Researchers at Credit Suisse Securities (USA) http://www.credit-suisse.com a worldwide wealth manager, recently conducted a review of 2019 Employer Benefit Guides to better understand the competitive environment for telehealth. Recently, findings were published summarizing key issues emerging for 2019 affecting the telehealth competitive environment.
Researchers analyzed 145 open enrollment benefit guides and summarized the key themes emerging for 2019. They also developed a spreadsheet tracking the changes the researchers noted for Teladoc Health https://www.teladoc.com, the one public company in this space.
Researchers found that the large group employer market is highly penetrated, showing that any benefit of incremental telehealth adoption remains limited. Additionally, large employers seem to be maintaining the status quo on telehealth offerings.
However there are a few instances where large employers have narrowed the number of telehealth vendors. For example, Home Depot offered Teladoc Health and Doctor on Demand to their employees in 2018, but is offering only Teladoc Health in 2019. In the cases where large employers switched telehealth vendors for 2019, it was generally driven by a change in contracted medical plan vendors
Unlike the large group market, where more than 80 percent of employers are offering telehealth benefits to their employees, small group employers are still not heavily penetrated with respect to telehealth offerings.
Cross-selling opportunities still remain between Teladoc Health and Best Doctors. The analysis indicates that employers using Teladoc Health as one of their telehealth vendors are not offering any second opinion or expert opinion offerings. TDOC’s second opinion/expert opinion faces competition from Grand Rounds which contracts with several large and middle market employers. Also, some clients are offering Best Doctors to employees that have a contract with some other telehealth vendor.
Teladoc Health has highlighted potential opportunities to cross sell its offerings to existing clients, noting that only 13 percent of its U.S membership has three or more products and only one percent has four or more products.
Researchers noted an increased interest in covering dermatological services under telehealth with several instances of success for Teladoc. Another fact noted is that the coverage of behavioral health services was another area of interest among employers offering expansion for 2019.
Based on recent conversations with management, CVS Health plans to advertise Teladoc Health’s telehealth offering in Minute Clinics after it is fully rolled out across the country in 2019. This contract is unlikely to meaningfully contribute to revenues in 2019.
Credit Suisse reports that due to the uncertainty related to telehealth adoption among seniors and the way CMS plans to reimburse for these offerings, MA plans are likely to contract with telehealth vendors on a more white labeled approach and a visit fee model which means less significant and uncertain potential revenue stream for telehealth vendors.
Recent sell-off in Teladoc Health shares has trimmed valuations, however Teladoc shares are trading at a valuation essentially in line with similar growth. Credit Suisse is concerned about Teladoc’s under representation in the provider hub-and-spoke market where research shows potential growth opportunities in the telehealth market.
Go to https://www.credit-suisse.com for more information on the key themes emerging in 2019 contained in the report “Telehealth: Review of 2019 employer Benefit Guides”. To provide feedback, email Jailendraq Singh, Director Equity Research/ Managed Care and Healthcare Facilities at Credit Suisse Securities at jailendra.singh@credit-suisse.com