Consolidation and Telehealth 2.0

Insights into what's next for the Industry - and how to capitalize on it

Telemedicine and telehealth have reached a watershed moment. After years of shouting into the empty forest, suddenly everyone is listening. Tens of thousands of lives are now being saved by the very industry that Boards of Medical Examiners were relentlessly trying to shut down just a few years ago.  

Entrepreneurs in their relentless quest for capital are now encircled by investors hunting for deals. Companies and ideas are getting funded, sometimes with obscene valuations.

There are several reasons why my team and I am working with some of the pioneers of telemedicine on what we call “the next generation of telehealth.” Through our efforts, and those of many others, we have seen a portion of the patient healthcare experience shift from the distressing, uncomfortable environment of a hospital or clinic to the comfort of one’s own home. 

We now see an opportunity to expand the scope of what can be done from the home and recognize the market indicators on where telemedicine is today. A transition is about to happen in the industry. We have seen this happen before.

COVID-19 has propelled the industry from the emerging into a growth stage. With growth, the efforts of prudent businesses will be focused on building scale and market share. New ideas will be created, built and sometimes destroyed. Consolidation will accelerate as the top competitors will solidify their empires through acquisition. 

Today, there are likely thousands of telehealth companies in various stages of development. In a few years, most of the early stage companies, now excited by their own growth, access to capital, and high valuations, will be gone. The vast majority will be simply crushed out of existence. The fight for the dominance has begun, knowing that the top three or four players will control up to 50% of the entire industry, while the rest will be anemically held by less than a dozen more.

In the 1990s, I built an Internet company. Those were exciting times. Boom times. Investors were encircling us and throwing money at our deals. Many of my friends and associates turned away great offers because they thought they had the next “billion-dollar deal.” In almost all cases, they were wrong, and they ended up with nothing. In the late 90s, there were thousands of Internet companies. Now there are a handful, and they are called AT&T, Sprint, Verizon, and a few other familiar names.

The lessons of the late 90s apply today. History teaches us the cycles of a new industry. In 2002, Harvard Business Review published a study on the topic. We have seen example after example of how this stage plays out in a new industry with: manufacturing, automobiles, airlines, telecom, internet and electric power. The list could go on and on, and the pathway is always the same. There is a reason smart people study history…

For Jay Sanders, myself our other partners, all of whom are pioneers of the telemedicine industry, and to the entrepreneurs on the front-line, who will become our partners, and who are destined to be the next generation of pioneers, the concept of “Teladoc 2.0” is immensely appealing for several reasons:

First, we see what the next stage should look like. Teladoc 1.0 ushered in an industry focused on improving the “cross coverage” or low acuity experience. During that phase, we sharpened the skills of remote diagnosis for common ailments, and began to develop and test the elements f the next generation.

Now, with advanced tools like AI, Machine Learning, a richer data environment and regulatory reform, we can broaden the scope. Care delivery workflow can now include specialty telemedicine, chronic care, second opinions and much more. 

Building the foundation of 2.0 will broaden the scope, while it solidifies the foundation, improving outcomes. These things are critical to our delivery system, but with them, we also see opportunity for the innovators and next generation of telemedicine pioneers. 

Second, 2.0 is immensely appealing because those of us who seize it, can use the current tidal wave of consolidation and access to capital to help usher in that stage.

The goal of my team is to find the high value assets that belong in the foundation of 2.0 and make sure they not only survive the consolidation phase, but also thrive in that phase. We are designing and executing our own roll-up -- A Super Roll Up, if you will, of the best of breed in healthcare. Some will be so small, that few are aware of who or what they are, while others will be the mainstream, predictable entities.

If you are an investor looking for an opportunity, we should be talking.

If you are building a telehealth company with great operations skills, a cornerstone innovation, topline revenue between $5M and $50M, and the desire to survive this consolidation stage of the industry, we should be talking.

Carpe Diem