Episode Details

Welcome to Episode 292, Part 2. This is the second part of a two-part episode, but, in a way, you can listen to whichever part you want first. So, if you wound up here first, no worries. Just go back when you have a sec and listen to Part 1. There's some good stuff there you don't want to miss, including some background information that might be good to have.

This episode, as well as the last one, is about Teladoc buying Livongo. I am going to call the combined organization T&L because I heart acronyms as much as you do.

Here's the thing with T&L: They are not alone in their quest to disrupt the traditional health care delivery market. You also have Aetna making a plan design that advantages CVS clinics. You got Humana doing the home health thing. You got Walmart and Oak Street hooking up in Texas and risk contracting with managed Medicaid and Medicare Advantage. You have employers across the country direct contracting with Centers of Excellence and buy in perspective bundles. Also, speaking of employers, on the on-site clinic space, Premise Health just recently acquired CareHere. These two organizations will reach 11 million eligible lives at 2200 customers in 300 markets.

All this being said, let me make a fairly obvious point: Increasingly, the competition is going to be about outcomes—or perceived outcomes. Competition is going to be around the value delivered (ie, quality divided by cost). This I like. To me, it's a tragedy that the health care industry can get away with charging prices no one would consider fair and delivering subpar health care let alone health.

I want some of these organizations that do a really nice job coordinating care and which patients really appreciate to do well by doing good. And I love that some of the payers out there—some of the employers and even some of the Medicare Advantage and other health plans—recognize the value that these organizations can deliver.

But let's consider the implications of this—notably, here's one: Few, probably even the very best, for example, endocrinology practices or maybe even cardiology practices, have a bead on how well they ultimately attenuate downstream medical costs. They might not even know, outside of what they are required to report for quality incentives, how well they are consistently creating better patient outcomes.

Livongo does—or at least claims they do—and lots of employers and plans buy the results they're selling to the tune of something like $300 million in sales this year. Here's what I don't like: What is shaking out is a turf war, and the weapon of choice may or may not be authentically better patient outcomes. Some of the weaponry here is built on a marketing "chassis." The one who has the best marketing shall triumph. People judge books by their covers, and that's a cliché for a reason.

You can read Al Lewis's blog post on Livongo, where he dug into their purported results. Then listen with your left ear to some of the chatter on the street about how Livongo is more of an employee retention tool than, you know, a clinical tool. I don't kn0w where these rumors started, but I keep hearing that because the Livongo NPS (Net Promoter Score) is high and employees, including executives, think it's pretty cool as a service, that maybe, given this, that it's okay if many of the Livongo charts and graphs don't have labels on their Y axes. And it kind of, you know, makes sense if you actually sit there and stare at them as I have done.

All this I just said? Background noise. The games have begun, and the winners will be those who consumers/patients love. It'll be the ones who know how to market to employers or Medicare Advantage plans. It'll be the ones who c