Digital health companies and investors had a remarkable 2020, as fundraising totals broke records and deal volume significantly outpaced previous years. Moreover, the increase in investment activity has triggered more exit opportunities, from IPOs to M&A deals.

Among the most notable digital health transactions in 2020 was the $18.5 billion merger of telemedicine pioneer Teladoc Health and chronic disease management company Livongo. The deal made waves across the industry not just because of its price tag, but what the merger indicates about the future direction of virtual care.

In the third installment of our video series, “Digital Health Trends Shaping 2021,” I continued our virtual sit down with my good friend Megan Zweig, Rock Health’s chief operating officer, to discuss the significance of the Teladoc-Livongo deal and our healthcare system’s transition to telemedicine 2.0.

In essence, “telemedicine 2.0” involves ongoing patient engagement that is supported by analytics, which helps providers seamlessly integrate virtual care with patients’ day-to-day lives.

“When we think of telemedicine 2.0, it’s: ‘How can we get to this continuous engagement?’” Megan told us. “And, in a lot of cases, it’s remote monitoring so that we can place that analytics layer on top of that monitoring, and then elevate things to the care team when they need to be elevated. But otherwise, telemedicine 2.0 is really pretty seamlessly integrated into the patients’ lives.”

In the video, Megan also notes that while public market investors have been welcoming mature digital health entrants—even throughout summer 2020 as the economy faltered due to the pandemic—digital health startups have also been especially attractive acquisition targets. In addition, she reported that digital health companies continue to be the most frequent acquirers of other digital health startups.

See the video here and read key takeaways from my talk with Megan further down.

see video here.

Key Virtual Care 2.0 Takeaways

Recently, I wrote about the exit markets for privately held digital health companies, and about the Teladoc-Livongo merger that Rock Health likened to a “starter pistol” signalling the start of a race toward consolidation among virtual care providers.

Here is a quick overview of takeaways from my video with Megan about telemedicine 2.0, and how it signals a departure from the virtual care programs of the past:

• Teladoc’s acquisition of Livongo enabled the company to move into chronic condition management, which goes beyond live, synchronous communication with a doctor to provide ongoing, proactive care management and monitoring. This kind of ongoing health management—virtual care 2.0—has become the “Holy Grail” of the digital health industry.
• Companies that aim to enable virtual care 2.0 must build scalable components into their platforms (e.g., incorporating AI to more easily connect with their members). They must also think in terms of connecting patients to additional members of the care team, and executing care asynchronously by utilizing text messaging and other programs.
• Remote monitoring is an important piece of bringing comprehensive healthcare into consumers’ homes, and analytics will be key to making it work. Analytics not only help providers offer care in a more proactive way, they help route questions from patients to the right care team member.
• With brick-and-mortar healthcare giants aiming to push further into home care—and startups launching disease-specific telemedicine platforms—more consolidation is likely as healthcare organizations of all sizes strive to enable virtual care 2.0.

The Teladoc-Livongo deal may have set the tone for M&A in the coming year and beyond. Virtual care platforms may have more to gain by joining forces—and thus offer ongoing proactive care—than they would by competing in a crowded field.

Also stay tuned for the final video in our series, which will explore moves that traditional retail, tech and telecom giants are making in the healthcare space.