Welcome to Thoughts on the Market.
I'm Erin Wright, Morgan Stanley's U.S. healthcare services analyst.
Today, the emergence of the self-directed patient and its implications.
It's Tuesday, May 12th at 10 a.m. in New York.
A blood test ordered from your phone, a wearable that tracks your sleep or nudges you to move recover, hydrate or rethink last night's dinner.
Preventative health is moving out of the clinic and into everyday life.
And that shift is becoming an investable theme.
In essence, healthcare is moving from reactive to proactive.
Instead of waiting for symptoms, more consumers are using lab tests wearables, imaging and digital tools to spot some of these risks earlier.
And this shift reaches well beyond healthcare.
On our estimates, the US spends about 34 trillion annually on chronic disease, including lost economic productivity.
About $1.4 trillion of 2024 spend was tied to preventable diseases.
So the big investment question is, can earlier detection and behavior change bend the cost curve?
We think expanded preventative testing, screening and monitoring can help avoid roughly 200 billion to 800 billion of US healthcare spend by 2050.
That assumes preventative testing reduces preventable disease costs by about 10 to 30, based on our analysis.
Direct-to-consumer lab testing lets people order lab tests directly, often online, without starting with a traditional doctor visit.
We see this as a roughly $4 billion US market, which has more than doubled since 2021.
And it's no longer niche.
Our AlphaWise survey found that about 34 of respondents completed a voluntary wellness lab test in the past three years.
Among users, the average was 3.2 tests, suggesting this is not just a one-time behavior.
The most common test was a general health profile. used by about 45% of recent testers.
Wearables are the other part of the story.
Our survey found that 41 of respondents currently use a wearable or fitness device, while another 22 are interested in getting one.
More importantly, people are acting on the data.
34 of wearable users today regularly change behaviors or decisions based on their device, and 52 even sometimes do so.
Based on our survey,
That creates a feedback loop.
A wearable might flag poor sleep.
A lab test might show elevated glucose.
A digital health tool might suggest changes to diet or exercise or follow up care.
Over time, prevention starts to feel less like an annual event and more like a daily habit.
The sector implications are broad.
In healthcare.
More testing may initially actually increase utilization, as people follow up on results.
But over time.
Earlier detection could obviously support lower cost of care and better chronic disease management.
That also aligns with value-based care, where providers and payers are rewarded for better outcomes and lower total costs, not just simply more services.
In consumer sectors.
Better health tracking could shape food choices, reduce demand for some indulgent categories and support products tied to hydration, lower sugar, protein and functional benefits.
Fitness may also benefit as gyms evolve from just workout destinations into broader wellness platforms with recovery and coaching and preventative health services layered in.
Imaging is another emerging area, as screening shifts from reactive diagnostics towards earlier disease detection.
Of course, there is some risk that these health tracking and consumer-driven diagnostic trends could still prove to be a wellness craze rather than the new normal.
Out-of-pocket costs.
Privacy concerns, inconsistent interpretations and limited repeat testing are all real issues.
But consumers are clearly taking more control of their health and increasingly asking what can I learn before I get sick?
Thanks for listening.
If you enjoy the show...
Please leave us a review.
Wherever you listen and share thoughts on the market with a friend or colleague today,
It is not an offer or solicitation, nor is it tax or legal advice.
It does not consider your financial circumstances and objectives and may not be suitable for you.
