Invest Like the Best EP.500: Healthcare Should Be Half of GDP, Because Another Healthy Year Never Diminishes

Contents

1. How can spending half of GDP on healthcare make any sense?
2. What is the one central flaw in American healthcare?
3. Are GLP-1s just weight loss drugs?
4. How does a zombie company grow tenfold in four years?
5. If the drugs can be made, why is progress so slow?
6. How do I use any of this myself?
7. Worth a look
8. The one thing to take with you

A human life weighs most of all; it is worth more than a thousand pieces of gold. To save one with a single prescription is a virtue greater still.

—— Sun Simiao, preface to “Essential Prescriptions Worth a Thousand Gold” (Tang dynasty, c. 652; my own translation)

In the Invest Like the Best episode published on 11 November 2026, its 500th, Patrick O’Shaughnessy talks with Zach Reitano, co-founder of the online healthcare company Ro. Reitano says the 18% of American GDP that goes to healthcare is not a problem in itself, and that the question to ask is what the money buys; in a world where material things keep getting cheaper, he thinks another healthy year is the one good with no diminishing returns, so 50% or 70% of GDP would be defensible. Two of his numbers: about half of American healthcare spending goes to 5% of people, and once GLP-1s went direct to consumer the list price fell from $1,300 to $149 while the drugmakers earned more. His argument rests on two premises — that material abundance arrives, and that the Jevons paradox holds, with market size expanding as unit cost falls.

How can spending half of GDP on healthcare make any sense?

His answer: we have never treated any other absolute number as the problem, so why this one. The question is whether we are getting what we want for the money.

The share rises everywhere. His figures: the United Kingdom went from 6% to 12%, Germany from 9% to 12%, the United States from 9% to 18%. Most people read America as the anomaly; he reads the rest of the world as being on the same road, with America further along it.

As for why America reached 18%, he points at unit cost rising, when the Jevons paradox needs the opposite — cost per unit falling, with volume and market expanding together. The other piece is that roughly half of healthcare spending goes to 5% of people, because America does not give up on anyone.

He also defends the American system in a way that cut against my own impression. It is good at acute care: cancer survival rates beat the United Kingdom’s National Health Service, and heart attack and stroke survival beat the OECD average. Americans have fewer and shorter hospital stays; what is expensive is prices, plus a much heavier administrative burden. Life expectancy has not moved in over a decade, and he splits dying into two clocks. The fast clock is gun deaths, car accidents and overdoses, which drag the average down. Most people die on the slow clock, chronic disease, and the slow clock has been getting worse for three or four decades.

What is the one central flaw in American healthcare?

He gives a single answer: the patient is not the customer. Whoever controls the flow of money at the point of purchase is the customer, and the whole industry gets built around that stakeholder. Patients do pay — out-of-pocket is the small slice, the rest arrives through taxes and suppressed wages — so in most interactions the payer is somebody else. That is the problem Ro is trying to solve.

Then he shows where it works: LASIK, cosmetic surgery, GLP-1s. Prices fall, quality improves, convenience improves, and all of them are cash pay. He uses GLP-1s as a foil. Regulators chased price transparency for twenty-odd years, and pharma achieved it by going direct: a drug listed at $1,300 that someone was quietly paying $300 or $400 for, and once it went direct the list-to-net gap vanished. The pharmacy benefit manager — the layer sitting between insurer and drugmaker, known as the PBM — and the insurance company both left the picture, the price landed at $149, and he says the people making the drug earn more, with Lilly’s earnings showing prices down and volume jumping further. He calls PBMs the appendix of the healthcare system: useful in some era so long ago that nobody remembers what for, and once you remove them software does the job.

People push back with asymmetry of information. He borrows the shape of Churchill’s line about democracy: the patient is the worst person to own their healthcare decisions, except for literally everyone else. Hospital price transparency law, in his view, is lipstick on a pig — no industry survives without public prices, a shop that posts none wins no customers, so the law itself is a symptom. His alternative design: turn the $20,000-odd an employer spends per person per year into a card usable only on healthcare, let people decide how to spend it, roll the unspent balance forward, and keep a portion for catastrophic cover. Then nobody needs a law forcing anyone to publish prices.

Are GLP-1s just weight loss drugs?

He says they treat the leading causes of human death. Four years ago they were approved only for diabetes; now diabetes, obesity, heart disease, sleep apnea, liver disease and kidney disease are all on the label, with neurodegeneration, addiction and cancer prevention under study. He used to be annoyed by the word “just” and now wears it as a badge.

He predicts more than half of people will be on some GLP-1 in ten years, squeezing the estimate from both ends: bottom up, 75% of Americans are overweight or have obesity and are clinically eligible; top down, the share who are metabolically healthy is 10% to 12%. His comparison is statins, with forty or fifty million people on them and a narrower label. He does not frame this as something everyone should take: some people should not, some cannot tolerate it, affordability remains a large question, and he says the order is to start from your own health goals, family history and risk tolerance and decide with a provider.

Why he cares is personal. He had a heart procedure at 18, and the main side effect of his heart medication was erectile dysfunction — every 18-year-old’s dream in their first semester of college, as he puts it. At 12 he did not grow for a year; he was small and bullied a lot, his parents fought the insurer for coverage, and he injected growth hormone into his leg every day for about six years, entering high school at 4’8” and leaving at 6’1”. He lines up the three paths: dead at 18, 5’3” with the side effect, or 6’1” and married to the person he calls the most incredible in the world. The difference, he says, came from his parents constantly fighting the system.

How does a zombie company grow tenfold in four years?

In January 2021 they raised $500 million at a $5 billion valuation, and that year revenue grew 9%. Eleven months later he saw the position while looking at the annual numbers on a plane: not burning fast enough to die, not growing fast enough to escape, with an $800 million preference stack above them. He calls that a zombie company. The team had been working seventy or eighty hour weeks for five years, and they might not even clear the preference stack.

The same day, the people team sent every employee a Christmas gift — macaroons from a women-owned New York business, beautifully packaged. In the company-wide Slack channel he saw: “next time we send out Christmas gifts, can we not do it in an ocean full of plastic?” He wanted to reply “@here, you’re fired,” and says bad wifi on the plane saved him. His first thought was anger at that person; the second was worse — anger at himself, because nobody cares about packaging when the company is winning. They were, in his phrase, as soft as a macaroon.

Then came a six-page memo to his co-founders, seven VPs leaving within five months, another 20% of the organisation after that, and the brands consolidating from Roman into Ro. He is honest about layoffs: Silicon Valley has an odd fetish for them and rewards them too much, and the better version is never to have hired those people. He also believes a talented person can simply be in the wrong environment.

For rebuilding the culture he uses a steakhouse: strong attract, strong repel, and a vegan should not walk into a steakhouse. When someone gives him feedback he first asks whether it is a feature or a bug — complaining that the steak is meat is a feature; saying you lack the context to do your job is a bug. He puts the blame on himself: they had been a restaurant whose sign said come in when you’re hungry, we serve food, and handed you the menu only after you sat down.

Three concrete practices stuck with me. One, build sequentially: push five things over ninety days and you see progress on each, but push one and that one travels far further — his image is working only on the first ten years of a compound interest curve and never reaching year thirty. Two, a daily 8:50 meeting with the whole leadership team, held every day for two years; agree on Monday that you own the next step and you cannot turn up empty-handed on Tuesday. Three, kill long-term roadmaps — nothing planned beyond six months, because in an era when GLP-1s and AI are both moving, a long roadmap is a printed paper map on a road trip, and one changed variable voids steps three through seventeen. They learned to live with long-term uncertainty and keep short-term precision.

His own numbers: the team went from over six hundred people to a bit over four hundred, and revenue from a $250 million run rate to over $3 billion, with fewer people than in 2021.

If the drugs can be made, why is progress so slow?

He points at a way of arguing: an obsession with inputs. Healthcare is debating whether care “must remain human,” and he thinks that question looks in the wrong place — tools, human or new technology, have to earn their place, a new thing should be made to prove it is substantially better rather than 1% better, and the status quo does not get a pass for already existing.

His example is driverless cars. About 40,000 Americans die in car accidents each year, close to the number who die of breast cancer, and driverless cars have proven ten to twenty times safer than human drivers in some areas, while the public conversation centres on job displacement. He tells a story: a driverless car CEO told a regulator deaths would fall, and the regulator asked, “but what about the organs” — organs from crash victims save other lives. The CEO’s answer, in his head, was that he hoped they were still in the original person. He says the people impeding driverless cars where they are proven safe should have a body count attached to their names.

The other reason he gives is data and feedback loops. AI does well where there is structured data, a verifiable reward and a tight loop, which is why maths and coding thrive; medicine runs on trial and error, most of its data is unstructured, and feedback like heart disease or death takes a long time. He times the PCSK9 story: the Dallas Heart Study enrolled about 3,500 patients in 2000; in 2006 researchers found a group with a faulty PCSK9 gene, LDL in the 30s and 40s, and an 85% to 90% lower risk of heart disease no matter how they drank, smoked or ate; in 2015 Amgen produced Repatha as a biweekly injection, and only this year was Merck’s oral version approved. A quarter of a century from enrolment to a pill. He says that is too long.

He is on that path himself: total cholesterol and LDL high at 30 despite diet and exercise, genetics uncooperative, so drugs were added one at a time until his LDL reached 10. He added and removed each one separately to tell whether a side effect came from the dose, from a particular drug or from a combination. He says he is more aggressive than most, that it was dialled in with his doctor, and that it may not suit anyone else.

How do I use any of this myself?

Let me start from an uncomfortable scene: a position you are stuck in, or a project you have worked on for three years, where you know it does not work but the reasons it does not are mixed up with “a lot of people depend on it” and “look how much we have put in.” This episode hands over two knives.

The first is to ask who controls the flow of money at the point of purchase, because that is who the company is actually serving. I used to look at whether a product was good to use; now I ask whether the person deciding to pay is the person using it. Once those two split, improvements drift towards the payer, and the financial statements will not say so. Running that question over my own holdings produced a few answers I did not enjoy.

The second is to separate inputs from outcomes. My own checks often measure inputs — how many scripts I ran, how many reports I read — when what I want to know is whether my judgement got more accurate. His line cuts both ways on me: the stuck position should be judged on whether future cash flows and its place in the chain have changed, and how much I have already put in has nothing to do with the answer.

Worth a look

• Invest Like the Best, episode 500, 11 November 2026 — the source for this piece
• The Dallas Heart Study and the literature on the PCSK9 gene
• Recent Lilly and Novo Nordisk earnings, for the direction of price and volume
• Cleo Abram’s YouTube channel, Huge If True, mentioned in the episode

The one thing to take with you

Health is a precondition to progress.

The stretch from year 0 to 1800 stayed with me. Life expectancy was 30, held down by infant mortality, maternal mortality and infectious disease. Once those three were beaten back, families stopped mourning children and spouses every day, started investing in the children they had, those children went to high school and college, women entered the workforce, and the Industrial Revolution happened. His claim is that all of it followed from health arriving first.

It holds for one person too. His father had his first heart attack and stroke at 39 and had to stop practising medicine. At the end of the episode he tells a story from when he was 15: his parents visited him at boarding school, he was homesick and acted mean to them, and as they left his father asked his mother to drive, which she never did, got into the passenger seat, rolled down the window and said in a changed voice, “tell me you love me.” He did, his father said “good, I love you too,” then turned to his mother and said: take me to the hospital, I’m having my fourth heart attack. He asked afterwards what those seconds were about. His father said he did not want his son’s last words to him to be an argument.

Here is something I have tried that works outside investing as well: book the check-up you have been putting off for six months — bloods, dentist, a physical, any of them — and book it for a weekday morning rather than waiting for a free weekend. Health gets into the schedule when you are willing to give it the expensive hours.

Raw Markdown

This article is an educational discussion of investment method. It is not advice to buy or sell any individual security, offers no target prices, and does not analyze any current holding. Investing carries risk; make your own decisions or consult a qualified professional.