As smartphones spread and state regulations shift, telehealth has grown into a billion dollar industry, with millions of patients expected to contact a physician or medical professional through their phone or computer this year.
At the center of that is Purchase-based Teladoc, Inc., a publicly traded company that arrived early to the telehealth industry and now controls 75 percent of its market.
The company is looking to build on that growth. Teladoc in June announced a $440 million deal to acquire medical consultancy Best Doctors. The deal is expected to expand the company”™s reach into new specialties and global markets.
Growing fast
Patients used Teladoc”™s platform to access more than 950,000 doctor”™s visits in 2016, and the company expects to exceed 1.5 million visits this year. In two years, revenues have grown from $43.5 million in 2014 to $123.2 million last year, according to the company”™s 2016 annual report.
During an interview at the company”™s corporate headquarters at 2 Manhattanville Road in The Centre at Purchase office park, Teladoc president and CEO Jason Gorevic said the company certainly had an advantage by launching early in the industry. The company started in Texas in 2002 and went public in 2015, the first telehealth company to do so.
But more than that, Gorevic credited Teladoc”™s success to a platform and model that saves clients money and that consumers have rated as easy to use.
“Consumers love us,” Gorevic said, citing internal customer satisfaction polling he said is above 95 percent.
“But that only gets you so far unless you add real value for your clients. In that case, that”™s our employer health plan and provider plans. We deliver a very tangible, very strong return on investment for them, and so as a result we keep the clients that we have and we grow at a faster rate.”
Those clients include some of the country”™s largest insurers, such as Aetna and Blue Shield of California. The list also includes 220 Fortune 1000 companies, including Bank of America, PepsiCo and General Mills. The company predicts it will have more than 20 million members by the end of the year.
Teladoc offers virtual doctor visits in general medicine, behavioral health, dermatology, sexual health and tobacco cessation. Through the Teladoc platform, members seeking care are connected within minutes, or by appointment, to a doctor licensed to operate in their state. Teladoc has a network of more than 3,000 board-certified physicians and behavioral health professionals that see patients virtually.
Doctors and health care professionals are able to write prescriptions through the app. The co-pay per visit is typically set by insurers to be slightly lower than that of an in-person doctor”™s appointment, company representatives said.
About three-fourths of all appointments originate on a mobile device, according to the company, but visits can be done through a computer or by phone as well as video chat.
Stephany Verstraete, Teladoc”™s chief marketing officer, said the company”™s focus is on finding whatever keeps a patient comfortable.
“Our biggest challenge is that behavior change,” Verstraete said. “Getting people not to say ”˜I”™m sick, I have to go the doctor.”™ But saying, ”˜I”™m sick, what”™s the best way for me to get care?”™”
At its peak hour this year, Teladoc handled 503 requests for doctor consultations from around the country, about one visit every seven seconds.
About 100 people work in the company”™s corporate office in Purchase. Teladoc launched the Westchester County headquarters after it appointed Gorevic CEO in 2009. A Rye resident, Gorevic had previously worked as an executive at Empire BlueCross BlueShield.
The company continues its presence in Texas as well. About 400 people work at its provider network operations center in Lewisville, a Dallas suburb. Teladoc employed about 670 people total as of Dec. 31, 2016.
Best Doctors acquisition
The company believes its acquisition of Best Doctors, with its global network of more than 50,000 medical experts, positions it to continue to lead the growing industry. Those 50,000 doctors are all peer-rated as the top 5 percent in 400 different sub-specialties.
The deal is not the first acquisition for Teladoc. Last year, for example, the company spent $151 million to acquire HealthiestYou, a telehealth consumer engagement technology platform. But it is the company”™s most significant purchase “by an order of magnitude,” Gorevic said.
“It”™s probably three times larger in terms of the price tag. But I think more to the point, it really provides us with an unmatched set of capabilities.”
Best Doctors focuses on combining opinions from medical experts with data analytics to solve complex medical cases. Combining that expertise with Teladoc”™s platform allows Teladoc to cover what Gorevic described as the full healthcare pyramid. At the bottom of the pyramid, you have the lower cost, but more common conditions, such as a consultation for an upper respiratory infection. At the top of the pyramid, you have the less common but more expensive and complex conditions where Best Doctors provides expertise.
“The combination of the two really completes the spectrum for us,” Gorevic said. “That enables us to offer a comprehensive platform.”
Best Doctors”™ medical experts can review diagnoses for members of Teladoc”™s network and provide additional recommendations, particularly for uncommon and complex cases. In about 40 percent of cases, Best Doctors either changed or refined an original diagnosis. The company, founded in 1989, has reviewed more than 100,000 cases, and through adjustments, has created an average cost savings of $36,000 per case, according to data on its website.
The deal closed on July 17. Best Doctors will maintain its headquarters in Boston and operate as a department of Teladoc.
Gorevic said combining Best Doctors with the health care services Teladoc already provides, “opens up tremendous growth opportunities.” That includes internationally, where Best Doctors has already established partnerships.
The telehealth industry overall has been boosted in recent years as states have eased medical regulations to allow for it. Insurers have also encouraged it as a way to save money by avoiding unnecessary in-person doctor visits. The Wall Street Journal reported last year that 15 million people received remote care in 2015, a number expected to have grown 30 percent in 2016.
Teladoc predicts the market can grow well beyond those early numbers. The company noted in its annual report that of the approximately 1.25 billion ambulatory care visits in U.S. each year, about a third, or 417 million, could be treated through telehealth.
“Telehealth has ubiquitous appeal,” Gorevic said. “Whether it”™s rural areas, urban areas, north, south, east, west, we find that it gets equal attraction because it solves problems of access, cost and quality. There just aren”™t that many things in the health care system that address all three of those and are consumer friendly.”
