Beyond the Byline: How telehealth utilization has impacted investor-owned company earnings – Transcript

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Speaker 1:    Hello, and welcome to modern. Healthcare’s Beyond the Byline, will reporters add context to their stories to help you better understand the news and how it’s reported. My name is Alex Kacik. I’m the hospital operations reporter for modern healthcare. Today. We are lucky to have Jessica Kim Cohen, our technology reporter. Thanks for joining us, Jessica. Great to chat. I wanted to catch up with you about the third quarter earnings for the tech companies that you’ve covered that are rolling in. And I wanted to get your take on how balance sheets have been shaping up. One of which is Teladoc. The tele-health software developer, you know, reported more than 2.8 million visits for the third quarter, which is more than triple than the third quarter of last year. I’m curious how telehealth utilization is factoring in to these earnings for these companies that you’re covering.

Speaker 2:    Definitely. I think something really important to keep in mind when looking at the high number of telehealth visits and how that’s impacting tele-health company’s growth is that there’s two main types of fees that Teladoc charges that it makes money from. There’s the fees from visits. Like you mentioned, those visits fees were up about 170% year over year to about 51 million this past quarter, but then there’s also subscription fees. That’s the, that’s the money that Teladoc basically gets from charging enterprise customers like help insurers, where those customers will pay to then cover telehealth services and be able to offer those to their members. And those subscription fees were up about 90% to around 226 million this past quarter. So the fact that we’re seeing so many visits is definitely something that’s driving from the growth, but to a certain extent, the more sustainable thing to be watching is how many customers the company is getting and kind of what, what type of earnings they’re getting from those kind of larger scale contracts.

Speaker 1:    So how has tele-health played into this pandemic?

Speaker 2:    Yeah, this has to a certain extent, Ben Ben tele-health moment. It has been really helpful for patients who don’t want to go to the hospital or don’t need to go to the hospital, opened up the option for them to be able to stay home and talk to a physician, be a video, or be a phone call. And then on the other side, even for inpatients at hospitals, having the capability to be seeing patients over video has helped hospitals with decreasing infection rates. For example.

Speaker 1:    Yeah. That’s an interesting point because a lot of times we think of tele-health as you know, the patient facing solution, you know, you’re, you’re calling into a doctor, but it’s used internally as well. Right?

Speaker 2:    That’s been something that’s been really helpful. Like I mentioned, in terms of decreasing infection risk and also too at the start of the pandemic earlier on when they were concerned about a shortage of personal protective equipment and trying to, you know, decrease the amount of times that a provider might need to change their gowns in such kind of as much as physicians could be kept outside of those patient rooms, that was really helpful. So there were different projects to be able to use a video, to talk to a patient. So a physician or a nurse might not need to go inside of the room. There’ve been projects used in emergency departments, for example, using a physician who’s talking to patients via video to triage the patients. So that kind of one of the first contacts the patient is getting when you’re unsure, whether they are a suspected COVID case or not a suspected COVID case is done via tele-health. Other thing that’s been really helpful for this growth of telehealth inside the hospital has been the ability to have a kind of Bluetooth connected or internet connected devices. For example, some hospitals are using internet connected stethoscopes, so that instead of a nurse and a physician, for example, needing to go into a patient room and kind of take their vital signs and talk to them, see how they’re progressing. Instead, just one clinician could go in with a Bluetooth connected stethoscope with telehealth equipment.

Speaker 1:    So there’s so much uncertainty about the longevity of telehealth, you know, as you see these waivers and expansions of, of, of coverage rolled out via this emergency declaration, you know, we’re seeing expanded use, but I’m curious how are these for-profit investment and companies that you’re covering are, how are they factoring all this into their earnings? You know, are, are they relying on this, you know, increase level of utilization despite all this uncertainty over the longterm?

Speaker 2:    Yeah. It’s definitely been something that investors have been asking about as well, since there is so much uncertainty on the one hand, some of this insurance coverage could go away. In which case it would be a lot harder for patients to access services via tele-health. On the other hand, there’s definitely a lot of patients now who have been exposed to video visits and if in a year or so want to schedule a video visit with a physician and aren’t able to will be disappointed, confused. So there, there is hope that there’s going to be expanded telehealth services available to patients in the future. What it seems that most people are expecting is that it won’t be as high as at height of the pandemic. And since then the numbers have dropped. There have been fewer visits since that peak around March or April, but it’s still being used at an sat as significantly higher rate than before the pandemic. And most companies seem to be expecting that that’s what the future will hold. There will be more telehealth and telehealth might be integrated into kind of routine patient care. Something that American Wells leadership team mentioned on their earnings call is they think the future of care will be a hybrid model with some physical in-person visits, but also more virtual visits. So there is an expectation that it won’t stay at the super high level. It is now during the pandemic, but it will be significantly higher in utilization than previously.

Speaker 1:    Well, you mentioned Ann Wells, a CFO, who’s saying they expected a more hybrid care model combining physical and virtual care models. I’m curious, you know, what does that look like?

Speaker 2:    Something I thought was really interesting when I’m sitting in on American well corporation, which is now rebranded as Amwell. Their third quarter earnings call with investors is they mentioned that in previous years, most of the visits on their platform were visits in which a patient was calling in for a visit with the medical group that is associated with American wealth. So a lot of the time that’s the kind of direct to consumer urgent care model. We think about on the other hand now, you know, in Q3, when we are amid this COVID-19 pandemic and we’re seeing more hospitals offering telemedicine surfaces, they were seeing the majority of visits on their platform, actually between a patient and either one of American wealth hospital customers or insurance providers, the providers that are hired by those customers. So that would be a patient a lot of times seeing their own existing physician they already have, but on using through the American wealth software and platform. So looking forward, American law kind of expects that that’s going to be what the future of their company is going to look like. They’re going to be selling this type of a telehealth equipment to hospitals, health insurers, and they’re going to be integrating that into their care deliveries.

Speaker 1:    So you and I worked on a story about how health systems are treating this from a governance standpoint, where we’ve known, we noted in our reporting that more are carving out specific chief tele-health officers. And that, you know, before it’d be lumped into like a chief digital officer and another C-suite executive, but I’m curious, what does that tell you about how telehealth will be managed from the health system standpoint? And does it add some potential longevity to some of these projections in terms of how much it will be used and try to be integrated into these care delivery?

Speaker 2:    Yeah, I think that goes to show that tele-health is something that hospitals see sticking around, even for those that might still be figuring out how best to use tele-health for what patients, how frequently it’s something that they don’t see as a short term kind of COVID response. It’s something that they’re really integrating into their operations long-term. And I think one of the interesting things that I saw when we worked on that article was a move to give that tele-health oversight role to clinical leaders, to have physicians in charge of that have that under the chief medical officer’s purview. So it’s really being seen as a part of care delivery, not just a technology project.

Speaker 1:    I’m curious, like you’re seeing these Telehouse companies to draw a lot of investment, whether that’s venture capital, some health systems are active investing in certain, some of these startups, these smaller telehealth companies. I’m curious, you know, with this seemingly record levels of capital coming into some of these companies, how is that being utilized?

Speaker 2:    It very much depends on the investment to a certain degree. These companies, of course, particularly if they’re startups need capital. A lot of these tele-health companies like Teladoc and Amwell aren’t profitable yet. So they do need capital to pay off expenses and also to kind of grow and scale their services. There are some investments that have been more on the innovative front. Recently, Google invested a hundred million into Amwell and Amwell leadership has said that that investment will kind of span everything from the more basic infrastructure with the company, migrating some of its work onto Google cloud as part of a kind of surrounding partnership. That’s gone along with this investment, but also as part of that, there’s kind of this more innovative side where, and well, and Google has said, they’re going to be working together to develop AI and automation tools with the AI and technology capabilities that Google has. So we’re seeing investments first of all, as a way to gain capital, but also as a way to kind of strike these strategic partnerships between different companies that can kind of bring their different technology backgrounds together.

Speaker 1:    Have you noticed anything in particular about these acquisitions that these companies are making, or is there a certain overriding strategies involved when you let’s say, you know, see Teladoc, you know, planning to merge with Lavango, which is an e-health and chronic disease management platform, you know, it also acquired InTouch, a smaller tele-health company. I’m curious what, what those deals are indicating to you.

Speaker 2:    Yeah, I’d say for Teladoc in particular, it’s stress quite a few acquisitions over the past few years, and it’s been really interesting to see just based on those acquisitions where it looks like the company is looking to grow. For example, last year, I believe Teladoc ha acquired a company called InTouch health, which has a big foothold in the provider market. So that’s a bit of what we were talking about earlier. Instead of having tele-health seen as this kind of direct to consumer patients, calling a physician with an urgent care issue. That’s not their typical physician. They see in touch health was much more the kind of telehealth platform that had a strong foothold in which healthcare providers that healthcare providers were using to connect and basically take the care they were already doing and moving it to a virtual space. So that’s one thing that Teladoc built up through that acquisition.

Speaker 2:    They also acquired a company called best doctors, which was focused on patients with chronic conditions. That’s something that Lavango also focuses on the Longo focuses on trying to improve outcomes for patients with diabetes, with hypertension. So seeing again, tele-health moving beyond what people might think of as a service primarily used for one-off urgent care or for predominantly healthy patients. And instead looking at it as a way to kind of keep patients to help patients who need more support, manage their care. And then teledocs also had a few acquisitions that have big market share in other countries.

Speaker 1:    This has been great. Thank you so much for taking the time and sharing your insight with us. We appreciate it. And we’ll keep an eye out on your future reporting.

Speaker 2:    Definitely. Thanks so much.

Speaker 1:    Thank you all for listening. We’ll have links in the show notes that feature Jessica is reporting as well as like subscribe all to all of modern healthcare’s content. So we appreciate your support.

Speaker 1:    Hello, and welcome to modern. Healthcare’s Beyond the Byline, will reporters add context to their stories to help you better understand the news and how it’s reported. My name is Alex Kacik. I’m the hospital operations reporter for modern healthcare. Today. We are lucky to have Jessica Kim Cohen, our technology reporter. Thanks for joining us, Jessica. Great to chat. I wanted to catch up with you about the third quarter earnings for the tech companies that you’ve covered that are rolling in. And I wanted to get your take on how balance sheets have been shaping up. One of which is Teladoc. The tele-health software developer, you know, reported more than 2.8 million visits for the third quarter, which is more than triple than the third quarter of last year. I’m curious how telehealth utilization is factoring in to these earnings for these companies that you’re covering.

Speaker 2:    Definitely. I think something really important to keep in mind when looking at the high number of telehealth visits and how that’s impacting tele-health company’s growth is that there’s two main types of fees that Teladoc charges that it makes money from. There’s the fees from visits. Like you mentioned, those visits fees were up about 170% year over year to about 51 million this past quarter, but then there’s also subscription fees. That’s the, that’s the money that Teladoc basically gets from charging enterprise customers like help insurers, where those customers will pay to then cover telehealth services and be able to offer those to their members. And those subscription fees were up about 90% to around 226 million this past quarter. So the fact that we’re seeing so many visits is definitely something that’s driving from the growth, but to a certain extent, the more sustainable thing to be watching is how many customers the company is getting and kind of what, what type of earnings they’re getting from those kind of larger scale contracts.

Speaker 1:    So how has tele-health played into this pandemic?

Speaker 2:    Yeah, this has to a certain extent, Ben Ben tele-health moment. It has been really helpful for patients who don’t want to go to the hospital or don’t need to go to the hospital, opened up the option for them to be able to stay home and talk to a physician, be a video, or be a phone call. And then on the other side, even for inpatients at hospitals, having the capability to be seeing patients over video has helped hospitals with decreasing infection rates. For example.

Speaker 1:    Yeah. That’s an interesting point because a lot of times we think of tele-health as you know, the patient facing solution, you know, you’re, you’re calling into a doctor, but it’s used internally as well. Right?

Speaker 2:    That’s been something that’s been really helpful. Like I mentioned, in terms of decreasing infection risk and also too at the start of the pandemic earlier on when they were concerned about a shortage of personal protective equipment and trying to, you know, decrease the amount of times that a provider might need to change their gowns in such kind of as much as physicians could be kept outside of those patient rooms, that was really helpful. So there were different projects to be able to use a video, to talk to a patient. So a physician or a nurse might not need to go inside of the room. There’ve been projects used in emergency departments, for example, using a physician who’s talking to patients via video to triage the patients. So that kind of one of the first contacts the patient is getting when you’re unsure, whether they are a suspected COVID case or not a suspected COVID case is done via tele-health. Other thing that’s been really helpful for this growth of telehealth inside the hospital has been the ability to have a kind of Bluetooth connected or internet connected devices. For example, some hospitals are using internet connected stethoscopes, so that instead of a nurse and a physician, for example, needing to go into a patient room and kind of take their vital signs and talk to them, see how they’re progressing. Instead, just one clinician could go in with a Bluetooth connected stethoscope with telehealth equipment.

Speaker 1:    So there’s so much uncertainty about the longevity of telehealth, you know, as you see these waivers and expansions of, of, of coverage rolled out via this emergency declaration, you know, we’re seeing expanded use, but I’m curious how are these for-profit investment and companies that you’re covering are, how are they factoring all this into their earnings? You know, are, are they relying on this, you know, increase level of utilization despite all this uncertainty over the longterm?

Speaker 2:    Yeah. It’s definitely been something that investors have been asking about as well, since there is so much uncertainty on the one hand, some of this insurance coverage could go away. In which case it would be a lot harder for patients to access services via tele-health. On the other hand, there’s definitely a lot of patients now who have been exposed to video visits and if in a year or so want to schedule a video visit with a physician and aren’t able to will be disappointed, confused. So there, there is hope that there’s going to be expanded telehealth services available to patients in the future. What it seems that most people are expecting is that it won’t be as high as at height of the pandemic. And since then the numbers have dropped. There have been fewer visits since that peak around March or April, but it’s still being used at an sat as significantly higher rate than before the pandemic. And most companies seem to be expecting that that’s what the future will hold. There will be more telehealth and telehealth might be integrated into kind of routine patient care. Something that American Wells leadership team mentioned on their earnings call is they think the future of care will be a hybrid model with some physical in-person visits, but also more virtual visits. So there is an expectation that it won’t stay at the super high level. It is now during the pandemic, but it will be significantly higher in utilization than previously.

Speaker 1:    Well, you mentioned Ann Wells, a CFO, who’s saying they expected a more hybrid care model combining physical and virtual care models. I’m curious, you know, what does that look like?

Speaker 2:    Something I thought was really interesting when I’m sitting in on American well corporation, which is now rebranded as Amwell. Their third quarter earnings call with investors is they mentioned that in previous years, most of the visits on their platform were visits in which a patient was calling in for a visit with the medical group that is associated with American wealth. So a lot of the time that’s the kind of direct to consumer urgent care model. We think about on the other hand now, you know, in Q3, when we are amid this COVID-19 pandemic and we’re seeing more hospitals offering telemedicine surfaces, they were seeing the majority of visits on their platform, actually between a patient and either one of American wealth hospital customers or insurance providers, the providers that are hired by those customers. So that would be a patient a lot of times seeing their own existing physician they already have, but on using through the American wealth software and platform. So looking forward, American law kind of expects that that’s going to be what the future of their company is going to look like. They’re going to be selling this type of a telehealth equipment to hospitals, health insurers, and they’re going to be integrating that into their care deliveries.

Speaker 1:    So you and I worked on a story about how health systems are treating this from a governance standpoint, where we’ve known, we noted in our reporting that more are carving out specific chief tele-health officers. And that, you know, before it’d be lumped into like a chief digital officer and another C-suite executive, but I’m curious, what does that tell you about how telehealth will be managed from the health system standpoint? And does it add some potential longevity to some of these projections in terms of how much it will be used and try to be integrated into these care delivery?

Speaker 2:    Yeah, I think that goes to show that tele-health is something that hospitals see sticking around, even for those that might still be figuring out how best to use tele-health for what patients, how frequently it’s something that they don’t see as a short term kind of COVID response. It’s something that they’re really integrating into their operations long-term. And I think one of the interesting things that I saw when we worked on that article was a move to give that tele-health oversight role to clinical leaders, to have physicians in charge of that have that under the chief medical officer’s purview. So it’s really being seen as a part of care delivery, not just a technology project.

Speaker 1:    I’m curious, like you’re seeing these Telehouse companies to draw a lot of investment, whether that’s venture capital, some health systems are active investing in certain, some of these startups, these smaller telehealth companies. I’m curious, you know, with this seemingly record levels of capital coming into some of these companies, how is that being utilized?

Speaker 2:    It very much depends on the investment to a certain degree. These companies, of course, particularly if they’re startups need capital. A lot of these tele-health companies like Teladoc and Amwell aren’t profitable yet. So they do need capital to pay off expenses and also to kind of grow and scale their services. There are some investments that have been more on the innovative front. Recently, Google invested a hundred million into Amwell and Amwell leadership has said that that investment will kind of span everything from the more basic infrastructure with the company, migrating some of its work onto Google cloud as part of a kind of surrounding partnership. That’s gone along with this investment, but also as part of that, there’s kind of this more innovative side where, and well, and Google has said, they’re going to be working together to develop AI and automation tools with the AI and technology capabilities that Google has. So we’re seeing investments first of all, as a way to gain capital, but also as a way to kind of strike these strategic partnerships between different companies that can kind of bring their different technology backgrounds together.

Speaker 1:    Have you noticed anything in particular about these acquisitions that these companies are making, or is there a certain overriding strategies involved when you let’s say, you know, see Teladoc, you know, planning to merge with Lavango, which is an e-health and chronic disease management platform, you know, it also acquired InTouch, a smaller tele-health company. I’m curious what, what those deals are indicating to you.

Speaker 2:    Yeah, I’d say for Teladoc in particular, it’s stress quite a few acquisitions over the past few years, and it’s been really interesting to see just based on those acquisitions where it looks like the company is looking to grow. For example, last year, I believe Teladoc ha acquired a company called InTouch health, which has a big foothold in the provider market. So that’s a bit of what we were talking about earlier. Instead of having tele-health seen as this kind of direct to consumer patients, calling a physician with an urgent care issue. That’s not their typical physician. They see in touch health was much more the kind of telehealth platform that had a strong foothold in which healthcare providers that healthcare providers were using to connect and basically take the care they were already doing and moving it to a virtual space. So that’s one thing that Teladoc built up through that acquisition.

Speaker 2:    They also acquired a company called best doctors, which was focused on patients with chronic conditions. That’s something that Lavango also focuses on the Longo focuses on trying to improve outcomes for patients with diabetes, with hypertension. So seeing again, tele-health moving beyond what people might think of as a service primarily used for one-off urgent care or for predominantly healthy patients. And instead looking at it as a way to kind of keep patients to help patients who need more support, manage their care. And then teledocs also had a few acquisitions that have big market share in other countries.

Speaker 1:    This has been great. Thank you so much for taking the time and sharing your insight with us. We appreciate it. And we’ll keep an eye out on your future reporting.

Speaker 2:    Definitely. Thanks so much.

Speaker 1:    Thank you all for listening. We’ll have links in the show notes that feature Jessica is reporting as well as like subscribe all to all of modern healthcare’s content. So we appreciate your support.

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