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Harry Wang, Senior Director of Research
July 28, 2016
Digital Health Webcast:Disruption and Innovation in the Top-three Digital Health Markets
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Parks Associates has invited you to view and listen to the webcast recording.
Click link to view recording: https://attendee.gotowebinar.com/recording/2653136227726965249
Audio Recording Playback
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About Parks Associates
Expert Analysis and Forecasts
Competition
Consumers
• The company's expertise includes• Internet of Things (IoT) • Digital Media & Platforms• Entertainment Services • Streaming Media Devices • Augmented Reality/Virtual Reality• Home Networks• OTT & Pay TV services• Cloud Services• Privacy and Security • Big Data• Digital Health & Wellness• Mobile Applications and Services• Tech Support Services• Consumer Apps• Consumer Electronics • Home Control Systems and Security• Smart Home and Energy Management
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›Connected Health Summit: Engaging Consumersspotlights health technologies as part of the Internet of Things (IoT) phenomenon and the transformational impact of these connected solutions on the U.S. healthcare system.
›This focus provides strategic insights into consumer engagement, care accountability, service innovations, and platform design to determine successful approaches in the deployment of connected healthcare products and services.
›ConnectedHealthSummit.com
›Sample Confirmed Speakers From…
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Parks Associates Digital Health Research Service
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Background: Venture Funding
IPOed
Acquired
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Innovations and Disruptions
Doing new things
Vertical progress
Horizontal Progress
Copying things that work
510(K) cleared devices
Healthcare
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The Disruption Formula
Find a broken industry fraught with …
Leverage technology to create a solution
with better…
Scale Up
Squeeze Incumbents and
become dominant
Look for the next growth
opportunities
Success Stories In other industries
Strivers in healthcare Industry
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What We Learned
Innovations may not be disruptions
Innovations may as well fail
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Evaluate Innovators for Potential Sustainable Disruption
Innovator Leaderboard—Sustainable Disruption Matrix
Disruptiveness of Innovation
Gro
wth
Sus
tain
abilit
y
HighLow
Hig
hLo
w
Disruptive Front-Runners
Visionary Mavericks
Growth Masters
Differentiation Executors
Innovations don’t equal to disruptions
Technology breakthroughs can lead to disruptions only if the underlying business model is financially sustainable
Sustainability of revenue models should be considered along with innovation merits
Key Takeaways:
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Three Leading Innovation Frontiers
Digital Health Solutions Definition Buyer Profiles
Consumer Fitness & Wellness
Digital products, software, and services that help consumers achieve fitness goals and improve overall wellbeing.
Health Optimizers & Savvy Engagers
Virtual Care SolutionsTechnology, solutions, and services that help care providers deliver care without requiring patients to meet in-person
Hospitals, health systems, and some payers
Patient Communications and Education Solutions
Technology and solutions helping care providers improve in-bound/out-bound communications with patients & their families and engage them for education purpose
Hospitals, health systems, particularly those with a high percentage of business tied to shared risk contracts or fully capitated contract
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Demand Drivers:
Quantified-self benefits
Lowered product price
Growing integration of fitness/wellness tracking devices into wellness management solutions
Consumer Fitness & Wellness
Industry Trends:
Growing integration of other wellness tracking functions: e.g., sleep, stress, posture
Growing use of video to aid fitness training:
Wellness coaching as a premium service:
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Consumer Fitness & Wellness: Market Landscape
Device App or Service only
Multi-Function
Single Function
Integrate with other sensors
Expand into other smart device categories
Adding software & digital coaching service
Add device support and social features
To Differentiate…
Device + Service
Integrated wellness experience
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Fitness & Wellness Solution Adopters & Targets
49% 54%Current Heavy Users Next Good Targets
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Usage, Usage, Usage
70%
83%
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Positive Correlation between Fitness Device Ownership and Wellness Program Usage
±
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Fitbit’s Software & Service Revenue
Corporate Wellness Program Users as %of Total Fitbit Active Users
Service Revenue
As % of Total2015 Fitbit Revenue
1% $9.3M 0.5%
3% $28M 1.5%
5% $46M 2.5%
10% $93M 5.0%
15% $139M 7.5%
20% $185M 10%
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Demand Drivers:
Convenience and cost savings for consumers
Care providers embrace it for patient acquisition, operation efficiency, and patient satisfaction
Payer acceptance: Reimbursement parity in most states
Good news on multistate licensure
Virtual Care Solutions
Industry Trends:
Expanding use cases: from primary urgent care and routine care to post-discharge follow-up and chronic care management & health coaching; from primary care physician, to pediatrician, behavioral therapist, and specialist
Growing # of Vendors target B2B: demand from not only care providers, but also EMR/PM/DM vendors that want to embed virtual care into their own software platform
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Virtual Care Solution: Market Landscape
B2C B2B
Phone+ Video
Video only
Multi-Modal
Text Only
Text-first virtual care
Virtual visits for women
Text-based patient survey followed by the most appropriate virtual care option
Primary care + behavioral health virtual visits
Virtual visit with a dermatologist
To Differentiate…
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Business Model Comparison
Virtual Care Provider
RevenueModel
Pros Cons Platform Visit Type
Visit Volume (2016 est.)
Transaction fee only, no PMPM access fee
Attractive to businesscustomers for lower financial risk
Appealing to payers and employers
Sensitive to utilization rate
Less appealing to healthcare providers
High marketing cost
Mobile Only
Video visit only
N.A.
Access PMPM + Transaction fee
Recurring revenue provides financial visibility
Incentive customers to collaborate on improving utilization rate
Appealing to payers and employers
Revenue sensitive to large customer churn
Not appealing to healthcare providers
Utilization rate, if persistently low, reduce business customers’ perception of service value
Landline, Web, mobile
Telephone,Web/Appsessions, & video visit
890K visits out of 17 million members in 2016 imply a 5% member utilization assume using the service once a year
$120M in revenueest. for 2016
SaaS model + transaction fee
Flexible for OPEX bycustomers
Appealing to health care providers
Customer lock-in benefits
Limited revenueupside for growth in utilization
Less appealing to payers and employers
Web & Mobile
Web/App-based video sessions,and phone call
N.A.
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TelaDoc Revenue Model Sensitivity to Utilization
% Utilization Revenue Gain or Loss %
Total Revenue
1% -43% $68M
2% -31% $82M
3% -19% $97M
5% 0% $120M
8% 23% $147M
10% 44% $173M
12% 68% $201M
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Doctor on Demand’s Revenue Model Tied to Utilization
% Utilization
Twiceper Year
Four per Year
Six per Year
1% 600 million
300 million
200 million
5% 120 million
60million
40 million
15% 40 million
20 million
13million
30% 20 million
10 million
7 million
600
200120
6040 30
2015
12
300
100
60
3020
1510
8 6
200
67
40
2013
107
54
1% 3% 5% 10% 15% 20% 30% 40% 50%
Utilization Rate: % of Users Who Use Virtual Visits
2 times PUPY4 times PUPY6 times PUPY
Doctor on Demand's Revenue Model Sensitivity: "At what user base size can Doctor On Demand achieve
TelaDoc's 2016 estimated revenues of $120 million, given different utilization rate assumptions?"
Doctor on Demand’s User Base Scenarios
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Demand Drivers:
Health service providers have no CRM experience
ACO/Value-based care models: payment tied to patient care outcome
HCAHPS: patient satisfaction score
Patient Communications & Education Solutions
Industry Trends:
Bye-Bye, Patient Portal; Welcome, Patient Experience Platform
Desire both in-bound & outbound capability with multi-modal scalability
Priorities: transitional care, care coordination, & population health
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Patient Education & Communications
EducationCommunications Engagement
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Major Player Categories and product Strategies
Customer Service Center
Health IT Vendors
Telecom Services Startups
Patient Communications, Education, & Engagement
Repurpose Bundle
IntegratedValue-added
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What do we like Emmi Solutions:
Focus on overall patient experience in and outside of care faculties
Solutions tailored for transitional care and care provider-supported care management tasks
High client retention rate
Robust product roadmap to support patient engagement across care continuum
Disrupter Highlight
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Recap: What is Sustainable Disruption?
Innovator Leaderboard—Sustainable Disruption Matrix
Disruptiveness of Innovation
Gro
wth
Sus
tain
abilit
y
HighLow
Hig
hLo
w
Disruptive Front-Runners
Visionary Mavericks
Growth Masters
Differentiation Executors
Innovations don’t equal to disruptions
Technology breakthroughs can lead to disruptions only if the underlying business model is financially sustainable
Sustainability of revenue models should be considered along with innovation merits
Key Takeaways:
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Questions? Contact us today.
Harry WangSenior Director of Research
Leaders in Consumer Trends & Research
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