Telemedicine Provider Teladoc’s Bold Move
Teladoc has popped up in the news quite a bit lately as a telemedicine provider. Well-known for their strong presence in the direct-to-consumer (DTC) telemedicine market, they’ve been expanding their global reach lately by acquiring smaller DTC telemedicine companies such as Best Doctors, Advance Medical, French company MédecinDirect, and others. So far, they’ve focused on accessing patients either directly or through business partnerships. Now, however, in a move aimed at medical facilities, Teledoc has announced its purchase of telemedicine vendor InTouch Health.
Teledoc first entered the public’s consciousness as a DTC alternative to the long lines and complicated payment structures of traditional health insurance and delivery. Swipe a credit card and boom—you can talk to a doctor or nurse who could give you the medical advice and prescriptions you think you need without any hassle. The concept took off like a rocket, but the ascent was slowed by questions from more traditional providers—and some lawsuits—that they were not establishing a “proper” doctor-patient relationship before making diagnoses and prescribing treatments. Teledoc survived this tempest and established upstream payer relationships, becoming a well-established business-to-business telemedicine provider whose partnerships give them access to millions of patients.
Among other services, Teladoc provides insurers and employers with access to an in-house network of licensed physicians who are available on-demand for patient consultations via telemedicine; this feature is often offered to employees and individuals as a health benefit. According to Teledoc’s website, since its founding in 2002, the company has spread to 130 countries with roughly 35 million members. The company’s main focus thus far, however, has remained DTC services, for which it has yet to reach profitability. As of Autumn 2019, multiple industry analysts believed that it will experience further losses before climbing to breakeven around 2022; however, the recent revelation of Amazon Care‘s entry into the DTC telemedicine market gave investors further pause.
Perhaps recognizing its limitations in DTC and seeking near-term growth, Teladoc announced in mid-January, ahead of the 38th annual J.P. Morgan Healthcare Conference in San Francisco, its purchase of privately-owned InTouch Health. This action signals a significant shift in strategy; as explained in its press release, Teladoc seeks to become the sole, comprehensive telemedicine provider for health systems who prefer a single-vendor solution, covering the full range of acuity—from everyday to chronic to critical care. Teladoc also hopes to increase consumer engagement and control the rising costs of health care. The company sees a large market at stake, citing research from J.P. Morgan that found that 40% of hospitals plan to raise their telemedicine budgets. Overall, investors welcomed the news.
With this bold move, Teladoc appears to be aiming for not just the DTC demographic but the provider-to-provider market as well, wrapping up both the inpatient and outpatient populations neatly. As with any acquisition, only time will tell how well the different company cultures, technologies, and client desires can be harmonized into a profitable, sustainable enterprise. The technology landscape is littered with bold acquisitions that didn’t meet expectations, and we wish Teledoc and InTouch good luck as they sort, blend, stitch, and code their way to patient Utopia, hopefully avoiding creating a FrankenSoft creature of bloatware along the way.
The digital health industry, including the telemedicine provider niche, has seen a constant foment of innovation and consolidation over the past few years, with American Well acquiring Aligned Telehealth; this was shortly followed by the merger of InSight Telepsychiatry and Regroup Telehealth. Both unions sought to form telepsychiatry giants, but as the telemedicine market continues to grow, it remains extremely fragmented and sub-specialized. Consolidation of Health IT has been cited as a major goal among health care systems, creating a sense of tension between vendors dividing a static pie. But the truth is that the pie is growing—and growing rapidly, with most estimates showing 20-25% annual growth for the next 5 to 10 years. There is plenty of room for us all to run. As a top performer in delivering value and service quality as measured by our customers’ voices in the KLAS annual Video Telemedicine Platform study, swyMed cheers as the standout features shift from technical towards service quality.
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