The pandemic drove unprecedented demand for virtual care, fueling rapid growth for Teladoc — one of the largest telehealth vendors in the U.S. The New York-based company, which brings in a majority of revenue from subscriptions paid by employers and health plans, is now hustling to prove its lasting value proposition to those buyers by enacting more care management solutions and exploring how it might leverage artificial intelligence in response to employer needs.
A number of recent deals illustrate those priorities, including reseller agreements with musculoskeletal care providers Hinge Health and Sword Health, giving Teladoc clients access to their tools on the vendor’s platform, and a partnership with Microsoft to leverage the tech giant’s AI capabilities.
Though Teladoc elected not to purchase an MSK provider, that doesn’t mean the company is eschewing acquisitions altogether. Teladoc could still look to buys to fuel growth this year and beyond as point solutions become increasingly strapped for cash, according to Kelly Bliss, president of U.S. Group Health. Bliss shared Teladoc’s strategic priorities and how the vendor is approaching AI integration in an interview on the sidelines of the HLTH conference in Las Vegas.
This interview has been lightly edited for length and clarity.
HEALTHCARE DIVE: Is this something your employers asked for — more MSK solutions?
KELLY BLISS: Our team has been talking to employer clients about evolving their virtual care strategy more broadly. Of our sales for the last several quarters, 75% are multi-product. Our clients are continuing to leverage our integrated whole-person strategy, but they’re also working with other vendors’ solutions.
Our clients are saying, “It would be really easy for us from an administrative burden side if you incorporated some MSK offerings into, at a minimum, the back-end administrative stuff.” And Sword and Hinge are both really strong players and quite dominant in that space, and many of our clients have them. So it was an easy decision.
Investors are saying that point solutions are increasingly seeing the value of integrating with bigger platforms. Who approached who here?
BLISS: We’ve had ongoing relationships with both Sword and Hinge. Our employer base is pretty massive, and we’ve always had inbound requests to integrate more effectively. What we’re focused on is the areas where we’re developing or expanding, whether that’s new clinical use cases or personalizing our member experience. So it makes sense for us from a commercial perspective to create an opportunity for our clients to better enable back-end administration.
People are desperately tired of point solutions. I think our clients are starting to realize the not just fractured member experience but how that impacts actual clinical outcomes, and the back office costs to standing up vendor point solution after vendor point solution. I had one client say, “I’m going schizophrenic putting new programs in place.” And now they have to justify ROI on those, and they’re starting to consolidate.
How do these referral deals fit into Teladoc’s business strategy?
BLISS: We’ve been building out more capabilities on how we refer into different systems, whether that’s a brick-and-mortar hospital system, whether that’s referral into other services like last-mile care. This is an ecosystem play. We know from our owned assets, when we pair, for example, chronic disease management with mental health, we know there’s actually improved outcomes. And it’s an opportunity for us to ease administrative burden on our clients too.
Given virtual primary care is the quarterback of care, in our view, we will continue to identify what’s the build, buy, partner strategy. The core of that strategy is clinical quality and safety to our members. Scalability — they have to be able to operate at scale, for us to really own an asset. It’s not just topline revenue growth — it’s how are you actually creating value for your client, because we’ve seen the level of sophistication with our clients shift in the last couple of years. They’re demanding meaningful outcomes, whether that’s clinical or ROI.
Teladoc historically has been fairly acquisitive. Why was MSK an area to partner and not buy?
BLISS: We’ve invested $400 million in R&D and we will continue to invest next year over $400 million in R&D. We have our own priorities. At this point, in MSK, Sword and Hinge are two very well known entities. And they’ve had those markets. So it’s just not a priority for us right now.
We will continue to be acquisitive. I don’t think our thesis around bringing in solutions that really build out our whole-person vision will stop. We’re always looking, and that will continue, and we’re lucky in that. Unlike probably anyone else [at HLTH], we are free cash flow positive with $950 million. So there’s opportunity for us as the markets start to get a little pressured.
What are your R&D priorities?
BLISS: It's AI and hyper-personalization of member experience. There’s a whole list of things — we’re not disclosing exactly what we’re investing in. But there’s a tremendous amount going into furthering our vision. There’s some I’m really excited about that are targeted at specific clients. We’ve had specific clients come to us and say, “This is what we want to tackle,” so we’re testing and learning for different lines of business there.
What are the implications of the Microsoft deal for Teladoc’s employer clients?
BLISS: It will be incorporated into all of our clinical use cases. We’ll use the Microsoft platform to more effectively document consults, which pulls out time and waste from the system. Broadly, Microsoft has these new tools called Copilots — within their AI packages, they’re ways to deploy AI for a specific use case. We’re figuring out ways in which we can deploy those with our clients.
For example, we’ve had a lot of clients come to us and ask for an ecosystem partnership. So health plan clients have their own care management team, and they’re trying to optimize their virtual care strategy with their care management team. We’ve had some really interesting meetings with some of our clients around that. That’s a great use case for AI, reducing that administrative burden for a health plan. The client reaction to the Microsoft deal has been very positive.
Where else could we see Teladoc leverage AI?
BLISS: We currently have 60 AI models running today. We’re doing more of scheduling members with a quality physician — if you can appreciate the ecosystem of requirements associated with bringing to bear an immediate response from a member inquiry, “I would like this type of visit,” with the matched client clinical resource requirements. So we’re using a lot of AI in that model. We’re using AI to do more personalization with nudges and making sure that our members are taking the next best action, and driving toward early detection and wellness.
On future use cases, there are a lot around pulling waste out, and understanding the member and how they like to interact with our system, and then deploying ways to further engage them and steer them into other clinical programs. And health history and benefits are dynamic, right? It’s constantly changing. So what’s the continuity of care if we have a virtual primary care relationship? So we’re trying to get after making sure a member or their care team is constantly served up the appropriate next actions in their care journey.