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24:37Carol Massar:It is the largest regional market and division of the Dutch health tech company, giant Philips NV, those ADRs trade in the U.S. They're done about 3 % year to date. As we said, Jeff joins us in here in studio. Welcome, welcome. How are you? I'm wonderful. Thanks for having me. Well, it's good to have you here. We do feel like we are spending so much time talking about AI. It's just coming into every aspect of our world. Tell us, though, about the study that you guys do. It is your 11th annual. What it's all about, who you talk to, and what are some of the findings? Thank you for having me, Carol.

25:06I want to set the table here very quickly because I talk to healthcare CEOs on a weekly basis. And the same three things always are putting pressure on that system, as you said. They're delivering more care longer to people that are living longer, and that complexity of that care is increasing. So that's actually putting stress on the system. They have staff shortages, which continue to persist and got worse post-pandemic. And then the cost of delivering that care is actually continuing to go up. So all those three things are really putting stress on the system. But the opportunity that we see is AI in healthcare is becoming quite of age, where a year ago in the study, roughly 20 ,000 people, 2 ,000 clinicians, 18 ,000 patients.

25:45And what we saw from year to year is they've gone from experimenting and piloting in AI applications to much more broad adoption and impact. Impact in time back they can spend with patients, impact in quality diagnosis, and impact in well-being. And they've been very clear about that in the study.

26:04Carol Massar:What do those AI applications in healthcare actually look like in practice? So I'll give you a simple example that everybody can relate to. So the average physician in the study said that they're getting five more patients per week because of tools that they're deploying in their practice. So when I go to my general practitioner, I get maybe 10 or 15 minutes if I'm lucky with him for my, and most of that time it's sitting on the keyboard asking me questions, right? What we're seeing is they're getting a chance to ambient speak what they're talking, that dialogue. It's translating it into the medical record.

26:38So what they're doing is they're spending time looking you in the eye, asking you more questions. That's better for more patients they can see because they're spending quality time in the room or maybe even more patients like we're seeing.

26:50Carol Massar:Do doctors feel or medical professionals, Jeff, feel that we are just barely scratching the surface when it comes to AI and healthcare? there. Yeah, I, I, a prudent approach is good because you want to make sure that you have responsible AI deployment and we're, we're hugely as a tech company, we want to make sure it's responsible. But I actually think we're the scraps at the table and the feast is yet to come. What do you think that feast looks like? So take the life of a radiologist. So the average radiologist has to work all day, seize patients, uh, maybe do procedures. Then they take all these studies, 200 studies home at night and they have to go these, go through these studies.

27:21That's pajama time, right? It's there. That's long days for radiologists, which makes me always nervous

27:26Carol Massar:as a radiologist who might be tired. Exactly. And reading my, like, I, yeah. Exactly. So you have these long days, they're stressful. And I know there's great doctors out there, so I don't want to diss the profession. No, but the system is not meant for them to have balance. And so what we're seeing is AI in the work, in the pathway, the whole, if you don't think of AI as a bunch of point solutions that do discrete things, in healthcare, it has to fit to the radiologist. It has to fit into their workflow. So I can scan somebody with great AI much faster. I get it into their workflow. I can determine who the most important person is to look at.

27:57I can find the slices in their scan that are the most important things to look at and even recommend, we think it looks like this. You should look right here. If you can do that at scale for 200 studies a day, you're dramatically improving quality of life. That radiologist in the study, a third of them say they take a lot less work home and they're suffering less burnout and they're just charged in their balance. That also adds to quality exactly like you're saying.

28:19Carol Massar:I also feel like the data that is input, right? Like there's just more data sets that scans can be compared against, whether it's an MRI, right? Like, do you know what I'm saying? We have way more data than anybody can use, but AI can use it. Right. And I'll give you an example. But I mean, when they're comparing scans, right? It's something that might be overlooked. overlooked again, not dissing anybody professionally, but when you've got just hard, cold data, that's what they're looking at. In the study, it'll say roughly half of the physicians that use AI as a, as a buddy or as a check, or actually more confident in the ability to make their own diagnosis because of the buddy check.

28:59And a quarter of them are saying that it's significant improvement in their, in the result that they deliver. They're miss, they're not missing medical issues and not misidentifying and they're not missing things. And that's from the physicians themselves that are saying it's actually helping them have higher quality diagnostic, which if you're dealing with something like a cancer potential, this is a big deal.

29:19Carol Massar:How do you kind of, I guess, help the physicians who maybe see, you know, an introduction of a new technology as just another thing that they have to deal with on top of their already busy day? Like, do you get pushback from maybe, I'm trying to think of some of those old school doctors who still, you know, do everything by hand. They still have paper notes. They still have all their files. you know, in a paper form. This is a pretty advanced technology you have to implement. I go back to this triple threat, the fact that there are not enough people to do the work today, and they're burning out the ones that are doing it.

29:51And so we actually find in most of the larger health systems, there's a huge appetite to embrace this if we're doing the design along the clinical workflow. The challenge is we, in the industry, typically have thrown technology at people and said, digest it, and the workflow has to change. We're not doing that at Philips. We walk alongside our customers. I work with most of the, all the largest health systems in the U.S. and Canada, and we're walking alongside them. So when we're designing it, we're having them in mind. The beauty of AI-driven tooling is that it can actually do the work in the process that they're in.

30:22We can adapt to do the work. That's a lot different than deploying software and complex things that you have to learn, screens and all that. All that goes away. And that's really the promise. That's not this magic black box thing. That's actually happening today in some of the leading health systems.

30:36Carol Massar:So where do you see it all going? In terms of generative AI, what role do you see in the next three to five years? Do you have a feel of how dramatic the impact is? Or what are you hearing from the doctors that you talk to? I think it's a journey that will be rightly done with some conservatism. Again, the operational aspects of clinical practice will have dramatic improvement. That's going to give staff back time to be with patients. And you're going to get a better workforce. And you may even draw people into the practice because they actually have these tools that help them be better at what they do.

31:11And they continue to have better balance. The sky's the limit. But we want to make sure when it comes to generative AI that we're really thoughtful about not getting over our skis and allowing hallucinations because trust is the number one thing. If we build trust with clinicians and we do it in the right way, that embrace and that self-check process actually improves the quality of the output. I met with a bunch of CEOs here in New York last night. Yeah. really, really top-notch institutions. And they're actually telling us in six months, the quality of the generative AI algorithms that they're building is improving itself at a rate they didn't anticipate.

31:46So again, I think do it where there's high trust, build that trust with clinicians, design it around the workflow, and then you'll really get better adoption. And we're seeing that. We're seeing year to year, we're seeing a massive improvement in adoption of tooling that is giving life back to a community that joined the practice to serve other people. Right. So it's exciting time. OK, so in maybe three to five years, is the artificial intelligence actually going to be making clinical decisions?

32:13Carol Massar:I.e., you can go as a patient into a doctor's office and instead of actually seeing the doctor, there's there's not a human involved. Essentially, the A.I. is giving you the diagnosis and telling you. I think it would be foolhardy to think about what could be in three to five years because the rate of innovation is so fast. What I can tell you is we believe, as a technology company, that decisions always land with the physicians. And so we want to augment that physician with as much of the non-value-add work and as much of the diagnostic quality they can so that they can make the best decision clinically for their patients.

32:44And I can't see how that will change in the near future.

32:49Carol Massar:Jeff, what does it mean for the devices that you guys, whether it's MRIs or CAT scans or sonograms, like the devices, the medical equipment, How does it impact you guys as a company and how you have to think about incorporating AI? Or is it kind of pretty easy? It's interesting. We've made the step to become more of a productivity company than a product company. I mean, it's a pretty big leap in this business. We think the beauty of orchestrating a workflow for healthcare concerns is where we want to be. It's not about the products anymore. And so when we think of like our patient monitoring journey, we're thinking about how do I have a monitoring, persistent monitoring experience across every aspect of where a patient could be in a healthcare system, even at home.

33:28And so we're building these platforms around radiology, around cardiology and cardiovascular intervention, and around patient monitoring from home to hospital to home, where we give hospitals that rich data and that physiological data from patients. And we think of it as the software layer or the platform that you can start to build these AI algorithms into. Kind of like cars, right? Exactly right. Think about the apps on your iPhone. Oversimplified, but think about apps on your iPhone, right? You plug the apps in to do certain things, but the platform itself. And that's where we've really moved our R &D.

34:00Carol Massar:Hey, listen, we'd be remiss. We've only got about a minute and a half left here, but I got to ask you about the macro. You see a lot. Your company obviously is global. You're in charge of the North American unit. How would you describe the business environment and the consumer side of things? Actually, pretty strong for both, at least for Philips. in the consumer segments we're in, we're seeing double-digit growth across the globe, particularly strong here in North America. Consumer demand has actually gone up for us, and we've got a great portfolio in the health system side. Again, we've seen double-digit growth last year.

34:32We've consistently outpaced the industry for some time. But about the industry itself, we see strong demand because of all the things we've been talking about. We're pivoting to be less about the product and more about productivity, and I think that's going to be a game-changer for health systems, that's long-term demand.

34:46Carol Massar:How are you guys using AI at your company? So we're deploying everything from our financial systems to my commercial operations to contract management, our services portfolio, so that we can deploy agents to look at health systems products that we have in the field to be able to do automatic determination of a root cause and a correction path. We're as committed internally to driving productivity and efficiency so that we can grow with our customers at pace. Yeah, it's kind of fast. We're all in. You've got to practice what you preach. I know, I know. You've got to eat your own dog food. That's right.

35:20Carol Massar:That's exactly. Jeff DeLullo, he is CEO at Phillips North America. Thank you so much. Really appreciate it. Yeah, we appreciate it. Stay with us. More from Bloomberg Businessweek Daily coming up after this.

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37:20Carol Massar:You're listening to the Bloomberg Business Week Daily Podcast. Catch us live weekday afternoons from 2 to 5 Eastern. Listen on Apple CarPlay and Android Auto with the Bloomberg Business app. Or watch us live on YouTube. And we're talking about the precious metal gold, which fell below$4 ,000 and 300 an ounce after Israel and Iran agreed to end attacks. Citigroup also lowered its three-month target carol for gold to$4 ,000 an ounce, citing the likelihood of a rate hike. And since a high back in late January, gold is down 21%. Our next guest has a front seat to it all. John McCluskey is president, CEO, and co-founder of Alamos Gold.

38:02Carol Massar:Joining us from the New York Stock Exchange, The stock is down about 11 % year to date, but more than doubled last year and is up about 400 % in the last four years. John, welcome. Thank you. Nice to be here. Thank you for joining us. So tell us about kind of what you see driving the gold market right now and what's next? Well, quite a lot changed after the war broke out against Iran. And that has really been the big influence on the whole dynamic of the way gold's been trading. Oil prices soared higher, gold prices came off. And frankly, the back and forth, it seems that at one point the market is anticipating peace and then the market anticipates perhaps not peace.

38:51Is it a truce? Is the truce over? That kind of uncertainty has certainly influenced the way that people have been trading both gold and oil. And so in the short term, it's a very, very difficult market to predict.

39:08Carol Massar:Yeah, I totally hear you. Well, it is interesting. Anybody who runs a company right now has to deal with some really big macro issues. When you look at this White House, do you have a line of communication to get a better idea of kind of what's still coming at us? and trying to get an idea of some of those macro conditions that in particular are going to impact your company? Well, we certainly do. We keep a very close watch on things. I think we're well informed. But the reality is that your safest position in a market like this is to just have very, very wide margins. And we do. We're a low-cost producer at these gold prices.

39:48We're generating phenomenal free cash flow from operations. You know, our all-in sustaining costs are around$1 ,600 an ounce, and gold, even after the pullback, is still trading north of$4 ,200 an ounce. So we have very, very healthy margins, and the company's very profitable, and it's one of the fastest growing gold mining companies in the world. All our assets are in very politically safe jurisdictions. The majority of our assets are in Ontario, Canada. We also have an asset in Mexico and one in Manitoba, Canada. These are very safe places to operate. They're safe places to build reserves. And we've been aggressively building reserves over the last few years.

40:34So our business remains very, very sound. And I don't really anticipate any problems whatsoever on that front. But in terms of trying to predict where the gold price is going, that is quite difficult to do in the short term. But if you take a long-term chart on gold, like a five-year chart or a 10-year chart, we're very clearly in a bull market. And the channel is still very, very definitely in the upward direction. I recently attended the Bank of America Merrill Lynch conference in Miami. And their chief economic forecaster is calling for over$6 ,000 gold. And that's not typical in the market.

41:18Generally, the banks take relatively conservative positions on commodities like gold. But I would say that that's more indicative of where things are going than anything else.

41:28Carol Massar:So that longer term bull market in gold, what is it telling you about the macro environment? Because oftentimes investors look to gold as a safe haven, a place that they want to go when they don't want to buy anything else. Well, I think what it tells you is that in the short term, a lot of the things that we're dealing about, a lot of the things that are dominating the current news cycle, they're going to go away. Eventually, the war in Iran will end. I think it really has to end. It's the smart move for everybody. It's smart for the United States. It's smart for Iran. That war should end. And when it does, then what will happen?

42:06Then this whole dynamic that's been driving oil, that will disappear. oil prices should gravitate down. Gasoline prices for Americans who will be voting in the upcoming midterms, those gasoline prices are going to probably come back down again. And frankly, gold prices in that context will go back up again. And I think the focus is going to be on much more on domestic policy, what's going on in terms of the debt situation in the U.S., what are Americans going to be dealing with in their day-to-day lives? And I think that ultimately is where people are going to be focused.

42:49Carol Massar:What worries you when you think about U.S. debt, what Americans are facing in their lives, and how it might impact what you guys are doing? Well, that's kind of a loaded question, Because on the one hand, what is sort of dominating American politics right now and what's dominating the economic picture for the United States isn't necessarily having a direct bearing on what we do, what our business is. Right. I think that what Americans have to contend with is the fact that nobody is interested in cutting the cost of government. Expenditures just seem to rise and rise and rise. The interest now is the number one cost for any government.

43:39It's exceeded like a trillion dollars a year. That's never been the case before. The deficit continues to grow in almost a trillion dollars every 100 days. These are crazy numbers. What would concern Americans is, will anybody ever address that problem? And if not, what will be the fate of the dollar? I think that is of concern to Americans. And I think that's one of the reasons why gold price is doing well, why the gold commodity is doing well and the gold price is going up. Because there will be more demand for gold. And there's a very limited amount of gold. Demand for that will continue to rise.

44:19And people will be buying gold, not just as some sort of temporary offset in their investment portfolio, but as a store of value for the long term.

44:27Carol Massar:John, so do you think we're at this moment in time? We've had a lot of conversations here around this table about dollar dominance or not so much. And yet folks keep reminding me that the U.S. market is so deep, the dollar-based assets have so much liquidity, and again, the depth of the market so that you continue to see kind of international investments and interest. But in general, the dollar, do you think in terms of dollar dominance, that era is definitely over? and it's just a case it's going to be different. And I'm not saying it just falls off a cliff, but it's a different world going forward.

45:04Yeah, that's quite the point. The dollar dominance is by no means over. I think the dollar is still very clearly the predominant currency in the world. It's still the world reserve currency. But to ignore the fact that the dollar is being undermined by government policy is to ignore the obvious. and I think to ignore the fact that other countries in the world are losing confidence in the dollar is also to ignore the obvious. That clearly is happening. And as the one indicator of that, I guess you could say is, you know, countries that were, like China, for example, Japan, that were holding U.S.

45:44Treasuries, like in excess of a trillion dollars in U.S. Treasuries, they've reduced that exposure and they've bought gold. and that goes to show you that there is a fundamental shift. It doesn't take place overnight. It takes place over time. But where do you want to be in terms of the long term in that trade? I think you want to, if you're thinking more long term, I think you want to reduce your risk to the fallout that might come as that debt situation just continues to escalate and escalate. And investors have to be thinking that way.

46:23Carol Massar:Well, maybe one way to control that debt situation would be a higher rate, higher interest rates. I mean, John, how would higher interest rates impact your business? Well, higher interest rates are generally not good for gold because typically what happens is, you know, there's an opportunity cost to holding gold as gold does not pay a dividend. And one of the primary reasons why I think gold equities make a lot of sense is because equities like Alamo's gold, we do play a dividend. We doubled our dividend in the first quarter. You can, in other words, have exposure to gold and basically make up for the opportunity costs that you would generally lose if you held the metal by holding the gold equity.

47:11But in the main, when people think of gold and owning the metal rather than equities, they're thinking about that. So rising interest rates usually mean people will shift from the commodity gold into treasuries and other interest-bearing instruments. That's an obvious thing. But the question is, are interest rates going to be rising in an inflationary environment? What will be the ultimate impact of this war the longer it continues? And I think that very clearly there are inflationary pressures coming to bear, and that is not going away. So will the rising interest rates be enough to counter the inflationary pressures?

47:56And that inflation undermines the value of the dollars. Yeah, no, absolutely. That's what makes it all difficult to predict.

48:04Carol Massar:John, we've got to run. Thank you so much, though. John McCloskey, he's president, CEO, and founder, co-founder of Alamos Gold. This is the Bloomberg Business Week Daily podcast, available on Apple, Spotify, and anywhere else you get your podcasts. Listen live weekday afternoons from 2 to 5 p.m. Eastern on Bloomberg.com, the iHeartRadio app, TuneIn, and the Bloomberg Business app. You can also watch us live every weekday on YouTube and always on the Bloomberg Terminal.

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