust has made 48.37 per cent since launch, compared with gains of 39.83 per cent from the MSCI World Healthcare index and 34.57 per cent from the IT Biotechnology & Healthcare sector.

Performance of trust since launch vs sector and index 

Source: FE Analytics

The trust has ongoing charges of 1.21 per cent and is 12 per cent geared.

It is on a premium of 1.5 per cent, which has been as high as 10.16 per cent in the past year.

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Data provided by FE fundinfo. Care has been taken to ensure that the information is correct, but FE fundinfo neither warrants, represents nor guarantees the contents of information, nor does it accept any responsibility for errors, inaccuracies, omissions or any inconsistencies herein. Past performance does not predict future performance, it should not be the main or sole reason for making an investment decision. The value of investments and any income from them can fall as well as rise.