*All prices are in USD
**This is not financial advice; it is merely the detailing of my thought process, for myself. Any investment decisions are made by individuals of their own volition, and not because of what I have or have not written.
What is Teladoc Health?
Teladoc (https://www.teladochealth.com/) – ticker code TDOC, is a digital healthcare platform, designed to provide holistic virtual medical care; think medical services in your pocket (on your device(s)).
For example: low-cost 24/7 virtual doctor visits, mental health services, complex care, primary healthcare team for long-term healthcare, ranging from basic and to complex care. Teladoc provides on-demand access to your healthcare team, 24/7 (Teladoc Primary360 Primary Care). Furthermore, Teladoc provides tools and support to provide personalised information to people with chronic conditions such as diabetes, or other related illnesses, in addition to expert health coaching, remote monitoring devices, and digital behaviour change tools. Teladoc’s pricing begins at $49, and varies depending on the care provided.
Teladoc Health for Clinicians
Teladoc also provides hardware (telehealth devices) and software to healthcare providers, for example:
Solo Virtual Care Platform
The Solo platform is the point of integration for Teladoc’s disparate infrastructure, providing services, both clinical and administrative to customers in conjunction with each customer’s healthcare team. This platform integrates with preexisting technologies and workflows.
Teladoc Solo provides continuity in care between virtual and physical healthcare providers, facilitating the continuation of doctor-patient relationships.
Machine Learning/Artificial Intelligence and Data
Teladoc utilises data to improve their patient treatment decision efficacies, customer satisfaction and engagement, and cost efficiencies . Data is a competitive advantage in-and-of itself as it is difficult to replicate, that is, a competitor would have to capture either: 1) better quality data, 2) more data, or 3) more better quality data to compete with respect to data and machine learning. Data is a tangible and incredibly valuable competitive asset; think: Google, Facebook, Instagram, and Amazon, and how they leverage data to improve their services end-to-end, with specific emphasis on the customer experience (think: Amazon and their search and recommended algorithm).
Teladoc has announced that is partnering with Microsoft to integrate their telehealth platform into Microsoft Teams, so that hospitals and other healthcare providers can seamlessly collaborate and communicate in their utilisation of both Teams and the Teladoc platform . This partnership is aimed at increasing the operational efficiency of patient care and the health system more broadly.
Porter’s Five Forces Analysis
In this section I will analyse how Teladoc is strategically positioned within their industry, detail their competitive advantage(s), and conduct a SWOT analysis.
Five Forces Analysis
Porter’s Five Forces Analysis investigates the strategic positioning of a company within a sector/industry based on 5 dimensions: threat of new entrants, bargaining power of suppliers, threat of substitute products, bargaining power of buyers, and rivalry among existing competitors.
Threat of New Entrants
Barriers to entry:
To compete with Teladoc, a competitor would have to create an integrated healthcare platform, and provide a service equal to or greater than of what is provided by Teladoc. Threat of new entrants is medium, as it is possible for a competitor to develop a competing product, although it is unclear the degree of difficulty involved in this process, at this stage. The capital requirements would be moderate also, with software development being a time and cost intensive process. Switching costs would also be moderate as the patient’s data is sticky to that ecosystem, although it is unclear whether there is a function for customer’s to extract their data and take it to a competitor.
Bargaining Power of Suppliers
Medical infrastructure – human capital
Teladoc suppliers’ would be the human capital, medical experts, specialists, generalists, and mental healthcare providers etc.
It is unclear at this time what kinds of contracts, if any at all, these medical providers would be under. Without a contract however, theoretically these providers could switch to a competitor. For providing complex care, specialist medical practitioners and experts are necessary for providing increasingly specialised knowledge and care; these practitioners would have greater supplier bargaining power (leverage) over general medical practitioners.
Threat of Substitute Products
What are the substitute products, and what do they offer relative to Teladoc?
There are numerous other competitors also, see.
MeMD is a telehealth provider that offers virtual nurse/physician consultations, with prices as low as $67 for urgent care, and talk therapy for $85 per session. It doesn’t boast an integrated platform for the virtual management of patients, only 1:1 telehealth; lab tests cannot be ordered either, although lab results can be analysed. MeMD is essentially a commodity and does not appear to boast any competitive advantage outside of possibly cost.*
*Not every single product from every competitor has been analysed to determine whether a cost advantage exists for MeMD.
Similar to MeMD, iCliniq offers virtual telehealth consultations; written questions are able to be submitted to doctors, too. Areas covered are: psychiatry, oncology, obstetrics and gynecology, dentistry, sexology, dermatology, and general medicine. First consultations are free, and then they offer a range of monthly plans from $36/month.
Amwell provides basic telehealth services via their website or mobile application. It is essentially a virtual doctor in your pocket, providing services such as: urgent care, therapy, psychiatry, breastfeeding support, nutrition counselling, pediatrics, women’s health, and general medical services, such as a second opinion. Services begin at $79 and increase depending on the complexity of support, i.e. specialists are charged more. According to their on the 12 months preceding the end of June 2020, Amwell boasts 97% client satisfaction, 4.9 average rating, and over 3 million mobile application downloads.
Product differentiation versus competitors
Teladoc offers a lower entry point into their ecosystem than their competitors, except iCliniq, in addition to a more thorough, comprehensive, and integrated suite of services. Teladoc’s primary competition offer basic and rudimentary telehealth services – things already available in-person; additionally, Teladoc offers a virtual platform integrating all aspects of a customer’s healthcare needs. Teladoc’s competition does not appear to be particularly technologically sophisticated, and so Teladoc does possess a technological edge, with respect to machine learning (AI/Artificial Intelligence), and their software platform. Furthermore, Teladoc’s utilisation of data and machine learning to improve the customer experience, in addition to driving improvements in diagnostic efficacies and cost efficiencies.
Bargaining Power of Buyers
Number of customers
Their potential market, at least just within the United States, is somewhere around ~330 million, as every human requires healthcare and there isn’t a strong socially insured (free or heavily subsidised) public healthcare system – it is expensive, and therefore is ripe for losing market share to an innovative competitor. Each individual customer has low bargaining power as the size of the potential market is so large.
The majority of Teladoc’s revenue comes from their B2B healthcare sales, such as providing employee healthcare for companies. This increases the bargaining power of their B2B customers to moderate, as corporations and large companies typically involved big-ticket transactions, and therefore possess higher leverage as buyers as they are better positioned negotiate on cost.
Size of each customer order
Customer purchases may range from one visit to ongoing, both frequent and like clockwork (once or more per week, like clockwork).
Teladoc appears to possess the most sophisticated product offering in the sector, and so customers are more likely to select Teladoc as their telehealthcare provider.
Healthcare is expensive, and so it’s logical to assume price is an important factor in the customer decision making process. Teladoc is quite competitive in terms of cost, with specific respect to their product differentiation relative to cost, in comparison to competitors.
Buyer’s ability to substitute
As Teladoc utilises data to drive increases in both efficacies and efficiencies, they currently possess an tangible but difficult to replicate technological competitive advantage; therefore customer ability to substitute is limited, at least with respect to recieving equal or higher quality of differentiated care.
Rivalry Between Existing Competitors
As Teladoc’s competition is largely commodified and lacks competitive differentiation, Teladoc is competitively positioned, in my opinion. They possess a data lead, with over 1Bn+ data points already captured  – slide 6; this is a strong competitive edge, in my opinion.
Teladoc’s Competitive Advantage
Teladoc offers a broad end-to-end virtual healthcare solution; their customer experience is continually refined by artifical intelligence and augmented intelligence based on data they collect about each of their customers throughout the customer experience. This data is utilised to improve each customer experience, which drives more data collection, which results in customer experience refinement, etc.
It is out of the scope of this article to detail non-competitive aspects of Teladoc, although in the future I will be covering this. If you would like to do further research on Teladoc, their investor presentation is located here.