Welcome to the "Lessons from the C-suite" series, featuring Advisory Board President Eric Larsen's conversations with the most influential leaders in health care.

In this edition, Jason Gorevic, CEO of Teladoc Health, talks with Eric about completing a mega-merger during a pandemic, barriers to entry versus barriers to success at scale, and how pulling an all-nighter jumpstarted his career in telehealth.

[Edited by Dave Willis, Vice President, Health System Strategy, Advisory Board.]

Question: Jason, you’ve had a great run as CEO of Teladoc since 2009, guiding the company through several chapters – most notably an IPO in 2015 and then just last year, in the teeth of the pandemic, completing the massive $18.5 billion acquisition of Livongo. 

Lots of great stuff to discuss about Teladoc’s present and future, but I’d like to start with something of a retrospective – any thoughts or reflections on what has stood out in your career journey so far?  Big moments of inflection?

Gorevic: If I reflect back, Eric, the hardest decisions and the biggest turning points have always been when I took a path that was probably a little bit more difficult. Those have been the breakthrough moments for me, and I’ll give you a few examples.

When I was in college, my expectation was that I was going to go into my family's jewelry business. But I worked there one summer and decided that wasn't really what I wanted to do.  It wasn't something that I was passionate about. I remember having the conversation with my father, and he said, "Oh, thank God, you don't want to go into retail."

That was hard, but it ended up being a great decision for me and led me ultimately to Oxford Health Plans as my first job out of college. I remember a day when our chief marketing officer threw some brochure on my desk about a Nurse Advice Line, some sort of demand management service. And he said, "Go get smart on this, and let's talk about it tomorrow."

Now, I was fresh out of college, and our chief marketing officer wanted to talk to me about something, so I was going to get as smart as I could. I remember poring over everything I could overnight, literally pulling an all-nighter because he said he wanted to talk to me the next day about it. Lo and behold, he didn't even show up the next day, he was working in a different office.

I was in my direct boss's office complaining about this, when Steve Wiggins, our CEO at the time, walked in and asked what we were talking about. And I poured out everything that I had learned in the last 24 hours. He said, "I want to hear more about this and how this might work." And that led to me building a Nurse Advice Line, and then running that Nurse Advice Line.

I could have stayed on that course, but then I did a startup, and that one was challenging because we were raising capital in the middle of 2001 when the towers came down and the dot com bubble burst. So, that was another pivotal moment for me. And then if you fast forward a few roles later to my decision to leave WellPoint in 2008, I had a fork in the road to either go back and run a big health plan or go to this little startup called Teladoc. When it was announced that I came here, I got all of these condolence emails. I had people reaching out to me saying, "Hey, I thought things were going so well…if it doesn’t work out, let me know and maybe I can help you."

Then the most recent seminal moment was obviously the pandemic.  We always had this expectation that everybody was going to realize that virtual care was going to be the future. When the pandemic hit, it became the future overnight, and it was brutal for a little while. But we managed to rise to the occasion, handle the volume. And obviously, we were on this incredible trajectory.

At that moment, I sat down with the management team and I said, "This is great, but everything is going to be in motion now because everything has accelerated so fast." And so we leaned in, and we did the Livongo merger in the middle of a pandemic when we could have just ridden the wave.

Although it was incredibly difficult to do an integration through the pandemic, it was absolutely the right thing for us to do. And so, sometimes bucking up and making the hard choice can be the best decision that anybody makes.

Q: Many of those big, consequential career decisions that you describe Jason seem, curiously, to have coincided with some of the most chaotic moments of the past twenty years: 9/11, the dotcom burst, the global financial crisis of 2008-2009, and then of course the Livongo transaction amid all the disorder and confusion of the pandemic.  Pretty compelling evidence that those moments of upheaval can also offer the most opportunity.

Gorevic: It's funny you say that, Eric.  I totally agree. When I got all those questions from people about why I was joining Teladoc, my response was always that, if I were an investor, I'd be a macro trend investor. I believe fundamentally that you don't want to bet against the big macro trends. And if you can figure out which direction those trends are heading, especially in these chaotic moments as you mention – and you have the execution chops to be able to take advantage of it – then there is massive opportunity.

Merger origins

Q: Let’s talk more about Livongo – lots to deconstruct here.  First, nomenclature – it’s been called a merger, but it seems de facto to be a full acquisition; I'd be curious for your characterization of it.  And more importantly what was the strategic impetus?  How were discussions started and diligence performed, especially with the complexity of doing a transaction during the pandemic?

Gorevic: We do talk about it as a merger. It was bringing together two large organizations.

In the early months of the pandemic, our team saw this incredible shift in the market among consumer behavior and provider behavior. Suddenly, all the things that we had been talking about for the last 11 years came to fruition, and the market woke up to the power of virtual care. Maybe somewhat out of necessity, because there wasn't another option.

But once they did, they realized that it was incredibly powerful. The net promoter scores among consumers were off the charts, and among providers were shockingly high, even among those who had resisted for decades. We were looking at the data, but we were also looking at the behavior patterns. And it was clear that the market had accelerated probably three to five years in terms of adoption.

We created a strategic map, a chessboard, if you will, of all the various players and the potential moves. Because when you get that kind of seismic change in the market, it sets that chessboard in motion. We concluded that there was going to be consolidation, there was going to be more money coming into the sector. And we could either be the catalysts and we could define the category by putting together the leaders, or we could let things happen and potentially lose the years of advantage that we had built up.

We felt there were two obvious leaders in the market. Two companies that had gotten to scale. Two clear leaders in terms of technology, market position, impact on the consumer, distribution, relationships with the various players in the healthcare system. Drew Turitz, who leads corporate development for us, has known Lee [Shapiro, Livongo CFO] for years. They both live in Chicago, and Drew called Lee and said, "Hey, you want to go for a walk?" This is in the middle of June when nobody was interacting with anybody. That’s where the subject was first discussed, and there was strong receptivity among the Livongo team. Glenn [Tullman, Livongo CEO] and I had a conversation following up on that. And we agreed that the market had accelerated and was ready for this combination.

We all ended up meeting in Detroit, the three of us in a hotel in Detroit, because that was the only place you could go during the pandemic without any of us having to quarantine for two weeks.  That was the beginning of it. And we quickly figured out that there was cultural alignment, there was mission alignment, there was strategic alignment, and very, very complementary businesses.

We put these two companies together because we both had the same vision of whole-person virtual care. Not just a single condition, not just mental, not just physical, not just chronic. But, the whole person, chronic, complex, acute, episodic, across the entire spectrum. And I believe very strongly that that's not only the winning solution, and truly differentiated in the market, but that there's nobody else who's even close.

Ups and downs of the public market

Q: Shifting gears here, Jason, I’m curious for your perspective on the volatility and ups and downs in the public markets. Teladoc went from a 52-week stock price high of $308 down to $129, and today you're $148—how closely do you track those market movements? My guess is you have to be a bit of a philosopher when it comes to these things and try to ignore share turbulence when someone mentions ‘Amazon’ and ‘telehealth’ in a headline. 

Gorevic: What I believe very strongly is that the financial markets ultimately reward long-term performance. The headlines move things on a daily basis, but all of that gets washed out over the long term. There is absolutely no reason that when there's a headline that has big tech and telehealth in it, that our stock should drop 5% or 10%. That's the most ridiculous thing, it has no bearing on our valuation.

I stress with our team the importance of consistently exceeding expectations. One of our values is keeping our promises. And that includes the financial guidance that we give. Fortunately, most of the investors I talk to are long-term holders and see the value building over time.

Scale matters

Q: Let's turn our attention to the overall telehealth market – I'm curious how you would characterize the broader landscape?  You mentioned a 3-5 year time compression through the pandemic, with McKinsey and others now projecting a $250 billion market for telehealth. And consequently we’re seeing a ton of activity in the space: a stack of suddenly well-capitalized telehealth ‘point solutions’; more conventional telehealth competitors like AmWell and Doctor On Demand engaging in IPOs and M&A; and then of course some of the big non-traditional players like Amazon and Walmart muscling into the space.  With all of this frenzied activity in telehealth, how is Teladoc continuing to differentiate itself?

Gorevic: When I got to Teladoc 12 years ago, the first thing I had to do was raise capital, and this was back in 2009, so not the greatest capital market.  I kept having the same conversation.  I like the VCs, but they all go with the same playbook. “What's your secret sauce? What’s your differentiation? Where's the protectable IP that's going to make you win and make nobody else able to do what you do?”

But for us, it's always been about consistently delivering more value because we're the broadest solution in the market. We've charted a course, and this goes back to our IPO roadshow deck.  It says, we're going to become the destination for the consumer, regardless of what their healthcare needs are. We're going to have the broadest solution. And we're going to do it with all these different things.

We went public in July 2015, and in September of that year, there was a Wall Street Journal article saying the PMPM model is dead, and Teladoc is in trouble. Like we were just talking about, those headlines create chaos, our stock cratered, it went to $9 or something.  And I remember saying, "Okay, well, they can say that, all we have to do is continue to prove them wrong.” And we've consistently done that. Today, our subscription access fees are 85% of our revenue. Because when it comes to differentiation, it's the breadth of our offering, being able to really take care of the whole person. It's being in all of the customer channels.

And executing on that really has mattered because as the market has matured, those point solutions have become more and more obsolete. They're too narrow, they don't take care of the whole person. As we come out of the pandemic, we've gone from the awareness phase of virtual care, to the adoption phase, to now we’re at a place where the consumer expectations for virtual care are high. They want it to be integrated.  Just like they are with the rest of their e-commerce requirements, and their other interactions with the rest of their daily lives.

So how do we differentiate?  Our model is very integrated.  We deliver care through our network of physicians. We enable care to be delivered virtually for hospitals and health systems all around the world, not just in the U.S. Our global presence really matters. And we're focused on empowering consumers with the best technology, and the best data, and the best healthcare to best manage their own care. There is nobody else who has that breadth of capabilities, the breadth of distribution, and sort of leadership in every channel.

And then there’s our scale.  Scale matters in healthcare. First, because large clients want to know that they can rely on their partners. And second, scale equals deeper and broader data sets. The ability to use data in healthcare is a fundamental differentiator.  When some of these small private companies go public, and actually have to be transparent with their finances, the scale difference will become very apparent to the market.

Relief for heads of benefits

Q: You mention scale as a strategic advantage, Jason.  There is a countervailing trend that we’ve referenced – so many of these point-solution, single-product offerings multiplying in the market.  And corporate benefits managers are throwing up their hands in frustration – too many pitches, too many ‘dis-integrated’ solutions.  It sounds like a big part of Teladoc’s strategy is to counter that phenomenon and offer a fully integrated, holistic platform as a one-stop-shop.  Fair characterization?

Gorevic: That's exactly right, Eric. We believe, fundamentally, that both the consumer and the purchaser, whether it's the health plan, or the employer, want a single integrated solution to take care of the whole person. Why would we ask benefits managers to be the integrator of a bunch of point solutions? That's not their job, it's not their expertise. Why would a large employer spend the money to create that integration when they can get it in a much better fashion from a player like us, who can bring together not only the consumer experience, but also the provider experience and the data to create the best healthcare?

And then think about the patient, the consumer.  I talk a lot about chronic conditions and the intersection of mental healthcare and physical healthcare. If you think about a person who's recently diagnosed with diabetes, they're not just going to benefit from a doctor, they're not just going to benefit from a device, they're not just going to benefit from a coach, they're not just going to benefit from a registered dietician, they're not just going to benefit from a therapist who can help them with the depression that they now have. They're going to benefit from all of this.

And if you're not bringing all of those together in an integrated fashion, all working with the same data set, then it's a partial answer. You're missing the opportunity to really make an impact on their healthcare and the cost of their care. I feel very, very strongly that the right solution for the entire system, and especially the consumer, is that whole-person care that pulls all of that together.

Q: So how might this play out in the market? An accelerated period of price competition, consolidation, and ultimately a small handful of winning telehealth platforms that offer an integrated solution – especially one that encompasses physical and mental health?  I’ve seen estimates that there are as many as 1,000 companies offering digital health solutions right now, maybe more. So an interesting analog might be the EHRs.  In 2006 there were something like 1,000 ambulatory EHRs. And here we are 15 years later with basically two main winners in that market.  Is that what’s going to happen here – but a lot faster than 15 years – with competition in telehealth?

Gorevic: Yes, I think so Eric.  People always ask me about barriers to entry. For better or for worse, the barriers to entry in legacy telehealth are relatively low. What's really big are the barriers to success at scale. So, I don't spend too much time focused on the $5, $10, $20 million dollar companies.  In the healthcare world, those are very small niche players. And those will either be swallowed up, or they'll die under their own weight. As you said, we're in a generous financial market now with respect to venture capital and private equity.  That’s not always the case, and that goes through cycles. And every time you go through a cycle like that, there's a washing out.

So I think the market generally takes care of those things. From my perspective, it's more about execution. And the good news is, we're having more real strategic discussions with, frankly, your target audience. With the C-suite of the biggest hospital systems, the biggest public payers, all the Blues plans, the pharmas. We're having more strategic discussions with them than we've ever had before.

We moved up the C-suite because everyone realizes that the right solution is an integrated solution that works with the rest of the healthcare system. This is another one of my sort of pet peeves. I don't think healthcare is disruptable. It's too complex a system. That’s an unpopular thing to say in some parts of the sort of VC world.

But we see our job to work with the healthcare system, transform it and improve it, but in an integrated manner, not from the outside in.  We want to bring as much value to hospitals and health systems and other providers as we do to payers and employers and the end consumer. If we execute on that, I don't really worry or spend too much time thinking about those point solutions.

Value proposition to health systems

Q: Let’s get into your rather counterintuitive point that healthcare is not ‘disruptable,’ and that Teladoc will work from ‘within’ to transform and improve it.  I presume a large part of this strategy, in addition to aligning and partnering with employers and payers, will be working with incumbent health systems.

Gorevic: Yes. When we did the Livongo deal, we had a hypothesis that the big health systems would be interested in taking advantage of that technology for post-discharge care, for their chronically ill patients, readmission avoidance. But it was just a hypothesis because Livongo had really never sold in that manner. They had sold to hospitals just for their employees, as an employee benefit.

And the magnitude and the velocity of interest at the hospitals and health systems, for those capabilities, has blown me away. It's incredibly strong. What they're looking for is to be able to discharge a CHF patient with a connected blood pressure cuff and a scale and for us to apply our data science. And I want the platform such that if that patient needs to speak to somebody because they're having an exacerbation, they can do it in an integrated fashion on a virtual visit on the same platform that is seamless.

Another thing.  Health systems are seeing the change in the hospital moving into the home. Everyone is talking about reducing their physical footprint, moving more acute care into the home. And I think this will be a catalyst because finally we're really moving down the risk spectrum.

Q: Agreed – conversations around site-of-care shift, home as an epicenter of care, and virtualization of care dominate every CEO conversation I have.  So a lot of energy and excitement here.  But then we run right smack into this immovable object, which is the fee-for-service reimbursement system for health systems. And the rhetoric around value doesn’t necessarily match the reality; very few health systems, outside of the vertically integrated ones like Kaiser, Intermountain or Geisinger actually have much capitation or delegated risk.  So how are you structuring your partnerships with health systems to accommodate the variety of players, markets and reimbursement structures we see?

Gorevic: There are multiple parts of our offer. If you look at the InTouch portfolio of products, that's about high acuity. Telestroke, telepysch, in the NICU, very high intensity use cases where you have to have medical-grade technology. And Zoom doesn't cut it. So, that's part of our business, and every health system needs that.

Then there's the hospital who says we really want to extend our reach into the home, we need a platform to do that, and we want something that's integrated with the rest of our workflow. The point solution video interface isn't sufficient. Because it doesn't integrate with the rest of their systems, their scheduling, their EMR, etc. So we're bringing that solution too.

And then there's the third, which really gets to your question around risk, which is the chronic care management, the post-discharge. You’re right about the plodding movement toward actual risk arrangements. However, where the hospitals really are on the hook is readmission avoidance. So, you can argue whether that's really taking risk or not taking risk, but they see it as taking risk for good reason. Because if there's a readmission and they're on the hook for the expenses of that, that is real risk to them financially, downside risk.

So, go back to that CHF patient who's being discharged. If you can keep a read on that CHF patient by understanding what their daily weight is, what their daily blood pressure is, you've got a pretty good read on how they're doing. And if you can then augment that with virtual visits in the home to check in on them periodically, you're pretty likely to be able to avoid readmissions and that's real dollars.

And regarding primary care, with our Primary360 product, we really believe it's reimagining primary care in a much broader sense, and with much greater frequency and velocity of interaction with the consumer. So we will, without a shadow of a doubt, move down the risk spectrum toward at least primary care cap, maybe primary care plus cap.

Q: Let’s go deeper into your last point about primary care – one of the most dynamic and competitive spaces right now in the healthcare landscape with health systems, payers and capitalists (SPACs, private equity, venture capital, etc.) all jostling for relevance. I’d love to hear how you are thinking about Teladoc’s position in this PCP ecosystem, especially as it relates to brick-and-mortar practices versus a more virtualized platform.

Gorevic: There’s a real opportunity to truly transform what has become a broken primary care system. And to do it in a way that is non-invasive for the consumer, but very personalized and high value for them. We’re not going to be able to everything virtually, but I have no interest in acquiring brick and mortar practices. This goes back to working with the health care system from the inside, not disrupting it from the outside.  We believe that we can do that in a way that integrates with the healthcare system.  By assembling the right resources available virtually, we break down the barriers to getting the right resource connected to the right consumer. And we rely on data and technology to improve the whole-person experience.

We’re going to do 12 to 13 million virtual visits this year. We're going to have orders of magnitude more digital interactions with the consumer this year that don't involve a person connecting with them, a healthcare professional. We collect 2 million-plus blood glucose readings a week. We're getting giant feeds of people's weight and blood pressure readings. And then we also have the opportunity to connect with their Fitbit, their Apple Health kit, their sleep tracker, their Weight Watchers app.

Think about the opportunity of pulling together all that data to be able to really improve the insights and personalization of care.  And with myStrength Complete, we can bring cognitive behavioral therapy, dialectical behavioral therapy, stress management, mindfulness digital modules to augment your care. And work with the MDs who are taking care of you and the coaches who are coaching you on your diet and your exercise regime.

So there's a layer of what can be done virtually, there's a layer of what has to be done in a facility, and then there's a big in-between. I think you'll see us partner with the in-between. Dispatching people to the home for diagnostic testing, or for an onsite physical that's augmented with a virtual physician coming into the room. And then making the most effective referral the first time when we have to refer somebody into an actual physical setting because we know who the best providers are for what your condition is.

All of that I think will make us uniquely positioned to not only impact care but also to take risk on that population. And go beyond what we can do virtually because when we make that best referral, or whether we dispatch someone to the home, it avoids the unnecessary testing that usually happens, the spinning through the medical system. So, I am really, really excited about that combined with a virtual-first plan design that encourages the consumer to have virtual care be their first stop.

Evolving primary care model

Q: Tell us a little bit about the infrastructure around that concept – you said you're not going to do bricks and mortar per se, but I presume you’ll have some nucleus of employed PCPs, all available virtually? How are you thinking about panel sizes?  And the reimbursement model – will you migrate from incentives around performance to full risk and capitation?

Gorevic: We’re not inventing people operating at the top of their licenses, we're just going to optimize around that. So, yes, we will have employed physicians, we'll have employed nurse practitioners, and nurses, and also coaches and therapists and registered dieticians. Again, who are all available virtually, and you don't have to send someone from one office to another to be able to take advantage of that.

By virtue of the exam room being your living room or your bedroom, we can bring any resource into that location. And as a result, I think we can optimize around the panel size, the resources that are being used. Now, I would stop short of what I hesitate to call AI-first diagnostic tools because those tend to be frustrating consumer experiences. They ask 25 questions to get to a differential diagnosis, but then the doctor is going to ask you the same questions because a differential diagnosis that it could be stomach flu, or it could be cancer isn't particularly useful. And that's a frustrating consumer experience. So we believe that AI is there to augment providers. It doesn’t replace the physician.  It's augmented intelligence more than artificial intelligence.

You're going to see us move along the risk continuum. And we'll probably end up always with some sort of a hybrid revenue model. But what we're seeing today as the first step in rolling out Primary360, and we do it with employers, but also with health plans, is for them to pay us a higher PMPM and a wider range of visit fees depending on what the intervention is. Because obviously, a 30 or 45-minute initial visit with a primary care physician is worth more than a sore throat visit.

The next step is performance guarantees and some pay-for-performance components. The step after that is a share of savings, where we actually benchmark against the population, and we create something like a matched pair cohort. And then the next step is to a true primary care capitation.

Right now, we're having that entire spectrum of discussions with large employers and with health plans. We’re finding different levels of appetites at different stops in the food chain. But I think that we'll continue to move toward delegated risk because we know that we can drive lower cost of care and better outcomes.

Navigation and care

Q: One adjacent question, which is in the employer navigation space – again, another example of a super-hot market segment.  A perennial (and intensifying) interest to self-insured employers, navigating to the highest-quality, lowest-cost provider, with lots of activity in this space. Is this virtual PrimaryCare360 platform a navigation play as well?

Gorevic: There is a navigation component, but I think a navigation play without actually being able to care for the patient is only a partial play. There's a difference between the navigation play that says “call me for anything you need in healthcare, including your customer service, or your claims, or what hospital you should go to, or whether this drug is covered,” versus, “we're going to be the epicenter of your healthcare – and when you need to be seen in person, we're going to help make sure we get you to the right place; we’re going to take the best care of you the first time.”

And if any company can't do the first level of diagnosis, and treatment, and assessment, and care for that consumer, they're not going to really get traction. Then they become just purely a navigator. And the pure navigation will end up losing out to somebody who can actually take care of you and answer your questions and provide the first level of care and the second level of care, and has all of the data that I described earlier about your overall whole-person.

Q: All these services – if not coordinated and synchronized thoughtfully – will serve to further dis-integrate care, the opposite outcome we’re aiming for. Which leads me to a follow up question – we find a lot of older patients and consumers have allegiance to their own primary care doctor, and expect the telehealth platform to accommodate that interaction.  On the other hand, a good number of Millennials and Generation Z are unaffiliated with a PCP (and many are perfectly happy with that fact), and don’t mind working with a different PCP or caregiver each time. How do you construct a solution that works with these contradictory demographic preferences?

Gorevic: Well, we make our technology platform available to provider groups, whether that's a big multi-specialty group, or an IDN. So if you, Eric, are needing a virtual primary care relationship, you can create that with your own doctor, or we can recommnd someone to you. We see it as an open system.

Q: So when you talk about your 12 to 13 million annual visits, what percentage is your own closed ecosystem versus enablement of others?

Gorevic: That 12 to 13 million is just ours. We'll enable probably another 4 million for our provider clients over the course of this year.  So right now, we're at about 75% of our visits are being delivered by our providers, and about 25% of the visits on our technology are being delivered by our clients' providers, to their patient population.

Market opportunity

Q: Zooming out from the micro to the macro, what does this mean for your total addressable market (TAM)?  So you’re hosting 12 to 13 million proprietary visits, while enabling an additional 4 million for your provider clients, out of maybe a billion total U.S. outpatient visits annually. That's an enormous market opportunity. Or do you think about and define the market differently?

Gorevic: So, honestly, people ask me about the TAM and I think it's an academic exercise that's almost unhelpful just because of how giant it is. Last I saw was a billion and a quarter ambulatory care visits a year, but that's just in the U.S. Remember that we're global. So, we have about 15% of our revenue today comes from outside the U.S., that's growing rapidly. And that also doesn't include all the mental health visits. Mental health is probably, right now, the fastest-growing part of our business.

By the time you do the math on those numbers, people are rolling their eyes because it really is that big.

Q: What do your numbers tell you about the Medicare population and telehealth utilization?  The numbers, pre-pandemic, were vanishingly small – less than 1% of visits for Medicare were virtual. And then in the early weeks and months of the pandemic, it jumped up to the mid-20s, and then found its equilibrium somewhere in the mid-teens. Does that sound right?  And what are the equivalent numbers in the commercial population that you think about?

Gorevic: For Medicare, yes, that’s about right, Eric.  For commercial, the math that we've done is that the opportunity is somewhere between a third and 45% of ambulatory care visits are ripe for virtualizing. But that might be conservative.  I've talked to CEOs of leading cancer institutions who say they expect at least 25% of their patient interactions to be virtual like for the foreseeable future.

And the other thing that I think is probably under-appreciated is all the digital interactions that we have that don't constitute a visit. We have millions of health nudges going out to consumers to help them manage their blood sugar, or help them manage their blood pressure, that don't require a human intervention. It uses technology to do it. And that doesn't constitute a visit, but we're getting paid for the value that we're delivering and the engagement of the consumer.

Q: You’re indirectly raising one of the big questions around telehealth, which is, of course, around demand: Is telehealth substitutive of an in-person visit or does it stimulate new demand? Obviously a hugely consequential issue when it comes to policy and reimbursement considerations, and at least to my knowledge, there isn't a definitive peer-reviewed study to definitively settle this yet.  How do you think about this question?

Gorevic: We've done multiple claims analyses and we ask every consumer, ""Hey, what would you have done if you didn't have access to Teladoc?"" About 10% say, ""I wouldn't have gotten care."" Now, we know that some of them would have ended up in the doctor's office anyway because they would have gotten worse, but let’s just assume for a second that for those 10% who say they wouldn't have gotten care, that our service is incremental. But given the low cost of a telehealth visit, that's such a small incremental cost versus the savings that are generated. So those extra 10% each cost $45 or $50.  It takes a lot of those to offset just one avoided ER visit, or all the unnecessary testing.

We've modeled this using multiple retrospective claims analyses.  For every visit that we did, we saved about $475. And we looked at the index visit plus 30 days so that we were capturing the entire episode of care.  Because what nobody talks about is, if somebody shows up in the ER, they're probably getting instructions from the ER that say, ""Hey, go follow up with your PCP sometime in the next couple of weeks."" And nobody shows up in the emergency room with a headache and doesn't get a CAT scan.

Vision for the future

Q: Bearing all this in mind, let’s play with a hypothetical.  If you, Jason Gorevic, were the regulator and could unilaterally write the rules, where would you land on some of the big telehealth policy and reimbursement questions regarding HIPAA enforcement, site of care requirements, state licensure, payment parity, etc.?

Gorevic: Eric, I'll tell you what I would do, but also what I think is realistic. So, HIPAA should go back to being enforced. I think it was appropriate to suspend enforcement during the national emergency, but I think it should go back to being enforced. I think consumers need protection and peace of mind.

I think we should finally put to bed the site of care requirements for virtual visits.  That is antiquated at best.

I think we should continue to reimburse for virtual care, but I don't actually think that payment parity is the right thing. I think virtual visits should be reimbursed at a lower level than in-person visits. Because it's more efficient to deliver them, it is fundamentally a lower cost of goods sold, and providers can make more money, a higher margin at a lower price and that's good for the system.

I think the secretary of HHS should have the right, in a national emergency, to suspend state licensure requirements. I don't think it's conceivable that the states will waive that on their own. And I don't think we're going to get to a place where it's a national license. But I think in a national emergency, there should be special powers that the secretary can call on to waive that for some period of time. That would have been very helpful back in March and April when we were underwater in certain states and not yet experiencing a surge in other states.

Teladoc’s future and final reflections

Q: With our last few minutes, Jason, I’d like to ask what Teladoc will look like as the vision coalesces.  Knowing you and the company I fully expect there to be constant evolution and growth, but I’m curious what ‘maturity’ looks like for Teladoc?  What does integration and a fully-fledged platform look like?

Gorevic: There are three layers to integration. There's the data platform and data integration. Because bringing all that data together and applying data science against it really improves care. And it makes it more personal for the consumer in a way that moves the needle on their behaviors because it is the compilation of all that data. So, the data integration is the first thing.

The second is an integrated consumer experience that through one entry point enables the consumer to access the entire spectrum of the digital and professional resources that are available. I frequently describe it as what the giant multi-specialty integrated delivery system should be. You’re not going from campus to campus and filling out forms at every stop along the way. You don't have to answer the same set of questions every stop along that way. But rather, it all just shows up for you, because there's an intelligent engine under it, and it's just through one door.

And then, third, it's the provider having access to all those resources through the same interface and being prompted by that data engine with the best action for the consumer to best improve their care.  The problem in healthcare isn’t that we have too little data, it's that we have too few insights coming out of the data. We have the opportunity, by bringing together all those things, to really provide the right resource for the provider, whether that's an MD or a sub-MD, to make available to the consumer in the right moment.

Gratitude

Q: Jason, let’s close with a final – and personal favorite – question. You've had a remarkable run, and of course you're still very much in the middle of it. As you pause and reflect, what are you most grateful for?

Gorevic: I'm honestly most grateful that we were able to be there for the world when they needed us.  In the middle of March last year, and we were just completely overwhelmed with demand.  Practically overnight, our demand had more than doubled and everyone was turning to us. Consumers were turning to us, provider organizations were turning to us, clients were coming and saying, ""Can you take 10 million more people?"" And I was really concerned.

I came home one day in mid-March, and I looked at my wife and said, ""I don't know what's going to happen, I don't know if we can handle this."" And she said, ""Jason, you've been working the last 11 years for this. You got this.""

I'm super proud of our team for stepping up, and I'm incredibly grateful that we were able to be there when the world needed us.

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