Issue 011
Welcome back to E&O Wednesdays, the enrollment-focused digital health newsletter from Exits & Outcomes — for paying subscribers only. This every-other-Wednesday issue digs into digital health companies that sell to self-insured employers as well as others that rely on enrollment-based distribution for their digital health programs.
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Teladoc sues Livongo’s ex-CCO and calls Hinge Health a “direct competitor” — huh?
You probably haven’t read much about this lawsuit. Only the legal blogs that monitor court filings have picked it up so far.
Teladoc filed suit against Hinge Health and its new president Jim Pursley, who joined the company as president in late February (I gave it a brief mention in Issue 008).
Pursley, of course, spent almost seven years at Livongo as its Chief Commercial Officer. (So, he was there at the beginning.) He left Livongo when Teladoc acquired it for $18.5 billion in late 2020. According to the lawsuit filings, Teladoc offered him a job at the newly merged company but Pursley turned them down.
Before he left, however, he did sign a one-year non-compete agreement that carried with it $150,000 in cash payments over the course of the year along with accelerated vesting of 75 percent of his unvested Livongo equity awards. Teladoc’s complaint says these accelerated shares were worth about $3 million.
The real head-scratcher though: In its complaint, Teladoc refers to Hinge Health as a “direct competitor” six times. Teladoc points to Hinge Health’s Terms and Conditions page on its website as evidence that it is a competitor to Teladoc. Teladoc argues that because that page describes Hinge Health’s services as “telehealth” it is a competitor to Teladoc. This paragraph in Teladoc’s complaint sums up how Teladoc views Hinge:
“Hinge Health sends devices to customers and then coaches them to improve their musculoskeletal (MSK) condition — which is nearly identical to Teladoc’s practice of sending devices to customers with diabetes, hypertension, weight loss (which is also used for people who need to have MSK surgery like total knee or total hip), and then coaching those customers to improve their condition. Telemedicine aimed at improving MSK conditions, diabetes, hypertension, and weight loss are just a few examples of how Hinge Health directly competes against Teladoc.”
That last sentence really muddies the waters. Hinge Health does not provide telemedicine aimed at diabetes, hypertension or weight loss. It is focused on MSK. Teladoc notes in that paragraph that its weight loss programs might sometimes target people who need to have MSK surgery — but c’mon. Teladoc actually works with TeleSpine for its Back and Neck care program. So, it outsources it.
You might be able to argue that Hinge Health is a competitor to Teladoc but a “direct competitor” seems a stretch.
The one area Teladoc comes close to convincing me in their complaint that it might directly compete with Hinge Health is its second opinions service, which Teladoc built atop its acquisition of Best Doctors:
“Hinge Health directly competes with Teladoc’s Expert Medical Service product and service offerings, where MSK cases make up a sizable percentage of cases and represent elevated return on investment per case.”
(But, hey, if that’s the case, then how is Glen Tullman’s surgery concierge and chat-based telehealth company Transcarent not competing with Teladoc?) UPDATE: A week after I wrote this, the Teladoc board decided not to renominate Glen Tullman or Hemant Taneja, which brought the size of the board down to 13 from 15.
The other piece that Hinge stresses over and again in its response filing is that Pursley never worked for Teladoc. He resigned before the Livongo-Teladoc merger officially went into effect. So even if Hinge competes a little bit with Teladoc is that relevant?
These non-compete lawsuits are always messy and this one already has a fair amount of drama.
Teladoc’s head of HR Arnnon Geshuri apparently tried to help Pursley convince Teladoc’s CEO Jason Gorevic that Hinge Health was not a competitor. However, Geshuri was also the Teladoc executive who signed off on Teladoc’s legal complaint verifying that Hinge Health was a competitor and that Pursley violated his separation agreement.
From the Hinge Health response to the Teladoc complaint:
“Mr. Geshuri agreed with Mr. Pursley that the companies don’t compete, and disclosed the real reason why Mr. Pursley might receive pushback: Teladoc’s CEO, Jason Gorevic, was unhappy with Mr. Pursley’s departure and harbored hard feelings. On February 1, Mr. Geshuri texted Mr. Pursley that he was ‘working through reactions internally. Please stay tuned.’ Given that the real obstacle was Teladoc’s CEO, and not any concern over competition or trade secrets, Mr. Geshuri offered to help communicate Mr. Pursley’s plans to Mr. Gorevic, and suggested that Mr. Pursley write a letter directly to Teladoc’s CEO to smooth things over.”
Hinge even included the email that Pursley allegedly sent to Geshuri for edits before he sent it to Gorevic. Here it is below. Hinge claims the light blue highlighted words were the ones Geshuri contributed:
“Dear Jason,
I hope this letter finds you and your family healthy and doing well. I wanted to write you in light of the recent discussions around my desire to join Hinge Health. I know that things may not have ended the way we had both envisioned and I acknowledge the transition of myself and some of the former Livongo leadership at the merger could have been handled better. Please know I have great respect for you and hope that we can support each other in our mutual efforts to build a healthier world. I strongly desire the very best for Teladoc Health and have been very thoughtful about my next career move, evaluating options with that desire in mind. Given that Hinge Health does not compete with Teladoc and in fact could be very complementary, I am kindly asking for your support of my career decision. I have no ill will toward you and the Teladoc Health team and would like to engage the broad market with enthusiasm, good will, and a sincere desire to support Teladoc Health and the many great people and former colleagues who work there. I think this goal of mutual support is very achievable and is in both of our best interests. Thank you for your consideration in this matter. Please don’t hesitate to reach out if you have any questions or would like to discuss anything in more detail.
Sincerely,
Jim Pursley”
That line that Geshuri supposedly added: “I acknowledge the transition of myself and some of the former Livongo leadership at the merger could have been handled better.” Points to some emotions about the departure of other ex-Livongans too, doesn’t it?
The day after Hinge Health announced Pursley was joining it as president, Teladoc sent a cease and desist letter to Pursley and then another one to Hinge.
On March 8, Teladoc filed the lawsuit. According to the Hinge Health response, Pursley talked to Teladoc board member and Livongo founder Glen Tullman that same day:
“That’s not all. On March 8 (the morning that Teladoc filed this action), Mr. Pursley spoke with Glen Tullman about Teladoc’s cease and desist letter. Mr. Tullman is the former founder and Executive Chairman of Livongo, and currently sits as an independent member on Teladoc’s board. Mr. Tullman confirmed what Mr. Geshuri had already acknowledged: the companies do not compete, and Mr. Pursley should not be prevented from joining Hinge Health.”
One final kicker here is that Pursley helped Hinge Health out for years while he was Livongo’s Chief Commercial Officer:
“Pursley joined Hinge’s Advisory Board in March of 2017 and publicly served in that capacity until September of 2019. This advisory work was well known to the executive leadership at Livongo and at no point in time were any concerns raised regarding competition between Hinge and Livongo.”
So, is Teladoc worried about the rise of Hinge Health? Is it fair to assume that Teladoc is setting up its own MSK programs now that it has made clear it sees the biggest player in digital MSK as a “direct competitor”? Does it sue Transcarent next?
The other more likely concern is that Teladoc assumes Hinge Health will not stay focused solely on digital MSK care forever. So far, however, Hinge has bucked the trend of platforming out into other medical conditions like Omada, Livongo, and others have done.
What a saga.
F500 Digital Health Stack: Costco
Digital health companies love to boast how many Fortune 500 customers they have. This recurring feature of E&O Wednesdays digs into a different Fortune 500’s digital health stack. So far, in past Wednesdays issues, I’ve written about the digital health stacks of nine big companies: Walmart, Activision Blizzard, JP Morgan Chase, The Home Depot, Boeing, 3M, Chevron, BorgWarner, Bank of America, and UnitedHealth Group.
This week, I dug into Costco, which has been an active partner to digital health companies for many years.
Teladoc for virtual visits: Costco employees and their dependents have access to Teladoc via Aetna. Here’s the Costco pitch: “Teladoc gives you access to a doctor anytime, day or night, via phone or online video chat. It’s an affordable, convenient alternative to costly urgent care and ER visits for non-emergency medical issues. You can even use Teladoc for someone not covered by your Costco medical plan… Teladoc doctors are primary care, pediatric and family medicine physicians who incorporate Teladoc into their day-to-day practice.” The Teladoc info page for Costco employees also has a funny but not entirely inconsistent message around timing: “A doctor will call you back, usually in about 10 minutes.” and then later down the page: “A doctor will call you back – usually in less than 30 minutes!”
SimpleTherapy for physical therapy (sort of): “SimpleTherapy is an online stretching and strengthening program, much like physical therapy, that can be done right at home. The program is customized to the employee or dependent based on the information they provide about their pain. SimpleTherapy is available at no cost to all employees and dependents (18 or older) who are enrolled in a Costco medical plan.” It is notable that this program is available at no cost, while Teladoc’s info page makes no mention of the costs involved other than that the visits are “affordable”.
Omada for losing weight or managing diabetes: “Omada is a personalized program designed to help you reach your health goals – whether that’s losing weight, managing diabetes, or improving your overall health. It combines real human support with the latest technology to support you in making lasting changes that fit your life, one step at a time.” Costco makes clear the program carries no cost if “you or your adult family members are enrolled in a Costco medical plan and are at risk for type 2 diabetes or heart disease, or are living with diabetes.”
Grand Rounds for care navigation, second opinions, and more: Costco tapped Grand Rounds for a couple of services. Here’s a block quote from the benefits page that includes most of the positioning statements:
“Grand Rounds offers several services, available at no cost to Costco medical plan members:
Help finding an in-network doctor. The online Provider Match tool lets you search 24/7 based on quality ratings, provider and facility type, or symptoms you’re having. Or a Care Coordinator can help you choose a provider. They’ll even schedule an appointment for you.
Expert second opinions. If you receive a serious diagnosis or if your doctor has recommended surgery, you can have your case reviewed for an expert second opinion. If your doctor recommends spine surgery, you must get a second opinion from Grand Rounds for the surgery to be covered by your Costco medical plan. You can also talk to a Grand Rounds physician by phone or video chat about a new diagnosis, lab result or medication, or for help deciding if you need to see a doctor in person. You can use the service as often as you like, and there is no time limit on these conversations.”
AbleTo for virtual therapy: Costco has a lot of info in its pitch for AbleTo, including various scenarios when an employee may want to tap AbleTo for help: deal with a chronic disease, boost confidence, or manage negative emotions.”AbleTo helps you take charge of your emotional and mental health with 8-week virtual therapy and well-being programs personalized to your specific needs and challenges.” AbleTo, which is now owned by UnitedHealth Group, is available to Costco employees “free” and Costco makes clear the site is “100% confidential.”
“You will have the opportunity to meet with a coach and/or therapist via video, phone, or chat. Convenient appointment hours (7am-11pm, 7 days a week in all time zones) make it easy to schedule your sessions around your work and life.”
myStrength for mental health: Costco offers its employees Teladoc’s myStrength program via the employer’s EAP, and it is available at no additional cost.
“myStrength is an online tool to help you live your best life. You’ll find help for stress, anxiety, chronic pain, and more. It’s safe, secure and personalized – just for you. Track your health, enjoy activities, and become inspired.”
Rethink for autism and learning disabilities: Costco’s EAP also makes Rethink available at no cost to employees.
“Rethink is a free support and education system for parents, extended family and caregivers of children with learning or behavior challenges, or developmental disabilities such as Autism. The program provides six hours of consultation with a board-certified behavioral therapist via phone or video conference, plus online resources and tools.”
Well, that’s a wrap on Costco’s stack.
Some of these stacks are easier to figure out than others (so no promises), but let me know which company’s digital health benefits you’d like to learn more about by hitting reply to this email. And if you happen to work at a Fortune 500 company (and I know that’s a lot of you), then please send me your benefits information.
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