Overview
We spoke with Amnon Gavish, a former Amwell & TytoCare executive, on October 30th about the outlook for telehealth and remote monitoring players like Teladoc & Livongo, as well as disruptors/new entrants like 98point6 and Ro, among others. Amwell is leading in the health system market, aided by its partnership with Cerner; however, Epic building telehealth into MyChart poses a threat. Meanwhile, Teladoc is playing a bit of catch-up (InTouch) and offense (Livongo) at the same time. We still like Teladoc on the long side following earnings but are becoming more constructive on Amwell.
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Health Care Call Replay & Notes | Virtual Care - A Game of Chess CLICK HERE for event details (includes video). CLICK HERE for our Pre-IPO Blackbook (from September 17, 2020) |
CALL NOTES
Teladoc (TDOC) vs. Amwell (AMWL)
- TDOC dominates the employer market due to its roots as a full services provider (the physicians are affiliated with Teladoc). It’s been more of a per-member, per-month (PMPM)) model, but the recent acquisitions (InTouch and Livongo) show how the company is looking to become more of a platform.
- AMWL dominates the health system market, offering a full-service option too, but hospitals and provider groups want to use their own physicians and white-label AMWL’s platform. TDOC is playing catch up here.
With telehealth/telemedicine adoption becoming more common, does that mean the need/demand for TDOC is less robust?
- We’ll probably see a trend toward using the customer’s (i.e., the provider’s/health system’s) medical group and physicians. COVID-19 has had a huge impact. Payers and CMS started reimbursing at parity or rates more similar to in-person visits, which removed a headwind (a lot of providers viewed telehealth as competitive vs. a tool to complement in-person) - most US physicians have experience with it.
- The “hybrid model” - a mix of in-person and telehealth coverage - is growing. There’s a reduced need to maintain a big medical group. In April, Amwell announced Amwell Private Practice for smaller provider groups - this was right after CMS announced the coverage changes, and everyone scrambled to offer a solution - Zoom or whatever.
- In addition to the shift toward “telehealth as a platform” on the provider side, employers are contracting directly with local primary care groups like 1Life (ONEM) that offer hybrid coverage (i.e., all services, including virtual coverage).
- Teladoc is evolving and playing catch-up.
Is the future state not a PMPM or population-based model?
- PMPM may not go away - it’s helpful for access and telemed companies can play the same role. Pre-COVID, employer surveys showed just 5% utilization. Another problem was that consumers couldn’t see their own doctor. Things are different now, but having the same tool w/ the same modality will drive utilization up (for a “physician in the cloud”).
Amwell’s modules help process data before and after the visit, right? How complicated is that? And, can TDOC transition to enable patients to see a doctor they know vs. one for the service needed right now?
- Starting with Teladoc - they already introduced a white label option. They just don’t have the penetration that AMWL does. They are competitive - at least two health care systems - one in Florida and one in Texas - have switched from Amwell to Teladoc (for different reasons). But, they are playing catch up.
- These are sophisticated implementations. Amwell integrates with the EMR, the ecosystem (other companies involved/providing software to the system). AMWL’s relationship with Cerner helps and is something that TDOC doesn’t have.
- Beyond the above, both companies bought into the inpatient market (Amwell w/ Avizia, TDOC w/ InTouch), but AMWL has a 2-year advantage bringing it in and online. Not having separate systems is very helpful. The gap is bridgeable, but TDOC operating on different platforms puts some hurdles on convergence.
How about what Epic is doing?
- Epic is not a player with employers or health plans, obviously. But when we think about health systems, Epic is the main threat to Amwell; however, it can’t access patients outside of the health system(s). Like Microsoft, Epic doesn’t partner well (they are developing their own solution).
- Epic has ~40% share, so it’s a threat to the segment of the market where its clients overlap with AMWL’s (Teladoc is not immune). Cerner partnered w/ Amwell, so that provides an opportunity (Cerner has ~25% share).
- AMWL’s modules are valuable, but nothing in telehealth is highly sophisticated - it’s all about the integration and workflow, influenced by the backend architecture. It will take Epic a couple of years to get its modules on par with Amwell’s.
Question on M&A and Expansion/Disruption
- Amwell has been getting more expensive by the day. TDOC and Amwell couldn’t combine (antitrust), but Teladoc isn’t likely to buy competitors. TDOC is looking for new modalities or markets (e.g., InTouch is more inpatient, Livongo monitoring/engagement with chronic patients). If Teladoc does another deal, it’s probably not going to be an MDLive or Dr. on Demand.
- We’re seeing disruptors get disrupted. AI-based, chat-based, etc. players like 98point6, Babylon (UK-based, raised over $500MM, expanding to the U.S.), Ro (raised over $200MM), and Parsley, among others, are growing. If TDOC continues with M&A it’ll be something new. Also, 98point6 has been aggressive with pricing and appears to be taking share in the employer market.
Have you tried 98point6? Does it feel like you’re talking to a bot?
- It starts with a bot but there’s a handoff to live. The bot is there to collect data, keep the person engaged until the handoff/transition. Some cases will go live because you can’t prescribe if you don’t see the patient.
TDOC/Livongo - opinion of Livongo’s AI and market opportunity?
- Livongo has a good glucometer - yes, the hardware. The strips were/are good. WellDoc - ex JNJ - can say the same. Then, LVGO added the AI and services around it. A while back, LVGO could have partnered with Amwell to add telehealth, and now it’ll look to do that with TDOC. Building the right engagement model around the chronic patient is key.
- DXCM has that opportunity as well, and WellDoc has built something similar, but is trying to catch up.
- The back-of-the-envelope math (round numbers) - if TDOC has 50MM people and 10% of the population is diabetic, there’s 5MM subscribers/users that are candidates for Livongo. It’s a huge opportunity because LVGO has less than 300k today.
Is that a better path forward for TDOC than competing in the hospital systems?
- Well, the original telehealth services were urgent care and episodic. There’s no relationship with the patient there, so it’s at risk of commoditization.
- There are pockets of growth for Livongo - mental health, for example. The missing part for TDOC/LVGO is the population management aspect (aggregated data for an individual, navigating between services, applying all the measurements and analytics to show that money is saved and outcomes improved).
- There’s a trend toward empowering users/patients. It goes hand-in-hand with the financial side as a result of the trend toward high deductible plans (HDHPs) w/ lower premiums. Premiums will likely go down next year because electives have been delayed, but the rise of HDHPs and health savings accounts is leading to more cost awareness. I think we’ll see more consumer-driven decisions about where to get health services.
- The Transparency in Coverage Final Rule will require every employer to give employees a shopping tool to allow them to see the actual prices of procedures (out of pocket, copay, etc.). This could change the way the market works (to-date, pricing has been secretive in the US, and now we’re empowering patients). Add in the retail side - Masimo, TytoCare - you can also see people making decisions driven by the products bought at retail.
- If TDOC or AMWL wants to acquire more customers, they could buy a product and connect the services to it. It wouldn’t be surprising to see TDOC or AMWL buy a medical device company.
- There will be a lot of direct-to-consumer kits sold - sub-$100. Create a “hub at home” and on the backend someone interprets the data/helps (TDOC, AMWL, 98point6). Amazon’s Alexa or Google Home are likely to pounce here. It wouldn’t be surprising to see Amazon show up and capture the DTC market.
How do you see Amazon and Google positioned?
- Amazon has all the pieces - members/subscribers, PillPack, home security, logistics, etc.; it’s interesting because the locks on the home are important - you can’t leave a prescription outside. Amazon Care is already live with its employees.
- Google = more of a data play. Verily seems to be more involved with data/analytics and wants to own the data about the populations. They might be able to monetize that w/ pharmacy companies, supporting clinical trials, etc. - AMWL could be “Google Doctor.”
Can you share your thoughts on ONEM?
- The model is very compelling, which is why there are a lot of ONEM-like organizations emerging. They can show a good ROI to employers by direct contracting. Providing care on a subscription basis, reducing overall costs, and offering consumers a white-glove holistic experience is a viable model (especially for white collar employers).
- There’s an equivalent for community health called Cityblock Health, which is paid by insurance (vs. ONEM paid by employers or self-insured).
What can you tell us about My Medical Shopper?
- Two things are important – one is the hospital price transparency. Every hospital must publish its rates. This puts hospitals on the spot – only 3% are prepared for January 1, 2021 (and there are steep fines). The other aspect was addressed per the Transparency in Coverage rule. That shopping tool is going to help drive big change in how health care is consumed. It could be very deflationary. If you take Singapore as an example, a consumer-driven health system, it operates at 25% of the cost we see in the U.S., and outcomes are 2x better. We think transparency will make a big difference.
Speaker Bio
Amnon Gavish is a Health Care Information Technology Executive with over 10 years’ experience working in/around virtual health solutions and remote patient monitoring. He is presently EVP, Corporate Development & Strategy at MMS Analytics (MyMedicalShopper), and previously was the Chief Commercial Officer at TytoCare (July 2019 - May 2020); and SVP, Strategic Business Development at Amwell (Dec 2015 - July 2019). Earlier in his career, Amnon spent two years as a Board Member and Chairman of Industry council with the American Telemedicine Association, and ~6 years with Vidyo as SVP, Vertical Solutions.
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Thomas Tobin
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