Post-COVID Digital Health & Chronic Disease (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 as a unique moment of opportunity for digital health. We also hope this is a key opportunity for digital chronic disease management, especially chronic inflammatory diseases.

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.”

One of the biggest positive changes in COVID-related digital health breakthroughs was loosening regulations around CMS reimbursement 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 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 triggered by COVID-mandated use of telemedicine. The merger doesn’t make better chronic care inevitable. However, it is an important milestone in building 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 realizing our vision of better chronic inflammatory disease management. This is especially for autoimmune and autoinflammatory patients.

Timing is everything: Teladoc-Livongo

On August 5th, 2020, Teladoc and Livongo announced a planned merger under the Teladoc name. Teladoc Health (NYSE: TDOC) is a multinational telemedicine and virtual healthcare company. Livongo (NASDAQ: LVGO) is a consumer digital health company. 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 Q4 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.

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

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. Teladoc, like other companies in the telemedicine sector, saw significant stock price rise after the March lockdowns. To a lesser extent, so did Livongo. The charts show similarity in shape if not in volatility and some 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 by speculative drop.

Telemedicine + (some) chronic disease management

For the combined Teladoc, this merger cements both companies’ early-movers 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 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 broadly integrated solutions rather than having to integrate multiple vendors of single-disease solutions. We see an emerging landscape for digital health much like biopharma and medical devices at the turn of the century. an ecosystem dominated by a few big players with regulatory/policy clout and deep capital/cash pockets surrounded by a much larger group of small, agile innovators who expect exits through acquisition by one of the giants.

What does it 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 & cross-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 our thinking had evolved as 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, digitally supported 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 was the biggest stumbling block 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 equally frustrated with the difficulty of diagnosis and lack of coordination of long-term care.

Maturing IT infrastructure is an opportunity 

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 saw the opportunity to go 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, other start-ups targeted less prevalent but high-cost conditions, often entering the arena by offering free phone apps direct to consumers. Some of these are focused on diseases like IBD (Oshi, SonarMD, Trellus, Vivante), IBS (Zemedy), Psoriasis (Kopa by Happify), RA (CrossBridge (CCIT), Augurex, Progentec (Dx)) and other autoimmune diseases (Mymee).

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

From a large number of small, limited DTC point solutions (e.g., free diet and disease tracking apps) the field now includes publicly traded, enterprise-level, broader 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, on the functional side, Parsley Health. We’ve also seen increasing 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 below in 2019.

VBC is an opportunity for better 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.

This is a promising trend for chronic disease and CID patients. Why? Because the fragmented specialist model is tough to negotiate (particularly for sick people!). In addition, FFS across siloed practices is a nightmare of accounting, billing and confusion, even financial  hardship, for patients. Especially true for those seeking timely diagnoses, on expensive specialty drugs or with conditions that require ongoing monitoring. Establishing long-term relationships instead of a series of endless FFS encounters can improve provider and payer services. Further, it is a step toward the patient-as-consumer, while keeping costs from spinning out of control. 

But what about autoimmune diseases?

We wonder what this means for the invisible epidemic of chronic inflammatory disease, autoimmune and autoinflammatory conditions. These disorders comprise dozens, perhaps hundreds of orphans among the more prominent chronic conditions. Today we see considerable progress toward better chronic care in cancer, T2D and prediabetes, COPD and blood pressure management. However, CIDs have seen much less progress. Most of that is 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.

  • We are thought leaders in helping our clients apply digital health innovations to chronic inflammatory, autoinflammatory & autoimmune disorders. 
  • Our subject matter expertise includes oral health and microbiome, autoimmune patient advocacy, digital health, self-hacking and more.
  • We have decades of experience in biopharma, finance, marketing and communications for healthcare and life sciences.
  • 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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