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MedPAC Commissioners Hint at Telehealth Policies that May Stick Post-COVID-19 Event: (9/08) A recent article in Healthcare Dive discussed MedPAC’s 9/4/20 public meeting which reviewed the expansion of telehealth delivery in Medicare. The key point of discussion was which changes in Medicare telehealth payment policies, waived during the COVID-19 public health emergency (PHE) would lawmakers and regulators allow to become permanent after the COVID-19 PHE ends. Description: During the pandemic Federal regulators relaxed many rules and payment policies surrounding telehealth to provide an alternative avenue of care, including the addition of 80 additional codes for Medicare covered telehealth services (from the then existing 100). When considering the issue some commissioners expressed concerns that expanding access could increase use of low-value services and also unwittingly widen the so-called digital divide with underserved populations (with two recent JAMA studies showing nearly 25% of older adults on Medicare lack access to computers with high-speed internet or a smartphone with a wireless data plan). In addition, commissioners appeared to dismiss the idea of continuing to allow the use of non-HIPAA compliant video platforms past the PHE but did appear inclined to continue coverage for audio-only services. Implications: The easing of regulations during the pandemic dramatically increased the speed and breadth of telehealth usage, rapidly expanding penetration and acceptance. While growth has slowed recently, how and which PHE waivers will be made permanent will dictate the pace of growth going forward. Given some commissioners were more willing to allow broader telehealth flexibility if they were delivered under some type of alternative payment model, blanket changes to the rules are likely to take longer than market participants expect initially and could be more limited in scope than many have suggested. For example, final payment policies and reimbursement at facility vs. non-facility rates may depend on CBO scoring. [Please contact us for our article “Not So Fast on the Future of Telehealth” published in PE Hub for more details] MedPAC commissioners hint at telehealth policies that may stick post-COVID-19 FCC Nears Launch of $100M Connected Care Telehealth Pilot Program: 5 Things to Know Event: (9/08) A recent article in Becker’s Hospital Review noted that the FCC had recently published application details on its $100 million Connected Care Pilot Program, which aims to enhance telehealth access for low-income Americans and veterans (originally introduced in 2018). Description: This three-year program provides $100M in grants to fund about 85 percent of telehealth programs’ connectivity costs, including patient broadband internet access services, provider broadband data connections and other network equipment. Under the program, users must have their own telehealth devices to participate and areas such as network deployment and construction of network and connectivity between healthcare providers will not be funded. Additionally, Connected Care is available in rural and non-rural areas, but is limited to nonprofit and public providers Implications: The funding and access to telehealth resources is extremely important for rural and underserved communities such as low income Americans and veterans. Making these resources readily available helps address the health disparities that exist in these communities and gives them better access to address their needs. Additionally, making this program available to nonprofit and public providers can help broaden usage of these resources to other vulnerable populations. FCC nears launch of $100M Connected Care telehealth pilot program: 5 things to know HHS Issues Plan to Improve Rural Health, Leaning on Telehealth Event: (9/04) On September 4th the U.S. Department of Health and Human Services (HHS) released an 84-page plan to address rural healthcare barriers, particularly due to the COVID-19 crisis. The plan details steps to expand telehealth services, emergency care consultations, and EMS training through a series of approximately $9M grants for up to 29 providers over the next four years. Description: Rural areas are not only plagued by a shortage of providers, but also suffer from lower incomes and higher incidence of chronic health conditions compared to urban areas. The 57 million rural residents are significantly more likely to die of heart disease, cancer or stroke compared to urban dwellers. The plan would allow rural health clinics and federally qualified health centers to furnish Medicare telehealth services and be reimbursed for virtual care at similar rates as comparable telehealth services under Medicare. The rural health plan would also allow Indian Health Service and facilities to receive compensation even if telehealth services are provided over state lines. Additionally, $12.4 million has been pledged to expand a pilot project to improve care for rural maternity and obstetrics patients, with expanded telehealth services. Implications: The health and geographic disparities in rural areas has been an existing, but heavily neglected issue for many years. HHS’s plans rely on telehealth and while telehealth has potential to help reduce geographic disparities in access to care, this may not be as helpful for addressing these issues in rural health. Telehealth relies on digital infrastructure that's largely not in place in non-metro regions and one-third of rural households say they don't have a broadband connection at home. HHS issues plan to improve rural health, leaning on telehealth Seattle Health Tech Startup Optimize.health Raises $15.6M for Remote Patient Monitoring Service Event: (9/09) A recent article from Geekwire noted that the Seattle health tech startup Optimize.health had raised $15.6M for remote patient monitoring service. The article noted that Optimize.health has raised more than $21 million in total funding to date. Description: Founded in 2015, Optimize sells a remote end-to-end patient monitoring service used by independent practices, hospital systems, and more. When health providers see that a patient at home needs support because a device such as a blood pressure cuff or a pulse oximeter indicates a potential health issue, the Optimize software provides a variety of communication methods for contacting the patients, including text messages and video calls. The company’s dashboard also provides a way to trigger a bill to the insurer for the clinician monitoring. The system integrates with Electronic Health Record (EHR) software. Implications: As COVID-19 outbreak continues, consumers are managing their health remotely. Optimize.health is allowing patients to receive regular care and updates through text message and voice calls in the comfort of their own home. This enables more accessible, convenient, and cost-effective healthcare. Seattle health tech startup Optimize.health raises $15.6M for remote patient monitoring service 5 CTA Members Leading the Digital Therapeutics Frontier Event: (8/25) In late August the Consumer Technology Association (CTA) launched a new initiative with 25 health technology companies to develop standards for the use of digital therapeutics. The goal of the initiative is to recommend best practices for the definition, application, use and performance requirements for the field to help educate the industry and, eventually, consumers to advance the adoption of the technology. As part of the launch, CTA profiled 5 of the companies in the initiative. Description: AppliedVR reshapes pain management care with its virtual reality platform aimed at alleviating a number of ailments, from labor pains to discomfort during infusions for cancer treatment. Ginger offers on-demand mental health support with trained behavioral health coaches, therapists, and psychiatrics with personalized skills building activities. GlucoseZone provides workouts, education and coaching to help users of the app reach their fitness and diabetes control goals. Healium leverages virtual and augmented reality (AR/VR) travel to allow users to biometrically alter their virtual environment through emotions and decrease their own stress. Implications: As the world continues to grapple with the effects of the COVID-19 outbreak, consumers have begun taking more control of their health care in the comfort and safety of their homes. Digital therapeutics, a relatively new branch of digital health, enables this socially distant health care delivery. The technology uses software applications to enhance clinician decision making, optimize the dose and delivery of other forms of medical treatment through patient monitoring, or even act as a stand-alone intervention. The standards from the CTA will help educate the industry and eventually consumers, to advance the adoption of the technology. 5 CTA members leading the digital therapeutics frontier A Buyer’s Guide to AI in Health and Care Event: (9/09) Last week, the NHSX, a unit of Britain’s National Health Service, published “A Buyer’s Guide to AI in Health and Care” proposing 10 questions on how to make the right decision purchasing products using Artificial intelligence (AI). AI has become desirable in advanced medical settings because it has the capability to interpret and classify test results more rapidly than physicians, allowing physicians to direct attention to more complicated issues facilitating improvements in the health of patients. Description: When purchasing products that use AI, consideration should be given to the type of problem you want to solve, the appropriate scale for addressing the problem, ensuring regulatory standards are met, and what the intended uses are for the product(s). The Buyer’s guide, linked below, does not provide a comprehensive treatment of commercial contracting, but proposes questions that are classified under the following categories: problem identification, product assessment, implementation considerations, and procurement, and delivery. Implications: Since there is a shortage of clinicians in health care, a range of AI-powered innovations will allow physician time to be freed up for analysis of more complex cases and grant more time for direct patient care. This will help decrease costs, improve outcomes and create more positive health experiences. “A Buyer’s Guide to AI in Health and Care” points out important questions to consider when purchasing products that use AI to assure they are safe and effective for the organization being served. A Buyer’s Guide to AI in Health and Care

Access to Telemedicine Is Hardest for Those Who Need It Most Event: (9/3) A recent article in WIRED magazine noted the practical and technological issues that many older Americans, particularly Black and Latinx Americans have in accessing and using digital health technologies. Description: While virtual care exploded during the COVID crisis, accounting for as much as 44% of Medicare visits at one point, studies indicate that as much as 41% of Medicare recipients don’t have an internet-capable computer or smartphone at home, with elderly Black and Latinx people the least likely to have access compared to whites. Another study in JAMA noted that approximately 13M elderly adults have trouble accessing telemedicine services, and approximately ½ of those people may not be capable of having a telephone call with a physician due to problems with hearing, communications, dementia, or eyesight, including 71% of elderly Latinx people and 60% of elderly Black people. Implications: Although growth in virtual and telemedicine visits has exploded during the COVID pandemic, the increase in the digital delivery of healthcare services exposes and magnifies the disparities in care and access for the underserved, and is especially acute for the elderly in those groups. Providers and payers must look at methods of bridging the “digital divide” when expanding use of virtual care/remote access. They must pay attention to visual and non-visual cues to ensure understanding and incorporate other accommodations (such as automatic captioning and amplification) for elderly Black and Latinx populations. Access to Telemedicine Is Hardest for Those Who Need It Most Telehealth grew wildly popular amid Covid-19. Now visits are plunging, forcing providers to recalibrate (subscription required) Event: (9/1) In a September 1st article, STAT News looked at the nationwide slowing of telehealth visits and, noting that although telemedicine visits are higher than pre-pandemic levels the downturn is causing providers to adjust offerings based on patient preferences and needs. Description: As telemedicine visits have decreased from 69% of total encounters in April to just 21% of total encounters in July, providers are trying to figure out at what level the ultimate balance between in-person and virtual visits will stabilize and how visits will break down across service lines. For example, the University of Pittsburgh Medical Center launched a program to determine when patients should be seen remotely or in-person. They have found that while telemedicine visits have declined about 60% from April, most mental health visits are continuing to occur virtually while specialists are seeing more patients return to their offices. Implications: Following the pandemic providers are going to have to adjust the level of virtual visits by investigating what mix of virtual and in-person visits best suits their patient population. They need to determine what mix of the two will be most cost-efficient and profitable for them. In addition, the leveling off of virtual visits may create challenges for large telemedicine companies that are planning to expand based on the initial surge in demand and easing in the regulatory environment. This is due to the uncertainties about whether they will be able to sustain those numbers as patients return to in-person visits and what will happen with an unpredictable regulatory landscape. Deloitte survey shows consumers are more engaged with their health through technology Event: (8/26) A recent article in Healthcare Finance highlighted that two Deloitte surveys (the Deloitte 2020 Survey of US Health Care Consumers and The Health Care Consumer Response to COVID-19 Survey) show consumers are more engaged with their health through technology as a result of the COVID-19 pandemic. Description: Consumers are actively engaging in their health care, which has allowed them to discuss cost information, track health conditions, access and use their medical record data, disagree with their doctors about treatment and cost, and engage in healthy/preventative behavior. The Deloitte COVID-19 consumer survey found among consumers who had virtual doctor visits 80% would choose to have another virtual visit, provided the positive patient-physician experience which was defined as one where the healthcare provider was accessible and willing to listen. Implications: While consumers are more open to virtual visits since COVID Deloitte’s survey found consumers still want to have a personalized physician-patient relationship with a provider who listens, shows they care, takes their time, and communicates with them. The enhanced use of technology has also exacerbated health disparities, especially along racial lines. As a result organizations need to extend access to care deeper into the communities they serve addressing both clinical issues as well as issues around the social determinants of health (SDOH). Deloitte survey shows consumers are more engaged with their health through technology Carewell Secures $5M For Caregiver Advocacy, Home Health E-commerce Site Event: (9/2) Carewell, a North Carolina startup recently closed $5 million in seed funding to expand its e-commerce and home health advocacy site for home health products. Description: Carewell was started to support and educate families caring for loved ones, particularly those who are doing so for the first time. The online shopping platform consists of vetted product recommendations as well as a subscription service for caregivers who consistently need products and resources. Additionally, the company is looking to expand and create new categories of products that will continue to serve its customers. Implications: The demand for at-home care for seniors has exploded during the pandemic, with Carewell seeing revenue doubling and nearly 40,000 unique customers making purchases since February. With a disproportionate percentage of COVID deaths attributable to skilled nursing homes and senior living facilities, alternatives to institutionalized care and services which enable them are likely to see growing demand and interest. Carewell Secures $5M For Caregiver Advocacy, Home Health E-commerce Site Using technology to self-manage diabetes results in healthy lifestyle choices Event: (8/28) The University of Texas Health Science Center at San Antonio conducted a study to monitor how adults living with Type 2 diabetes use current healthcare technology to self-monitor their lifestyles and current health behaviors. Research found that allowing participants to track their behaviors, led to them making healthier lifestyle choices to manage their diabetes. Description: Using self-monitoring technology allows participants to understand the importance of making healthier lifestyle choices and helps to make sense of why certain decisions must be made to control blood glucose levels. A separate study conducted by Omada and Evidation Health also showed a reduction in participants’ A1C levels for those who used these digital chronic care management tools (please see 2nd link below). Implications: Being able to self-manage diabetes via healthcare technology platforms can lower A1C levels, reduce diabetes complications, improve quality of life, and lower medical experiences. Programs like Omada and Evidation Health allow people to improve quantitative and qualitative measures while monitoring their diabetes and making healthier lifestyle choices on their own. Using technology to self-manage diabetes results in healthy lifestyle choices Patients using Omada's diabetes management tool see reduction in A1c levels, according to research How 5G Can Enable Life-Saving Technology Event: (8/27) A recent article in CES Tech updated the progress on 5 companies selected into the latest cohort of Verizon’s 5G First Responder Lab, launched in partnership with Responder Corp. in 2019. The 5G First Responder Labs goal is to empower first responders by delivering the life-saving capabilities they need to serve their communities. The 5 companies accepted to this round using Verizon's 5G Wideband network are Biotricity, Rave Mobile Safety, DispatchHealth, Vuzix, and Visionable. Description: Biotricity is offering a patient-monitoring platform that allows medical professionals to remotely identify potential urgent alerts. Vuzix, whose Blade Edge smart glasses were a CES 2019 Innovation Award honoree, is creating augmented reality smart glasses to connect on-site first responders with experts to receive real-time feedback. Visionable’s collaboration platform will virtually connect medical professionals to provide follow-up care to patients remotely. Implications: As the world faces the COVID-19 pandemic, the spotlight is on health care-related technologies. As 5G technology continues to develop and get rolled-out it will enable greater use of more innovative and powerful virtual and remote care technologies closer to the site of care. This will improve emergency care, broaden access specialists, and enhance care in rural and underserved communities. How 5G Can Enable Life-Saving Technology

Uber Health forays into prescription drug delivery Event: (8/20) Uber and on-demand prescription platform NimbleRx, announced they are entering a partnership in the on-demand prescription drug delivery business. Description: The Uber-NimbleRx partnership comes with big drugstore chains CVS Heath and Walgreens. With almost 30% of people never picking up their prescription medication from the pharmacy, the partnership with Uber allows effective and timely delivery of medications. Nimble has completed over 15,000 deliveries via partnership with Uber Health (currently a HIPAA- secure service with 1,500 partners for non-emergent medical transport). Implications: Uber Direct provides easy delivery of medications which will promote medication adherence. Adults who lack transportation to medical care are much more likely to have chronic conditions, moreover, with absence of receiving medication, their conditions may escalate. NimbleRx offers next-day delivery to 40% of the population in the U.S and same-day delivery to an additonal 30%, with the increase in demand due to the pandemic, the new partnership will work to better meet the needs of patients. Uber Health forays into prescription drug delivery Lyra Health hits $1.1 billion valuation, as Coronavirus boosts need for teletherapy Event: (8/25) Lyra Health, a provider of mental health care benefits for employers became the latest healthcare technology startup to hit unicorn status by raising $110 million in Series D funding at a $1.1 billion valuation. Background: Lyra, which offers an easy-to-use digital platform to connect people with mental health providers, has around 1.5 million members so far, adding more than 800,000 people since the start of the pandemic. Lyra’s solution combines one-on-one video sessions with digital exercises to reinforce cognitive behavioral therapy sessions. Implications: Around one in four U.S. adults suffer from a diagnosable mental health condition. Depression is one of the leading causes of disability worldwide. Because of COVID, economic uncertainty, and conversations around racial injustice, people are suffering from anxiety and depression even more. According to Rock Health, the digital health industry has raised $588M in the first half of 2020, which is 29% more than 2019, 42% more than 2018, and is on track to set annual records for overall funding and number of deals. Lyra health hits $1.1 billion valuation, as Coronavirus boosts need for teletherapy PatientPop raises $50M and adds three to board of directors Event: (8/25) PatientPop, a healthcare tech company trying to automate many of the touch points of doctor-patient interactions, has raised $50 million in Series C funding. Background: PatientPop helps practices attract patients online through a customized website and search engine optimization. It also offers a fully-digital experience with online scheduling, telehealth options and electronic medical record integration. Implications: PatientPop will use these funds to continue to provide practices with the tools they need to enhance patient care in-person and online. Allowing providers to quickly adapt their digital strategy and presence to attract and retain patients, by deploying appropriate technology and tools to successfully operate their practices during COVID, will help maintain and replace volumes lost during the pandemic. PatientPop raises $50M and adds three to board of directors BJC HealthCare's experience-based strategy for digital transformation: Insights from CIO Jerry Fox Event: (8/25) BJC’s healthcare team in St. Louis is working on experience-based strategies for developing digital solutions that will improve health experiences for stakeholders (patients, families, and caregivers). Description: With the growth of COVID and the increase in virtual visits, BJC healthcare partnered with Washington University School of Medicine to transform user experience. This includes improving patient-provider telehealth platforms for scheduling, processing payments, and interactions, targeting patient experience, enhancing workflows that eliminate barriers for clinicians delivering care, and support for non-clinical care givers to enhance productivity and experience. Implications: Curating technology to ensure that stakeholders (clinical and non-clinical) have optimal experience and outcomes has grown as digital care has increased. With the growing use of technology platforms during COVID, expectations are changing and expanding, pushing digital teams to ensure that they are meeting the growing needs of their users. BJC HealthCare's experience-based strategy for digital transformation: Insights from CIO Jerry Fox Tenet California hospitals launch telehealth ER screenings: 5 things to know Event: (8/25) Tenet Health Center Coast, part of Tenet Healthcare, launched a new telehealth emergency room screening resource for patients suspected to have COVID or other medical emergencies, who are unsure of whether to seek medical attention or not. Description: This Tele-ER service helps address concerns and challenges with going to the hospital during the pandemic. Patients can communicate with ER physicians for registration via video conference, smartphone, or computer to assess whether they need to come in for in-person care, diagnostic procedures, labs, or if the visit can be conducted virtually. The service is covered by Medicare. Implications: The availability of this tele-ER platform will have a significant impact on healthcare delivery, especially during this COVID pandemic, where many patients have delayed care due to concerns of visiting healthcare facilities. With reimbursement provided through Medicare and commercial insurance services like this could expand the breadth of telehealth delivery while aiding accessibility of care particularly for seniors who are at risk. Tenet California hospitals launch telehealth ER screenings: 5 things to know USPS service delays are hitting some mail-order pharmacies and telehealth platforms harder than others Event: (8/19) Recent reforms and services changes created by recently appointed Postmaster General Louis Dejoy have led to widespread service delays. These service delays are hurting certain mail-order pharmacies and telehealth platforms which rely on the USPS to fulfill orders given its relative cost-effectiveness to other methods. Description: There have been many service disruptions for telehealth platforms due to recent reforms and administrative changes which have resulted in long-term concerns about prescription drug shipments handled by the USPS. Timely delivery and access to medications are extremely important for Americans especially during the pandemic, in order to avoid hospitalization, unnecessary emergency room visits, and increased costs if there is a need to use different carriers. Implications: Changes in post office policies have created broad service issues for certain telehealth and online pharmacy platforms leading to later than anticipated or complete lack of delivery for platforms relying on first-class mail delivery. These USPS delivery issues have led to service issues, complaints, and replacements or refunds of as much as 5%. This could dramatically increase costs and threaten these companies’ business models as customers turn to other providers for their medications. USPS service delays are hitting some mail-order pharmacies and telehealth platforms harder than others

The hazards of digital mental health Event: Mobihealthnews examined the lack of scientific evidence backing digital mental health apps, noting “investors and entrepreneurs alike are pouring record time and resources into digital health” including almost $600 million into behavioral health. With the explosive growth in digital mental health services, concerns have arisen due to unclear evidence of whether or not their products actually work. Background: Many digital health companies are introducing products to the market without showing if their solutions work, publishing their raw data or publishing for peer review. This leaves many health professionals uncertain when recommending digital health treatments to patients. This is due in part to the fact that only 18% of psychiatrists use measurement-based care due to lack of time, training, and the sense scales don’t capture the diverse phenotypes of mental illness. Implications: The success of many digital mental health companies is determined by their financials and operation rather than how effective the treatments are for patients Healthcare researchers, clinicians, and technologists have to collaborate and use measurement-based care to ensure there are effective digital mental health products out in the market as care increasingly moves to virtual settings. The hazards of digital mental health Telehealth visits have skyrocketed for older adults, but concerns remain Event: The University of Michigan released its National Poll on Healthy Aging (NPHA) noting in 2019, many older adults expressed at least one serious concern around the usage of telehealth services. Since COVID-19, telehealth has become a much more popular option among older adults due to underlying health risks and closed medical facilities. Background: After states mandated reductions in elective and non-emergency healthcare, the University of Michigan conducted a poll finding that 30% of older adults participated in telehealth services by June 2020. Comfortability in using telehealth services increased by 11%, and privacy concerns have dropped significantly. Older adults have a growing interest in telehealth, but lack experience or access which remain barriers to receiving care. Implications: Many older adults have limited experience and aptitude with digital health technologies and may need additional help to gain comfort with the quality of communication and privacy. Some older adults continue to express concerns about telehealth visits, particularly regarding the quality of care compared to in-person visits and the inability for a physical exam. Until these issues are addressed, some older adults may be hesitant to engage in telehealth visits. Telehealth visits skyrocket for older adults, but concerns remain Large U.S. employers focusing on virtual care, mental health services in 2021 Event: The Business Group on Health published its 2021 Large Employers' Health Care Strategy and Plan Design Survey noting the Covid-19 crisis has caused employers to re-evaluate and expand the benefits offered to their employees. These benefits include virtual mental health and emotional well-being services which are projected to increase in the upcoming year. Background: In the past, employers covered nearly 70% of healthcare benefits for their employees. Due to the increase in virtual health usage, employers are set to expand their virtual health options, offering telehealth services, mental health services, and minor, acute conditions. Additionally, 45% of employers have included mental and behavioral health training for managers to ensure mental health issues are recognized and dealt with during this unprecedented time. Implications: The increase in the use of telehealth services has opened the doors for more virtual solutions with both employees and providers seeing benefits and embracing these solutions. This report reinforces the importance of employee health during the pandemic, noting that with 2021 rapidly approaching, employers should focus on further expanding telehealth platforms and providing additional training on awareness and usage. Business Group on Health Large Employer Healthcare Strategy & Plan Design Survey Uncovering the real value of the benefits you offer Event: A recent article in Benefits Pro, highlighted that employees’ well-being not only improved from utilizing health benefits, but also from being offered health benefits by in effect providing them peace of mind. Citing Fidelity Investments report, “Uncovering the real value of the benefits you offer,” the article pointed out “if 2020 has shown us anything, it’s that this is not a typical year and arguably, we are approaching the most important annual enrollment we will ever experience in our lifetime.” Background: Fidelity’s Health Solutions Group took a more holistic view of value that can guide employers to make more informed decisions on how to improve their benefits offering. In part, they found not all benefits actually have to be used to be effective, and employers offering mental health, life insurance, and remote added value by demonstrating they had the employees’ best interests in mind. HSAs, telemedicine and parental leave, however, need to actually be utilized to improve well-being Implications: Understanding the difference between awareness and utilization of benefits can help employers dig deeper into which benefits they should focus their attention on. One in four companies have changed employee health benefits since the COVID-19 pandemic began in March, complicating the upcoming 2020 annual enrollment period Employee benefits offered vs. used: What's the difference? The “at-home” shift continues to accelerate Event: Salesforce announced they would let employees work from home until August 2021, offering additional benefits to purchase office supplies to work from home and more paid time off. At the same time last week, retailers such as Home Depot, Target, and even digital laggard Kohl’s reported that eCommerce sales came in above expectations. Background: Salesforce CEO Marc Benioff has been one of the most forward-thinking CEOs in terms of COVID, laying out an 8 point plan to deal with COVID and developing the “work.com” website to help companies bring employees back to offices safely. In terms of retail sales, while eCommerce sales have benefitted from COVID lockdowns, many had expected this to begin to level off as a number of states had permitted physical stores to reopen during the quarter (May-July). Implications: The “At-Home” (work at home, shop at home) shift is not slowing down and may in fact be accelerating further solidifying the secular change to a hybrid delivery model of customer engagement (in-store, online, mobile). While some providers are focusing on an “outbound care” delivery model (bringing the care to patients) the vast majority continue to focus on an “inbound care” delivery model, (having patients come to offices, clinics, and physical facilities) and risk missing another paradigm shift. Salesforce will let its employees work from home until August 2021 Earnings roundup: Online sales double for Home Depot

On Wednesday August 5th, two of the larger public names in the digital health space, Teledoc (TDOC) and Livongo (LVGO) announced they were merging, while we understand the stated logic behind the merger, we were a bit puzzled by several issues, our thoughts on each of them are below: Timing: there is a tremendous amount of runway for both of these industry-leading companies to grab before they are likely to stunt the growth of the other. No matter how well-executed or how experienced the integration teams, a merger is likely to distract attention from the sales and execution engines of companies with dramatic sales potential +70% est. for LVGO and +40% est. for TDOC. While telehealth has been moving at blinding speed due to COVID we still would expect consolidation of industry leaders when digital health growth begins to slow and applications for the technology begin to narrow. We see no signs whatsoever that this is the case. Valuation: At Tuesday's close TDOC is paying approximately 36x sales for LVGO a very steep price for a company whose stock has already risen over 200% YTD. While telehealth is a large and untapped market (estimated at ~ $100B pre-COVID to as much as $250B in a recent McKinsey estimate post-COVID) and significant amounts of care remain to be moved to digital, the deal is expensive under even the best of assumptions. At 36x sales, the deal would be more expensive than most recent acquisitions in software, which already tend to be expensive, and which we view as the most appropriate comparable. Best of Breed vs. All-In-One: In announcing the merger TDOC noted that the merger would create what amounted to a one-stop-shop for digital health needs, allowing employers and providers to work with numerous disease states and care models. However, our work indicates that about one-third of large employers prefer a best-of-breed approach to employer benefits and have found superior results from their plans. Given the lackluster results that many employers have gotten from their health benefits, our belief is that the trend will be towards this approach as opposed to an all-in-one solution. Go-to-Market Strategy: Although LVGO has been working to increase direct selling efforts, historically they have gone to market via channel partners and resellers such as Caremark, Express Scripts and Anthem, etc. (for YE 2019 over 60% of the company’s revenues came from these channels). TDOC has traditionally used large health plans as it’s distribution network such as Aetna and BCBS. We see it as highly disruptive to continuity of sales and sales management to attempt to modify (even modestly) growth strategy in the midst of a hyper-growth market. This combined with the fact that successful sales and marketing people will be highly sought after given how hot the market is, these types of changes could end up impacting growth (our understanding is that RSU’s vested 6 months after the IPO or with a change in control). Strategic positioning: While we believe that the deal makes sense for TDOC, as we see the basic delivery of telehealth being commoditized over time, there is likely more risk for LVGO based on their competitive positioning and the difficulty recreating the chronic care delivery model they have created. Given the opening that the declaration of a public health emergency (PHE) created for the use of non-HIPAA compliant vehicles like Zoom, Google Hangout, Microsoft Teams, etc.over time we see potential for other large video platforms to partner with/usurp the provision of basic connectivity. In addition, over time we expect video technology to change so that patients will no longer have to install separate telehealth apps on devices increasing ease of use and substitution. Consequently, we expect a stand-alone LVGO with a focus on chronic disease to have greater competitive advantage than TDOC. This is evidenced by LVGO’s sales growth rate in the 50% range vs.TDOC’s organic sales guidance in the 20%-30% range. Rollup risk: The LVGO acquisition will mark TDOC’s 11th acquisition since 2013 and the 2nd this year (recall TDOC agreed to buy InTouch in January 2020). First, as noted above, given the red-hot nature of the digital health market we have no doubt that both teams are already working all out to capture as much share as possible, a fact that is further compounded by the demands of COVID (physician shortages, supply chain issues, etc). When combined with the difficulties inherent in managing the merging of any two organizations, no matter how good or experienced the integration teams are, leads us to believe there is more downside than upside risk. In addition, we see roll-ups in emerging industries and in healthcare in particular as a difficult way to make money. While there are exceptions (i.e, Quest), they tend to be just that, exceptions, rather than the rule (i.e, physician practice management). We find this to be the case, particularly as roll-ups grow in size, with an early study by Booz & Company finding that once roll-ups got past $500M in value they often lose value.