Teladoc Announces Q3 Earnings & Primary Care Plans

Teladoc recently announced its financial results for the third quarter of 2021, providing investors with an update on the company’s earnings, as well as giving insight into the future direction of its Primary360 virtual-first primary care offering.

  • Financial highlights included year-over-year revenue growth of 81% to $522m, driven by strength in its BetterHealth mental health unit, and a 37% increase in total visits as a result of steady adoption for Teladoc’s direct-to-consumer offerings.
  • Teladoc revealed on its investor call that it plans to begin taking on financial risk with its Primary360 solution in the future. The company is aiming to generate savings with its virtual-first program and will take on risk where it can have the most impact.
  • CEO Jason Gorevic said that the rollout of risk taking for Primary360 would develop in tiers, “from first clinical measures, to then risk corridors to, ultimately, full capitation.”
  • Primary360 was only recently made available to payors nationwide, but Teladoc stated that it is beginning talks with hospitals about white-labeling the service for them to use as their own digital front door.

Primary360 Strategy

Since Primary360 integrates a wide range of Teladoc products, the service generates significantly higher revenue per member than the company’s general medical and mental health solutions. 

Most health plans lack the network and provider base required to develop a nationwide virtual primary care solution in-house, but as telehealth demand rises and pressures them to begin offering the service, many are turning to options like Primary360 to meet the need.

If Teladoc can successfully meet this demand while taking on risk, it will be able to capture a larger share of any savings it generates, further improving the economics of the service.

Hinge Health Raises $600M for Digital MSK Treatment

In a virtual care landscape where many competitors are looking to address multiple conditions with a single solution, Hinge Health is setting itself apart by taking the opposite approach.

Last week, online musculoskeletal (MSK) clinic Hinge Health raised $600m to help build its team and platform, doubling the fast-growing startup’s valuation to $6.2b. Despite the influx of capital, Hinge is keeping a singular focus on musculoskeletal therapy, and tackling the problem with a deep roster of solutions.

  • Hinge launched in 2015 with a mission to improve MSK treatment by combining wearable sensors and computer vision-assisted physical therapy with a multidisciplinary team of physical therapists, doctors, and health coaches.
  • Several acquisitions have helped fuel Hinge’s growth within the last few months, including both Enso (manufactures devices for electrical stimulation pain relief) and wrnch (digitizes human motion with computer vision).
  • Hinge’s holistic approach covers the complete MSK journey from prevention to post-surgery, using HingeConnect to integrate patients’ external EMR data and ensure continuous coordination with other providers.
  • Over 80% of employers that cover digital MSK solutions choose Hinge’s platform, utilizing it to reduce unnecessary surgeries through preventative interventions. Hinge doubled its customer base to 575 companies over the past year. 

The Takeaway

By keeping MSK treatment as its exclusive focus, Hinge has quickly built one of the most robust solutions on the market while bridging the gap between in-person and digital care. The new funding adds to this momentum, and could lead to more developments for MSK patients seeking accessible care.

DHW Q&A: Micro-Fulfillment & Telehealth With NowRx

With Carry Breese
NowRx, CEO and Co-Founder

At a time when consumers are wary of traveling to crowded pharmacies to pick up their medications, NowRx is taking a new approach to solving medication nonadherence: same-day prescription delivery.

In this Digital Health Wire Q&A we sat down with NowRx CEO Carry Breese to discuss the company’s micro-fulfillment strategy for prescription delivery, recent moves into telehealth, and why equity crowdfunding could be the right fundraising path for many companies.

Can you tell us about NowRx and the company’s overall strategy?

We originally began as a direct-to-consumer pharmacy offering same-day delivery on prescription medication, but as we’ve evolved we’ve begun to look at ourselves more as a digital health platform. We still provide same-day pharmacy delivery, but we also couple that with a broad telehealth platform and virtual services.

The whole key with NowRx is to be a full replacement for traditional pharmacies. To do this, we use a micro-fulfillment strategy, which involves dispensing out of our own brick-and-mortar pharmacies, which are staffed with pharmacists, technicians, and local drivers. The proprietary tech inside our micro-fulfillment centers makes them extremely efficient and keeps costs down.

The philosophy of our company is to use technology to try and fix the bottlenecks in healthcare that produce bad patient experiences.

Earlier this year NowRx moved into telehealth, what was the motivation behind that transition?

The way we built the delivery pharmacy component is probably the best way to illustrate that answer. We’ve always looked at successful approaches to the healthcare industry as needing to integrate as many components as possible to provide a full experience.

Some companies have tried to do delivery pharmacy, but they were mainly just doing delivery logistics, acting as couriers between pharmacies and patients. We felt that model doesn’t give you enough control over what’s going on inside the pharmacy, and can lead to constraints with anything from physician communication to inventory management.

To solve this problem in the best way possible, you need to own the dispensing, have your own software systems, and directly address these constraints.

The entrance into telehealth was an extension of this thinking. Oftentimes it’s not only hard to get a prescription delivered, but also to get an appointment with a physician to write the prescription in the first place. Removing those barriers is key to our mission of providing great healthcare experiences, which is what made telehealth a natural extension for us.

How has the pandemic impacted remote care and your business?

There’s been a few distinct shifts during the pandemic. In the beginning, there was definitely a surge in demand for our services, and at the same time we had to institute all kinds of new safety controls: social distancing in the pharmacies, hygiene for the cars, contactless delivery. This was a huge operational strain, but since then it’s smoothed out quite a bit.

Although there was a significant boost in awareness for new ways to get medication, as well as an increase in demand, doctors began seeing patients less frequently. Patients pulled back on routine checkups and preventative visits, so overall, the pharmacy business saw a bit of a drop off in volume.

We expect that to alleviate as the pandemic wanes, and it’s also likely that we’ll see a strong rebound for new prescriptions driven by the backlog of doctor visits that have been postponed over the past couple of years.

Why did NowRx take a non-traditional approach to crowdfunding its $72 million Series C through SeedInvest and what are the plans for the funding?

Following the heightened demand over the past couple of years, we began looking to broaden our reach without sacrificing quality of service. As NowRx expands into new territories, we first launch a micro-fulfillment location, which requires a large up-front investment. The funding helps cushion that.

We were an early adopter of equity crowdfunding, and this will be our third round through SeedInvest. It works well for NowRx because people can easily grasp the concept. Delivery pharmacy makes a lot of sense to a lot of people.

Crowdfunding allows us to continue focusing on the customer experience while retaining more control over the direction of the company, as opposed to feeling pressure from a VC to grow at all costs. On top of that, it builds brand awareness. The retail investors become engaged ambassadors, even in territories where we don’t currently operate, and they help advocate for NowRx and our mission.

How does NowRx view the competitive landscape and how does it plan to differentiate moving forward?

New entrants like Amazon, especially following the acquisition of PillPack, are cutting the delivery times for medication from around one week down to approximately two days. Our belief is that it’s essential to perfect same-day service. That’s what patients have grown accustomed to in pharmacy. That’s why there’s a pharmacy on every street corner.

Patients have been trained to leave the doctor’s office with a prescription order that they go and get filled later that same day. That’s where our offering is differentiated. The micro-fulfillment strategy allows us to provide highly responsive care, and even one hour delivery, if needed for things like pain medication and antibiotics that are time sensitive.

Consumers are pulling the market towards that same-day delivery end state. That’s why having proprietary software and quick-fill systems to eliminate causes of delay is such a differentiator for the customer experience.

How can remote care be improved and how does NowRx fit into this picture?

The key to success is focusing on improving care and health outcomes above all else. One of the things that people generally don’t think about when they hear “delivery pharmacy” is how it helps to solve the problem of people not taking their medications.

Medication nonadherence is a huge strain on the health system, and it has many different causes. A majority of the time, it’s due to one of three reasons. The first is time and inconvenience. The second is lack of transportation. The third is simply “forgetting” to pick up a prescription. NowRx addresses all three of these directly.

There are countless unnecessary hospitalizations and avoidable issues due to medication nonadherence, so that’s one of the biggest problems we’re trying to solve. There’s so much inefficiency in the healthcare system, and we’re excited about using new technology and delivery models to address it.

Oak Street Acquires Specialty Care Provider RubiconMD

Value-based primary care network Oak Street Health acquired RubiconMD for $130m, adding virtual specialty care to its existing services focused on seniors in the Medicare Advantage population.

  • Oak Street operates by initiating full-risk contracts with Medicare Advantage plans, taking on complete economic responsibility for patients in exchange for per-member, per-month compensation. Oak Street Health currently operates over 100 centers across 18 states and is the only primary care provider endorsed by the AARP. 
  • RubiconMD’s network contains over 230 specialists across all major specialties, with a virtual platform that provides clinical insights on specific patient cases and allows primary care providers to directly manage more of a patient’s care needs.
  • Integrating specialty care into Oak Street’s value-based model will enable it to improve coordination between PCPs and specialists while streamlining operations, an important component to successfully managing a full-risk model.

The Takeaway

RubiconMD was built to support the exact type of health centers managed by Oak Street, and the acquisition provides Oak Street with a proven platform and a large specialist network instead of having to develop both from scratch.

Although Oak Street was an early entrant in the value-based care segment, the RubiconMD acquisition highlights the scale needed to compete for contracts with a limited pool of employers and payors, likely foreshadowing more consolidation on the horizon.

23andMe Enters Virtual Care With Lemonaid Health Acquisition

Genetic testing company 23andMe announced plans to acquire Lemonaid Health, a virtual care and pharmacy provider, in a $400m agreement expected to close by the end of 2021.

After going public earlier this year, 23andMe began to see a slowdown in purchases of its direct-to-consumer genetic tests, causing the company to search for new revenue drivers outside of its flagship product.

  • 23andMe is a consumer genetics company with a mission to help people access and benefit from the human genome. It has multiple FDA authorizations for genetic health risk reports, and began working on drug development with GlaxoSmithKline after an investment from the pharmaceutical company in 2018.
  • Lemonaid Health offers same-day telemedicine appointments and prescription drug delivery, leveraging clinical algorithms to assist its medical providers with treatment of a variety of common medical conditions.
  • Following the acquisition, 23andMe will be able to provide genetically-informed primary care, using genetic testing as a foundation for individualized treatment plans and disease management. 23andMe plans to accomplish this in part by using its FDA-approved pharmacogenetics reports, which indicate how efficiently different people metabolize certain drugs.

The Takeaway

Combining 23andMe’s consumer business with Lemonaid Health’s telemedicine and pharmacy services gives the company unique positioning in the increasingly crowded virtual primary care market. Activating a large existing customer base with a promise of personalized healthcare has been a popular strategy with recent digital health moves (Headspace Health, Crossfit Precision Care), and could give 23andMe an advantage over more traditional providers.

HLTH: UnitedHealthcare Launches Virtual-First Health Plan

UnitedHealthcare made headlines at HLTH by announcing the launch of NavigateNOW, a virtual-first health plan that offers an integrated approach to providing care both virtually and in-person.

  • NavigateNOW is a collaborative effort between UnitedHealth’s payor arm and its Optum subsidiary that seeks to capitalize on the industry-wide shift towards hybrid care. The virtual-first health plan is designed to provide patients with a personalized virtual care team for medical and behavioral health services with a seamless hand-off to in-person treatment if needed.
  • Availability begins later this year in nine initial markets, with a goal of expanding to large employers and over 25 markets by the end of 2022. NavigateNOW offers members no copays for common services, unlimited 24/7 physician access, and reduces plan premiums by approximately 15%. 
  • The collaboration leverages Optum’s primary care and behavioral healthcare services, with UnitedHealthcare’s national provider network available for in-person visits. The integrated care model is designed to identify health issues earlier, encourage preventive care, and deliver services in the most appropriate setting.

The Takeaway

It’s a strategic priority for UnitedHealth to take advantage of the overlap between Optum and UnitedHealthcare, and NavigateNOW is the first major launch in that initiative. NavigateNOW is UnitedHealth’s first virtual-first primary care plan, and combining Optum’s digital resources with a large clinical footprint gives the service strong value proposition within the digital health market.

B2C2B as a Digital Health Go-To-Market Strategy

In a recent editorial at MobiHealthNews, Marley Medical CEO Chris Hogg laid out the case for why business-to-consumer-to-business (B2C2B) could be the best future go-to-market strategy for virtual care.

After serving as the CCO of Propeller Health (acquired by ResMed in 2018), Hogg went on to found Marley Medical in August of this year, aiming to help people manage common chronic conditions by taking a new approach to the market.

  • Early digital health companies faced problems fitting innovative products into a lagging reimbursement framework, finding themselves misaligned with existing code descriptors. Without a standard classification, most companies began working directly with payors and employers, offering them services that they could then market to their members (B2B2C).
  • The B2B2C model allows digital health vendors to be compensated by payors in a variety of ways, usually tied to enrollment or engagement. After finalizing the contract with the payor, the vendors begin overcoming implementation challenges and marketing for new members, hurdles that often lead to slow enrollment and limited revenue.
  • Virtual care’s emergence as an effective care delivery method shifts the landscape, allowing digital health startups to classify their products as “traditional clinical services” qualifying for reimbursement. It also allows them to work with and market to individuals while unlocking the ability for payors to compensate them for providing services to their own user base (B2C2B).
  • The B2C2B model gives companies control over user acquisition while enabling their offerings to be subsidized by payors – a compelling go-to-market strategy. The need to directly acquire users causes companies to focus on specific populations and build people-centric products with tangible impacts, as opposed to ones that are easy to market to payors or employers.

The Marley Medical Strategy

In a telehealth playing field that seems to be getting more crowded every day, Marley Medical is looking to set itself apart by focusing its virtual primary care offering on specific populations with chronic disease, engaging directly with patients before working with payors as an in-network provider. With Hogg at the helm and a fresh go-to-market blueprint on its side, Marley Medical is in a good position to show how effective B2C2B can be.

Unsatisfied Patients Turn to the Internet

According to a new study from the AHIMA Foundation and Kelton Global, there is a large disconnect between the information shared by doctors and their patients’ understanding of it.

This communication breakdown leaves patients confused about how to proceed, prompting many to turn to other resources to feel more in control of their health.

  • The survey was distributed to a nationally representative sample of US adults in August 2021 (n=1,059), finding that 76% of Americans “do not leave their doctor’s office on a positive note,” due in part to lacking clear answers to questions (24%) or not having the chance to ask any questions (17%). 
  • After these visits, 62% of Americans are “not extremely confident” in their understanding of information discussed with their doctor, while 15% admit feeling more confused about their health than they did before their appointment.
  • As a result, 80% of Americans research medical recommendations online following an appointment, reporting that they are confident the information on the internet is credible (86%) and that it allows them to feel more confident in their doctor’s recommendations (35%).

The Solution

The researchers conclude that having access to a complete picture of your own health, whether through a doctor’s visit or internet research, is the key to seeing better health outcomes. Most Americans seem to agree, with 81% of survey respondents saying that if they had access to all their health information, such as medical records and test results, they’d see at least one improvement in their health management.

Walgreens Doubles Down on Primary Care

In a move to accelerate its value-based primary care strategy, Walgreens announced that it plans to take an ownership stake in VillageMD with a $5.2b investment.

The investment gives Walgreens a 63% stake in the primary care company, making it “the first national pharmacy chain to offer full-service primary care practices with primary care physicians and pharmacists co-located at its stores all under one roof at a large scale.”

  • The partnership originated with a 2019 pilot program of five co-located primary care practices designed to more closely coordinate care between patients’ physicians and pharmacists. It has since expanded to 52 co-located primary care practices, with plans to have at least 1k “Village Medical at Walgreens” locations by 2027.
  • VillageMD offers same-day appointments with its physician-led teams that include nurses, lab techs, and behavioral health specialists. It also helps physicians transition to risk-based care models, an approach that appears to be working: full-year expected revenue is $1.3b, a sharp increase from $217m in 2017.
  • Walgreens announced a new division called Walgreens Health to house VillageMD and its other clinical services, which includes the recent purchase of a 55% stake in care-at-home company CareCentrix. Walgreens Health’s goal is to provide whole-person healthcare to the 75% of Americans who live within five miles of a Walgreens.

Industry Impact

Retail clinics are quickly becoming a popular pursuit as companies like Walgreens, Walmart, and CVS Health rush to expand their clinical footprints to cater to the growing number of consumers seeking convenient care close to home.

Walgreens stated that it plans to make consumer health a key “growth engine” through partnerships in primary care (VillageMD) and post-acute services (CareCentrix), driving more volume of in-store health products while expanding healthcare access.

Equum Medical Expands Decentralized Provider Network

Acute care telehealth and tele-ICU provider Equum Medical has been busy. After raising $20m in funding this August, the company has been actively hiring and broadening the reach of its multispecialty clinician teams.

The timing of the moves is not a coincidence. As the pandemic continues to pressure hospital bandwidth and cause burnout among healthcare workers, Equum’s services could be a part of the solution.

  • Equum’s unique approach to care delivery supports health systems with telehealth-enabled physicians working in close proximity to patients. These clinical “pods” allow physicians to build durable relationships with local patients.
  • The company’s goal is to create a critical mass of local physicians and intensivists to provide uninterrupted care for partners, with the nationwide network available as a safeguard during local surges in demand.
  • This allows health systems to fill coverage gaps, reduce the labor load of on-site clinicians, and extend patient care in specialty areas. Equum’s modular services also allow partners to right-size coverage options while keeping their existing tech platforms.

The Takeaway

Unlike in other industries where specialization reigns supreme, health systems have yet to outsource a wide range of functions. With a growing number of “prosumers” taking an active role in their care and demanding more from providers, many hospitals are having difficulty meeting rising expectations.

Equum’s decentralized care framework aims to solve this challenge, not with the standard telehealth playbook, but by bringing its services closer to the people that it serves.

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