Unveiling the US Telemedicine Business Models: Different Approaches of Giants like Teladoc and MORE Health

As a country with the strongest general strength in global medical care, the United States' telehealth industry has made rapid progress in recent years, giving rise to many large telehealth companies, including Teladoc Health, American Well, Grand Rounds, MORE Health, and so on.

According to the World Health Organization, 2020 to 2030 may be the decade in which digital technology reshapes the healthcare system. Globally, the telehealth industry is accelerating its development.

As a country with the strongest general strength in global medical care, the United States' telehealth industry has made rapid progress in recent years, giving rise to many large telehealth companies, including Teladoc Health, American Well, Grand Rounds, MORE Health, and so on.

As a global leader in medical technology, how is the US telehealth market developing? What business models and visions do leading giants follow, and what are the advantages and disadvantages of their respective technologies and services? This article summarizes the profiles of the most representative telehealth companies in the United States, introduces the similarities and differences of their business models, technological barriers, and future development directions for reference.

Overview of Telehealth in the United States

Great innovations often stem from real needs. In recent years, telehealth has been one of the fastest-growing industries worldwide.According to the latest report from Verified Market Research, the global telehealth market was valued at \$21.17 billion in 2019 and is projected to reach \$71.44 billion by 2027, implying a compound annual growth rate of 16.4% between 2020 and 2027.

Behind the rapid growth of telehealth is both the gradual penetration of internet technology into infrastructure such as healthcare and the many unmet pain points.According to data from the US Centers for Disease Control and Prevention, there are approximately 1.25 billion outpatient visits in the United States each year, of which approximately one-third could be addressed through telehealth. In addition, according to statistics from several associations such as the American Cancer Society and the Epilepsy Foundation, there are also 5.1 million serious illnesses requiring expert telehealth consultations each year.

In the United States, the high cost of medical care is a major driver of the rapid development of the telehealth industry, giving rise to large telehealth platform companies such as Teladoc Health, American Well, and Grand Rounds; while differences in medical resources and endowments in various parts of the world in the field of serious illnesses have given rise to cross-border medical service platforms represented by MORE Health.

Since the outbreak of the COVID-19 pandemic, the prevalence and usage rate of telehealth have clearly taken a step up, and the acceptance of new technologies by patients and medical institutions has far exceeded the past. For example, Medicare temporarily raised the reimbursement rate for video medical consultations to the same level as face-to-face medical consultations, and the FDA and CDC have also taken measures to expand the application scope of telehealth.

Specifically, the largest company at present is Teladoc Health, founded in 2002. After its listing on the New York Stock Exchange in 2015 (stock code TDOC), it has continuously expanded its global market through acquisitions, focusing on primary care and complex disease telehealth services. Its latest market capitalization is approximately \$23 billion. The company has five sub-brands: Teladoc, Advance Medical, Best Doctors, BetterHelp, and HealthiestYou.

Founded in 2006, American Well (Amwell) uses chronic disease management as its entry point, allowing patients and doctors to conduct remote consultations via real-time video. The company also went public on the New York Stock Exchange in 2020 (stock code AMWL), and its latest market capitalization is approximately \$2.7 billion.

Figure: Amwell's interface on various terminals

Grand Rounds was founded in 2011, aiming to provide integrated solutions for employee healthcare benefits for enterprises, reduce customer healthcare expenses, and recommend high-quality local healthcare resources to patients through algorithms. In March of this year, the company merged with the telehealth company Doctor on Demand, which is also a platform that uses remote video to improve the patient's medical experience.

MORE Health was founded in Silicon Valley in 2011, using cross-border medical services in the field of serious illnesses as its entry point, enabling global patients to enjoy the most advanced medical services in the United States. Its unique expert joint consultation model allows for smooth use by doctors worldwide, supports multiple languages, and maximizes patient privacy.

In addition, technology giants such as Google and Amazon are constantly entering the telehealth field, using big data and AI technologies to expand their territory in the medical field.

What kind of business model can go further?

“Currently, we are observing that participants in the telehealth industry are rapidly expanding in scale. Each platform must combine its own advantages, consider the specific circumstances of each country, obtain sufficient financial support, and develop a unique winning business model in order to avoid being eliminated,” said a senior industry veteran with many years of experience in the telehealth industry.

Although many US telehealth giants have already achieved considerable scale, the current concentration of the telehealth industry remains very low.According to Teladoc's calculations, the telehealth market space is expected to reach hundreds of billions of dollars. As the industry leader, Teladoc's current market penetration rate is still less than 1%. To a large extent, the telehealth market is still in its early stages of development, and in the future, it is likely to present an industry pattern in which large integrated telehealth institutions and kings of niche segments coexist.

Currently, major healthcare providers are exploring their own business models and establishing their own brands. Specifically, ways to build brands include: integrating technology platforms, providing high-quality supplier networks, increasing complex consumer stickiness and coverage, and optimizing distribution channels.

1) Starting Point: Basic Diseases VS Serious Illnesses

In the United States, the advent of telehealth can greatly reduce medical expenses for patients (expensive outpatient costs in the United States) and effectively address the problem of uneven medical levels between regions, improving the efficiency of medical consultations.

Different telehealth companies have different business scopes and business models. Some companies excel in basic diseases, such as Teladoc and Grand Rounds; while others have been cultivating the field of serious illnesses for many years, with MORE Health being a prime example.

Teladoc started with telehealth for basic diseases, focusing on providing patients with more convenient and affordable medical access for common basic and minor illnesses, and gradually expanding to chronic disease management and a small number of complex diseases. Teladoc has two charging methods: one is a monthly subscription fee of \$35 for users; the other is a per-visit fee, ranging from a few dollars to over \$100 per visit. For patients, this fee is much cheaper than emergency room or outpatient fees in the United States.

Teladoc's business model is B2B2C, providing virtual medical services to over 12,000 global clients in a B2B manner, or directly to individual consumers (D2C). The majority of the company's clients are business owners and health insurance companies, driving revenue from paid members through B-end clients.

Grand Rounds' business model also starts with everyday basic diseases, aiming to address the burden of US healthcare spending, especially helping companies reduce employee healthcare costs. The company's main model is B2B, with the main purchasers of services being enterprises, and it cooperates with more than 130 large insurance companies. The platform uses a special algorithm to match patients and doctors, improving the efficiency of the medical insurance system; at the same time, it strives to reduce complications and readmission rates, thereby helping companies reduce costs.

Image: Grand Rounds Mobile Interface

MORE Health's starting point is different from the other two, mainly focusing on critical illnesses, aiming to allow patients to enjoy the world's leading treatment options while supporting cross-border telehealth for critically ill patients. The starting point of the company's business model is to address the differences in the level of critical illness treatment in various countries around the world, allowing patients who cannot afford medical treatment in the United States due to economic or cultural reasons to complete cross-border diagnosis and treatment in their own country, and greatly saving them the cost of treating critical illnesses.

Compared to platforms that focus on basic disease telehealth, MORE Health's business is low-frequency and high-customer-unit-price due to its focus on complex and expensive critical illnesses. At the same time, after years of iteration, the platform has become fully equipped in terms of cross-border medical data transmission, medical imaging synchronization, multi-party online consultations, and legal and regulatory compliance.

Initially, MORE Health mainly served B-end clients, including hospitals and enterprises. Its independently developed doctor consultation platform has been recognized by many of the world's leading hospitals and has become their software service provider; at the same time, the company has also gained many C-end clients through word-of-mouth. In recent years, MORE Health's business has also extended to insurance-like products. Currently, in addition to China and the United States, MORE Health's business covers Spain, France, the United Kingdom, the United Arab Emirates (UAE), Canada, and Australia.

Image: MORE Health's "AiYi ChuanDi" Mobile App Interface

2) Growth Path: Continuous Acquisition vs. Deep Cultivation of Niche Fields

It is worth mentioning that in recent years, telehealth companies have taken two diverging paths in their growth: some giants have chosen to expand their medical services across all departments through continuous mergers and acquisitions, while others have chosen to cultivate specific niche markets, becoming irreplaceable companies in their respective fields.

For example, Teladoc is a typical company driven by acquisitions. In recent years, Teladoc has actively acquired companies to expand its global business. Since 2017, its acquisitions include medical consulting firm Best Doctors, virtual and expert medical service provider Advance Medical, French telehealth provider MedicinDirect, chronic disease pre-diagnosis support platform Vida Health, hospital and healthcare system solution provider InTouch Technologies, and diabetes management company Livongo, among others.

In contrast, companies represented by MORE Health have taken a specialized route, focusing on the global cross-border and critical illness markets, attempting to absorb more scarce resources and using technology to assist in achieving the ultimate goal of establishing a global Internet hospital.

Whether it is through continuous acquisitions to expand its footprint or by cultivating a specialized field, this will become a long-term direction for the development of telehealth companies after the elimination of the unfit. However, it should be noted that acquisition-driven companies will face long-term cash flow pressure and require strong integration capabilities after acquisition. It is important to know that during the integration process, problems such as culture shock and internal losses are often encountered, which can hinder the company's development, posing a challenge for acquisition-driven companies.

3) Professional Medical Genes vs. Internet Genes

In the discussion of business models in the telehealth industry, company genes are also an interesting topic. Currently, leading telehealth service providers in the US market are almost all platforms and institutions with professional medical backgrounds. In fact, tech giants including Amazon and Google are also continuously investing in medical technology.

Taking Amazon Care and Google Health as examples, these medical service providers under tech giants start with big data applications to link medical services. These companies inherently possess internet genes.

However, to some extent, internet genes and the essence of medicine contradict each other. Internet companies often pursue standardized products, but in real life, the diagnostic process of cases is very complex and not entirely based on data deduction, but to a large extent relies on the clinical experience of doctors. Therefore, for technology companies lacking clinical medical experience, how to apply and commercialize technology in real-world scenarios has always been a difficult problem. For example, IBM's Watson attempted to use the concept of medical + artificial intelligence to enter the medical industry ten years ago, but the project has yet to turn a profit.

On the other hand, the entry of Internet giants with massive capital into some niche telehealth areas that are not yet large may stifle the development of small start-ups and hinder the creation of a good business environment.

4) US Domestic Market vs. International Market

Geographically, different telehealth companies focus on different markets. Different countries have different requirements for the safety of telehealth, and legal conflicts also vary, so different regions also present different entry barriers for telehealth service providers.

For example, Teladoc and Grand Rounds mainly focus on the US domestic market.

MORE Health, which focuses on critical illnesses, accepts patients from all over the world, and the demand for cross-border medical care also brings higher barriers. MORE Health established its Chinese company, AiYi ChuanDi, in 2016, established a Japanese joint venture, International Health, in 2018, and established MORE Health representative offices in Canada and Europe in 2019 and 2020 respectively.

Four Major Barriers Build Moats

In an era where everything can be "Internet+", what are the entry barriers for telehealth service providers?

In fact, with the rapid development of large telehealth companies, the industry's entry barriers are increasing. The main barriers are concentrated in physician resources, technological barriers, compliance barriers, and data accumulation. Especially in the field of critical illnesses, the barriers built around medical resources, technology, compliance, and data have become powerful moats for giants in the field.

1) Physician Resources

High-quality physician resources are scarce worldwide. It takes at least 11 years to train a qualified physician in the United States, including four years of undergraduate education, four years of medical school education, and an additional three to seven years of residency training to obtain a license.

In the field of critical illness, the importance of physician resources is self-evident. Unlike the basic disease track where Teladoc and others are located, critical illnesses place high demands on physicians. Regardless of the country, the number of doctors specializing in treating tumors, rare diseases, and other serious illnesses is very limited. Building a network of these top specialists is a major challenge. At the same time, serious illnesses often require multidisciplinary consultations. For example, in the United States, the treatment of tumors involves a tumor board composed of pathologists, radiologists, imaging specialists, and surgeons; therefore, telemedicine for serious illnesses also needs to connect top doctors from different departments via the internet.

Take MORE Health as an example. MORE Health has abundant physician resources. Its founding team consists of a group of top medical experts and scholars from UCSF, and a Medical Board composed of 20 professionals in the US medical field. This board is primarily responsible for contacting and expanding relevant medical experts and controlling the quality of newly signed doctors. Its own doctors all have over 15 years of clinical experience as chief or deputy chief physicians.

2) Compliance and Technological Barriers

In the United States, all formal telemedicine processes must comply with the Health Insurance Portability and Accountability Act (HIPAA). Therefore, a new entrant needs to follow over 600 clauses of HIPAA compliance and establish a consultation platform that meets various regulations and physician behavior patterns. This requires substantial funding and time to perfect. Companies like Teladoc Health, American Well, Grand Rounds, and MORE Health have all spent years building the necessary infrastructure.

Regarding health privacy and security, HIPAA rules place great emphasis on the privacy protection of personal health information, stipulating that no one can access information they should not have access to, and that physicians cannot access patient health information outside of the clinical setting. Therefore, especially in the field of telemedicine for serious illnesses, case information and related medical imaging files are often large, and the platform needs to ensure the security of the privacy data it receives, maintains, transmits, and generates to ensure that patient privacy is fully protected. In addition, telemedicine platforms must also meet the constraints of numerous clauses such as ISO27001 and SOC2.

For example, MORE Health's independently developed IT diagnostic platform enables seamless online integration of high-definition image data, allowing doctors to use it conveniently and quickly, without any additional learning costs. For all case information, physician diagnoses, discussions, and treatment plans, MORE Health uses high-specification encrypted transmission, making it difficult for competitors to meet similar compliance requirements in a short time. In terms of transmission speed, MORE Health uses multi-level caching to improve loading speed. For example, when a doctor enters a webpage, the website intelligently analyzes the sections they are likely to browse and caches them in advance, resulting in a smoother user experience.

3) Data Accumulation

Over time, the accumulation of medical data and cases has become a deep moat for telemedicine companies.

Currently, online platforms targeting common diseases, such as Teladoc, are focusing on intelligent diagnosis, with the future hope of replacing the diagnosis of general practitioners. The prerequisite for intelligent diagnosis is the accumulation of big data, while the application of technologies such as natural language processing (NLP) can help platforms achieve intelligent diagnosis. In this area, some giants already possess massive amounts of interactive data and are expected to better provide online medical services in the future. For example, Teladoc had as many as 10 million visits in 2020 and possesses hundreds of millions of interactive data points for various diseases. This data will be beneficial for the further development of machine learning algorithms in the future.

Especially in the areas of chronic diseases such as depression, obesity, and diabetes, some patients place a high value on privacy protection or are hesitant to discuss their condition. Medical platforms can use NLP to automatically process unstructured text (e.g., from chat rooms) or Tel audio to quickly address patient needs. In addition, NLP can be used to extract patient history and combine it with existing drugs and treatments to better treat patients.

In the more complex field of critical illnesses, the data is of even greater clinical and research value. Take MORE Health as an example. It has accumulated over 10,000 precise cases with diagnostic plans annotated by top doctors. This data is expected to make epic contributions to research in certain areas.

It is worth mentioning that MORE Health's technical team performs feature extraction on all cases, representing them as high-dimensional vectors. New cases, after feature extraction, can be matched for similarity with the existing case library. This protects the privacy of previous patients while allowing new patients to find better treatment plans by referring to the diagnostic opinions and treatment plans of similar cases.

The Future of Telemedicine

According to Frost & Sullivan, a world-renowned consulting firm, by 2025, the US telemedicine market will grow sevenfold from its current market size of \$2.6 billion.

From the perspective of the industry competitive landscape, telemedicine companies with different Business Scopes and genes will take different paths. Platform companies like Teladoc will continue to achieve rapid growth through mergers and acquisitions, with maintaining valuation and profitability being their primary considerations. Tech giants such as Google and Amazon will take a technology route, exploring medical applications from big data. Companies like MORE Health, which are deeply involved in cross-border medical care for serious illnesses, will grow and develop in vertical segments.

Looking to the future, the development of the US telemedicine market will be influenced by four factors.

First, government policy promotion,In March of this year, the US Congress introduced a \$2 trillion stimulus package, mentioning that relevant medical groups can receive \$200 million in funding to promote and develop virtual medical technology. In addition, cross-state medical licensing has been one of the major obstacles to telemedicine, but it has been gradually relaxed during the pandemic.

Second, technological advancement,Due to network bandwidth limitations, telemedicine technology cannot be popularized in some remote areas. In the future, with the application and popularization of 5G technology, telemedicine will become the new normal.Third, even in a developed country like the United States, medical resources are still scarce, and the tense doctor-patient ratio will drive the development of telemedicine. Fourth, the popularity and acceptance rate of telemedicine are constantly improving.

Other mountains' stones can be used to carve jade. The United States has a relatively early start in the development of telemedicine, with relatively comprehensive laws and regulations, and it is widely applied in various fields. In contrast, China's telemedicine is currently experiencing rapid development, but it still needs to improve the relevant laws and regulations on telemedicine licenses, network security, and data privacy, and establish a diversified and comprehensively covered telemedicine system.

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