Your doctor is on the line: Teladoc

How you can get a doctor on your smartphone in ten minutes or less.

Waiting in an emergency room while not feeling well is an awful experience, especially when your condition could have been addressed in a ten-minute primary care appointment. But when it’s after hours, patients have no other choice- or do they?

Teladoc is the United States’ largest telehealth provider, with over seven million members currently enrolled (1). The company offers access to board-certified physicians via telephone or videoconference within minutes, and from anywhere. Doctors provide care for nonemergent medical issues only. Teladoc’s success is evident in its growth: the company served 8 million patients in 2014, and is looking at a second annual 100% revenue increase this year (2). Teladoc is a clear winner in terms of driving alignment between its operating and business models.

Value proposition:

Teladoc positions itself as a fast, reliable alternative to urgent care centers and emergency rooms for minor medical problems. This proposition is appealing to employers seeking to reduce time lost due to worker illness. The business model of Teladoc is reliant on:

1) Greater access to care: A recent study found that the average wait time in Boston for a family practice physician is an incredible 66 days (3). Urgent care centers and emergency rooms have wait times on the order of hours, forcing patients with minor conditions to take time off work to be seen. Patients with subscriptions to Teladoc have a physician available to them 24/7/365, within minutes, regardless of their location (1).

2) Higher quality care: Given the nationwide primary care shortage, overbooked doctors often rush through appointments in order to stay on schedule. Teladoc doctors are not on a schedule, and have set aside uninterrupted time to answer calls, allowing for longer (one measure of quality) consultations.

3) Care coordination: Urgent care centers and emergency rooms, if not affiliated with a primary care provider, do not regularly receive or send records to a patient’s doctor; doctors therefore never have access to important information about the illness episode. Teladoc offers an online electronic health record to help ensure continuity of care (1).

4) Price transparency: After visiting urgent care center, patients receive bills for exorbitant amounts; the amount itself cannot be predicted at the time of care due to varying hospital pricing schedules. Teladoc offers a transparent pricing structure, with a monthly subscription cost along with a per-visit fee (4).

The operating model aligns with this business model to facilitate the provision of fast, accessible consultations to patients at a predetermined cost:

1) Services offered: Teladoc only provides services for minor medical problems, such as pink eye, sinus problems, and ear infections (1). These services address discrete conditions which can usually be dealt with without a physical exam, allowing for the remote visits, increasing access. Their diagnosis and treatment are not dependent on a longitudinal relationship with the patient. In addition, these medical conditions produce similar revenue levels for a doctor’s office; the lack of variability in the opportunity cost of delivering these services enables price transparency.

2) Physician flexibility: Doctors working for Teladoc are able to select their working hours. Calls are unscheduled, so doctors do not need to accelerate through visits in order to meet prespecified deadlines for the conclusion of the consultation. As such, average Teladoc consultations are 10 minutes long, in comparison to similar office visits running 3-6 minutes (1). That employed doctors are not on a prespecified schedule allows for longer patient visits, one metric pointing toward increased quality of care with Teladoc.

3) Use of electronic health record: In urgent care, providers often begin with little to no patient history. Teladoc’s physicians are supplied with a patient’s medical record to review just prior to the consultation. This both equips them with pertinent information and eliminates the need for the ill patient to recite prior medical problems during the visit, increasing the amount of time spent focusing on the chief complaint (another quality improvement). The health record is fully portable, and Teladoc patients are encouraged to share the record with their regular doctors (care coordination).

In summary, Teladoc seeks to provide accessible, high-quality, coordinated care at a transparent price. The company achieves this goal by only addressing minor medical problems that can be diagnosed and treated remotely; flexible doctors with time to address a patient’s needs; and an electronic health record that is used by Teladoc doctors and can be used to coordinate with a patient’s primary care physician.

Sources

(1) Teladoc.com (various pages within).

(2) “Thanks to Obamacare, virtual-reality doctors are booming.” Sept. 24, 2014. Retrieved from: http://fortune.com/2014/09/24/obamacare-telemedicine-doctors-booming/.

(3) Waiting… and Waiting… July 6, 2014. Retrieved from: http://www.nytimes.com/interactive/2014/07/06/sunday-review/waiting-and-waiting.html.

(4) “Why Teladoc Needs Medical Attention. Oct. 4, 2015. http://www.wsj.com/articles/why-teladoc-needs-medical-attention-1443984154

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6 thoughts on “Your doctor is on the line: Teladoc

  1. Thanks for writing this, Teladoc has a really interesting business model. Do you know what the pricing structure actually is? Is it comparable to having a $50 or $100 co-pay for emergency room visits? Is there any relationship with payers to allow patients to use this with their regular insurance policy? Similarly, who is paying for this? Are employers purchasing the subscription for their employees? It seems as though there could be great benefits for employers that provide this service, ie, healthier employees who lose less working days.

    1. That’s exactly right- employers are paying for the service for their employees in order to reduce time lost at work. The pricing structure involves a per-member per-month fee (over 80% of revenues come from this fee) and a per-visit fee (1). The exact amounts vary based on insurance plan. Unfortunately, with the subscription fees, Teladoc ends up being in total more expensive than a typical urgent care visit ($145 per visit on average) (1). This may improve when utilization rates improve, which has occurred quite slowly (2.1% to 3.7% from 2013 to 2014) (1). This is particularly worrisome because more competitors are entering the arena, and some (for example, Doctor on Demand), do not require a per month fee.

      (1) https://rockhealth.com/deconstructing-teladoc-ipo-s-1/

  2. You mentioned that patients using Teladoc are “encouraged” to update their records with their primary physician after their Teladoc appointment. How realistic do you think it is that patients will actually do this proactively? Is there any way you could imagine Teladoc taking care of this for patients automatically?

  3. Very interesting! I wonder what issues Teladoc runs into attempting to integrate with all the various EHRs out there. Seems like an important part of their value proposition, it’s probably not a trivial task considering all the efforts still in progress to get EHRs to communicate with each other.

    Following up on LH’s comment — I noticed in your reply that employers often end up paying for the subscription service. Is there anything about the business model or operating model catering specifically to employers as a revenue source? I wonder if Teladoc can transition to selling to large insurers or individual consumers without significant change to their business/operating models.

  4. This is very interesting!

    A few comments on the services offered: You say that they are focused on providing services for minor medical conditions like ear infections, pink eye, sinus infections — but how can these really be diagnosed without a doctor physically looking at the patient? Couldn’t this lead to an over-prescription of antibiotics since often these conditions are just viral and will go away on their own in a few days? BUT if patients do need a prescription, then they would have to go to the store to pick it up anyways. I guess if you are, say, dealing with a sick child you could leave them at home with someone else while you go out to pick up the prescription but often the doctor’s visit is paired with getting the medicine right away. Have you thought how CVS Minute Clinic might be a competitor/potential collaborator? I know personally, it would be great to have this on-demand service but I’d love to have it complemented with an in-person option (like Minute Clinic) where you can be seen in person and pick up your prescription if necessary.

    I’d also love to know more about the physicians they recruit. Are they limited to MDs or are they mostly staffing NPs and PAs?

    All and all, it seems like a very important service that has great potential — especially for people in rural areas who do not have easy access to care.

    1. I’m all in favor models that provide increased access to services. Like Kate I’m interested in the composition of the workforce. It seems to me that given the type of conditions that are being treated it would be much better to utilise lower cost NPs who are arguably more effective at diagnosing these issues. From an international point of view the US health system seems to look for opportunities to add cost into the system and steps like this are needed to pare it back to what actually needed and effective for patients.

      I also like to focus on using e-health records. This just seems like such a no-brainer which helps patients when they are travelling to ensure their care giver has all the necessary information to make an informed decision.

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