Digital Health & Chronic Disease Care Post-COVID (Part 1)

The COVID-19 pandemic and response is transforming healthcare in many ways, with unpredictable consequences. In fact, the pandemic and healthcare systems’ responses to it are the biggest disruptors in 30 years of digital health. Hopefully, this will be the biggest disruptor for a few decades to come! We see the post-COVID landscape offering a unique window of opportunity for digital health companies, large and small to improve chronic disease care. We particularly care about improving management of chronic immuno-inflammatory diseases (CIIDs). This includes autoimmune and autoinflammatory conditions, disorders like chronic fatigue syndrome, and now, long-COVID. We believe that digital platforms, especially virtual-first chronic care, are well-placed to improve care of CIIDs, if they can seize the opportunity.

Once in a lifetime:
COVID disruption = opportunity

“The coronavirus kicked the digitization of the healthcare industry up to light speed, cramming a decade of regulatory change and consumer adoption into roughly a month and a half. States and the federal government hastily cut barriers and hundreds of companies angled to use the boost to their advantage.”

https://www.healthcaredive.com/news/telehealth-6-months-coronavirus/581447/

One of the biggest positive changes–a COVID-related breakthrough–was loosening CMS reimbursement and regulations for telemedicine encounters. Practices and payers have also been released (at least for a while) from telemedicine co-pay mandates. These changes have allowed tens of millions of Americans to more readily access medical practices virtually. This includes the millions of us with chronic inflammatory diseases. Indeed, many of us have advocated for years for more telemedicine to improve chronic inflammatory disease management. 

From RockHealth, a chart showing  Digital Health deals: number of deals funding in dollars 2011-Q3 2020
From RockHealth Digital Health deals and funding 2011-Q3 2020

We believe the high-profile Livongo/Teladoc merger, the largest digital health deal to date, was also triggered by COVID-mandated use of telemedicine. The merger doesn’t make better chronic care inevitable. However, it is an important milestone in building the infrastructure necessary to support improved chronic care. And it’s not just the Telavongo merger, record venture capital is flowing into digital health. Funding is up for the same reasons: pandemic, lockdown, stimulus and the brightest spotlight on healthcare in history.

Here’s our analysis of what this situation may mean for the post-COVID ecosystem of digital health. In particular, what does this mean for realizing our vision of better CID management, especially for autoimmune and autoinflammatory patients? So far, digital CID management has been a poor stepsister to other chronic conditions like cancer, cardiovascular, diabetes 2, and pulmonary diseases, even though, in total, CIDs afflict as big a population as cancer and are as costly to payers.

Timing is everything: Teladoc-Livongo and the future of digital chronic disease care

On August 5th, 2020, Teladoc and Livongo announced a planned merger under the Teladoc name. Teladoc Health (NYSE: TDOC) was a multinational telemedicine platform and virtual healthcare company. Livongo (NASDAQ: LVGO) was a consumer digital health company focused on chronic disease. They started with remote monitoring and management of type 2 diabetes, expanding into pre-diabetes, hypertension and cardiovascular. Beyond that, the company has been publically rather coy, but media coverage suggests that arthritis, COPD, Crohn’s and more are part of the plan. If so, that may be good news for CID patients with inflammatory arthritis and GI conditions.

Each Livongo share will be converted at 0.5920 Teladoc shares plus $11.33 in cash, suggesting a $18.5 billion Livongo valuation. The transaction is expected to close by the end of 2020. The combined company is currently valued at nearly $37 billion. Teladoc reported $533 million in revenue in 2019, a 32% increase from 2018. Livongo revenue rose from $68 million in 2018 to $170 million in 2019. According to Teladoc, they anticipate revenue synergies of $100 million by end of 2022 and $500 million by 2025.

Teladoc, like other telemedicine companies, saw significant stock price rise after the March lockdowns. To a lesser extent, so did Livongo. The charts are similar in shape if not volatility and show convergence before the merger announcement on August 5th. The announcement is readily visible as a spike in both stocks, with the usual run up on rumors and the usual speculative drop.

Graph showing 9/19-9/20 stock charts for Teladoc and Livongo showing spike around the merger announcement date.
Teladoc and Livongo 2019-20 stock prices. Researched & drawn by Paraskevi Hadjicosta

Telemedicine + (some) digital chronic disease management

For the combined Teladoc, this merger cements both companies’ early-mover advantage in telemedicine and chronic disease management. Both companies had successful IPOs and leading market share in their slightly overlapping customer base. The merger makes them a formidable power in the digital health space and puts up significant barriers to later players. These are sometimes called network effects, of which the most familiar examples are Alphabet (Google), Amazon, and Facebook, all of which have achieved near-monopoly positions in key technology sectors. While there are digital health platform competitors, e.g., Amwell (IPO September 2019), Omada, and others, Telavongo sets a new bar.

Both Livongo and Teladoc were early aggressive sellers to large payer organizations. This is another way to lock in revenues and growth and block later competition. Earlier in the healthcare IT space, Cerner and EPIC come to mind as early movers whose installed base (and regulatory capture) blocked competition (even though most users hate their products). This represents a particular challenge for smaller companies. While it’s easy to enter the consumer healthcare app space, it’s impossible to defend. Payers prefer integrated solutions rather than having to integrate multiple vendors of single-disease solutions themselves.

As the digital health industry matures, mergers like Teladoc-Livongo are inevitable. However, the COVID situation has speeded and will continue to speed the M&A timeline as well as attract venture funding. We see an emerging landscape for digital health much like biopharma and medical devices at the turn of the century. Such an ecosystem will likely be dominated by a few big players with regulatory/policy clout and deep capital/cash pockets. Orbiting around them will be a much larger group of small, agile innovators who invent products and seek exits through acquisition by one of the giants.

What does this mean for chronic disease management?

On the surface, the Telavongo merger could improve care coordination and make virtual care increasingly available and easy to use. Will this prod more payers to invest in telemedicine platforms and (some) chronic disease management programs? Very likely. Is this the tipping point toward digitally enabled, patient-as-consumer healthcare? Not so fast. Will it help some chronic disease patients with behavior change and lifestyle modification? Maybe. Will it help boost more patient-centered care in chronic inflammatory diseases? Unlikely in the immediate future.

An illustration from the Teladoc/Livongo merger S-1 filing showing a patient and care-centered approach to digital chronic disease management.
From the Teladoc S-1 filing for the announced Livongo merger

What’s interesting about this synergy illustration is how much it looks like the conventional medicine side of ideas that we have been floating in the context of improving healthcare for autoimmune patients since 2012. First, let’s look at what we envisioned the future of managing chronic inflammatory disease from a patient-centric perspective. 

Our vision: empowered patients & practice teams

Two illustrations showing DrBonnie360's vision of patient/practice-centered healthcare enabled by digital and with the patient as CEO of her own care team.
From DrBonnie360/YAC Autoimmune Abyss slides 2014 & 2015

Back in 2014, when we started DrBonnie360/Your Autoimmunity Connection, we envisioned empowered patients working with their primary care practitioners to assemble and manage their own clinical teams: Wellbeing, Food as Medicine, and Musculoskeletal (swap in GI, Neurological or Rheumatology specialities, depending on diagnosis). With the patient as CEO and the PCP as lead provider, these teams would also integrate the best of conventional, functional and digital medicine.

By 2015, we saw enlightened practices beginning to use data and digital tools to enable research, drug development and clinical trials. But who would pay for team-based, digital health clinical care? Except for well-off patients willing and able to assemble concierge services and manage their own care, it didn’t come together in a fee-for-service (FFS) payments regime. During this time, we encouraged patients to be the CEOs of their own health and to become self-experimenters and care coordinators.

Autoimmune patients see obstacles to better care

Nevertheless, our findings at our 2015 Stanford MedX workshop validated our vision. In a preliminary survey, chronic autoimmune disease patients told us that lack of care coordination and collaboration were the biggest stumbling blocks to timely diagnosis and effective treatment. Workshop participants expressed frustration that no one was in charge of their care as they bounced between primary care and specialists in rheumatology, gastroenterology, neurology, dermatology, etc. Physicians and clinical care professionals who attended the workshop were also frustrated with difficulty of diagnosis and lack of long-term care coordination.

Maturing IT infrastructure supports post-COVID digital health and chronic disease care 

We noted back in 2012, in our white paper, Big Data in Healthcare: Hype and Hope, that data, analytics, remote monitoring and digital health apps were going to be key drivers of the future of healthcare. Since then, and especially over the last 5 years, building on a critical mass of digital bandwidth, faster and cheaper machine learning/artificial intelligence (ML/AI), better predictive analytics, and ever more data (with quality issues, see the mess that is COVID statistics), digital health has grown up. 

In the first decade of the 21st C, early movers went after the low-hanging fruit of high-prevalence, high-visibility, high-cost chronic conditions like cancer, Type 2 diabetes (T2D) and pre-diabetes, high-blood pressure, and obesity (Livongo, Omada). In the following decade, while barriers to entry were still low, some companies targeted less prevalent but high-cost conditions. Many entered the arena by offering free smart-phone apps direct to consumers. Some of these focused on diseases like IBD (Oshi, SonarMD, Trellus, Vivante), IBS (Zemedy), Psoriasis (Kopa by Happify), RA (CrossBridge (CCIT), Augurex, Progentec (Dx)) and multiple autoimmune diseases (Mymee). Others, like Decode Health (formerly IQuity) offer AI/ML predictive analytics to payers and employers to uncover high-beta conditions lurking in their populations.

From DrBonnie360 slide deck, our 2019 vision of digitally enabled patient-centered care delivery,
From DrBonnie360 2019 vision of digitally enabled patient-centered care delivery

An emerging post-COVID digital health chronic care ecosystem

From a large number of DTC point solutions (e.g., free diet and disease tracking smart-phone apps) the field now includes publicly traded, enterprise-level, chronic disease management platforms, such as Livongo and Omada. We’ve seen the rise of hospital system- and large practice-based centers of excellence, such as Allegheny Health, Cleveland Clinic, Autoimmunity Centers of Excellence, and functional practice, Parsley Health. We’ve also seen more integration of some non-pharmaceutical, lifestyle, even functional medicine modalities–mental healthcare, behavior change, diet, nutrition, exercise, meditation, acupuncture, massage, supplements–into conventional practice. So the field is moving toward the loosely networked model we envisioned above in 2019.

Post-COVID push to VBC enables digital health in chronic care 

In 2020, we see the legacy FFS model of care continues to be fragmented, costly and wasteful. Furthermore, government support of new primary care payment models is pushing the transition from FFS billing to value-based approaches. Value-based payments (VPB): capitation, episodes of care and risk-sharing, can better align payers and providers to improve care at lower cost.

The post-COVID push towards VBC is a promising trend for digital health, chronic care and especially CIID patients. Why? Because the fragmented specialist model is tough for patients to negotiate (particularly for sick people!). In addition, FFS across siloed practices is a nightmare of accounting, billing and confusion, even financial hardship, for many patients. Especially for those seeking timely diagnoses, on expensive specialty drugs, or with conditions that require long-term monitoring. Establishing long-term relationships instead of a series of uncoordinated FFS encounters can improve provider and payer service quality. Furthermore, VBC is more compatible with the patient-as-consumer, while keeping costs from spinning out of control. 

Will CIIDs and autoimmune be left behind in the digital health chronic care revolution?

We wonder what the post-COVID disruption means for digital health chronic care tackling the invisible epidemic of CIIDs. These disorders comprise dozens, perhaps hundreds, of orphans among the more prominent chronic conditions. Today we are seeing considerable progress toward better chronic care in cancer, T2D and prediabetes, COPD and blood pressure management. However, CIIDs are seeing much less progress. Certainly there is some progress in high-beta, high-cost, higher-prevalence diseases such as IBD, MS and RA. But this leaves less-prevalent disease patients to continue with the struggle for better care.

In Part 2 of Chronic Disease in the Post-COVID Digital Health Landscape, we discuss future trends and challenges.

Contact DrBonnie360

We approach these posts from two different multi-lens perspectives

  • DrBonnie360: clinical dentist, Wall Street analyst, patient advocate, and digital health consultant. 
  • Ellen M Martin: evolutionary life science, finance & investor relations, marketing, communications and writing/editing.

DrBonnie360 Strategic Consulting & Professional Services 

We provide professional consulting and services to companies working to bring the best of digital, conventional and functional medicine to patients with chronic inflammatory diseases. From our patient advocacy work and our own experiences, we can bring the voice of the patient to help guide your brand, products and services.

  • We help our clients apply digital health innovations and the patient point of view to improve care for chronic inflammatory, autoinflammatory & autoimmune disorders. 
  • Our subject matter expertise includes oral health and microbiome, autoimmune patient advocacy, digital health, self-hacking and more. Let us apply our expertise to your projects.
  • We have decades of experience in finance, marketing and communications for biopharma, healthcare and life sciences clients.
  • Our backgrounds include clinical dentistry, osteology, biotech investor and public relations, marketing communications, content creation, strategic consulting, autoimmune advocacy and much more.

Contact us for help defining and articulating your marketing position and strategy, including conducting virtual facilitated brainstorming and planning sessions. We excel at creating content, including articles, blog posts, collateral materials, web site copy and white papers. Our Your Autoimmunity Connection website showcases our own content.

Disclosure–we have done paid consulting work for IQuity, Mymee and Oshi.

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