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Innovator Award Winner CEO Jason Gorevic tells how Teladoc is blazing trails for the telehealth industry.
Named CEO of Teladoc in 2009, Jason Gorevic has led the company through tremendous growth, increasing revenue nearly twentyfold; driving Teladoc to become the nation’s largest and fastest growing telemedicine firm.
Tom Salemi: Hi, welcome back to the Breaking Health Podcast. This is Tom Salemi, Content Director at Healthegy. And I’m here with Steve Krupa, our host of Breaking Health. Hey, Steve, how’s it going?
Steve Krupa: Good, Tom. How are you?
TS: Doing great, thanks. This week, Steve’s letting me take the big chair –
TS: – and I’m going to run our interview that we did with Jason Gorevic, CEO of Teladoc. He was – won our Innovator Award at the Digital Healthcare Innovation Summit a couple weeks ago in Boston. And he sat down with us for 20 minutes and sort of just shared the thoughts of being the CEO of a publicly traded, dynamic healthcare company. Now, Steve, you missed the presentation. You weren’t in the room.
SK: I did. You missed mine as well.
TS: I did, I did.
SK: I had the opportunity to listen. I hope you’ve listened to my panel at this point.
TS: I’ve memorized it, yes. Ask me any question, I’ll spout them off. What was your take away with the interview with Jason?
SK: Well, he’s a very likeable guy –
TS: He is, he’s a good guy.
SK: He’s fun to talk to, you know, from your video. He’s got a lot of friends, right? He’s been doing this for a while. He goes back to Oxford and our friend Steve Wiggins and those days when healthcare was really starting to change and the HMO business was evolving as well. You know, I took a lot from that interview. The first thing, you know, I took away from it is it is a demonstration of the courage it takes for a startup to go public. In the old days, you used to have to be an earnings machine to go public. And when I say the old days, you know, 20 years ago, well before the Internet revolution. You know, the public companies had these steady stream of earnings that they would put out there in front of analysts. And now you can go public when you’re not yet profitable, but it is at some point a little bit of a guess as to how your stock is going to respond in the early days as you continue the growth model and you continue to pursue profitability. And you can see a little bit of that in the interview. He’s got to spend a lot of time educating new and old investors as part of his job that he did not have to do when he was a private company.
TS: And it really is – the whole space is obviously one that we’ve been talking about forever, telehealth, and it’s really starting to get some traction. We saw a couple of different attempts at it by companies who were in attendance at the Conference. American Well was one, Doctors on Demand was another. There’s definitely several different ways to go at this. Do you think there’s a right way or a wrong way? Are we going to see companies that are almost pursuing the same objective, just coming at it from completely different directions?
SK: Well, I think this is an essential aspect of heading into new territory, right? So Jason, with his company, he said he built it originally for providers, and that wasn’t getting the traction that he wanted, so he had to move over to a consumer engagement model and try that. And that started working for him. He had a value proposition for both, but the value proposition for the consumer was something the market was ready for. And I say that just to point out that if we think into the future, right, the Jetsons, if you will or something like that, you will – you can imagine large screens in your home that you’ll be able to access the Internet on, and call a doctor and have him look in on you from your home. I mean it makes total sense in terms of where the future is heading from an operational point of view and a lifestyle point of view, that the question in front of these startups is how to get there, how to find a part of the market that you can go after. And the bottom line is there’s – when they get started, they’re just guessing. I mean they may go collect some consumer data that tells them it’s better to go after the consumer or they might find interviews with physicians that say that’s the right direction to go in. But at the end of the day, this whole idea of pivoting is essential. And I would just say to you that we get to see these startups when they’re awesome, like public companies, right, but there are ten of them that didn’t make the right pivot and don’t survive. So pivoting is the ideal survival tool and necessary if you’re going to build something brand new.
TS: And Teladoc’s a great example of that, and Jason tells us of some pivoting he did in his own career –
TS: – moving away from a family business and taking on some challenges, including a stint in the – with an Internet company that went public. So he’s had some fun and has a great career. And let’s listen in on the interview and hear from Jason Gorevic of Teladoc.
TS: I feel bad because we had a nice time last night, sort of celebrating the end of the Conference, but you were at work. You had an earnings call last night. And you’re a public company now, so this is a very big deal. Can you spread the word maybe? I’m sure a lot of people in this room know, but how was it? Was it a good call, bad call?
Jason Gorevic: Yeah, no, it was great. This is our second quarterly report as a public company. One of the great things that I get to do as a newly public CEO. But the quarter was very good. We beat on all counts. We beat revenue, we beat the number of visits, we beat on membership, and we beat on EBITDA. So for us, that’s about all that we can ask for. And we continue to put up great growth because we have a product that people love. You know, I was – I frequently say I was a health plan CEO, and I wasn’t necessarily everybody’s favorite person in the room. But now we have our customers thanking us and our members thanking us for delivering service that they really need. And that’s really gratifying.
TS: That’s great. Journalists don’t get a lot of pats on the back. And the video, coincidentally, ended with the interview with Jim Cramer. I watched that and was ready for the bloodied fight that, you know, he was going to – your stock price had dropped from mid-30s to the teens, and I swear at the end of that, he was actually going to write you a check, wasn’t he? It was a very pleasant conversation. He seemed to be a big supporter of – well, he was very gentle in his questions and seemed to get the whole Teladoc story.
JG: Yeah, Cramer, you know, he has this persona of being kind of crazy. And I think if you really watch, he is when he’s on there by himself, because you know, look, it’s not the most exciting topic he’s talking about all the time. But he was very gracious. He had some words of wisdom which was really focused on keep your eye focused on this huge opportunity in front of you; don’t let the investors sort of cram you into short term returns and short term profitability. And you’ve got a massive, massive problem that you’re trying to solve, and don’t lose focus of that because that’s what creates a $50 billion company instead of a $1 billion company.
TS: And it’s obviously a good problem to have, being CEO of a public company. I’m not trying to feel bad for you at all. But it’s a different set of challenges, you know, in the summer I believe it was Highmark announced that it wasn’t going to renew a contract with you, and your stock price dropped from the mid 30 to the teens, as I mentioned earlier. When you see that happen, what is your first response? Is it do you literally just kind of dope slap yourself? Or are you more measured than I am in your reaction?
JG: No, I get pretty upset about it. I think I’ve probably been – had the extremes of emotions over the last few months. So, you know, we went public July first, and that was a phenomenal day, and we were on the floor of the Exchange, and then we’d seen the stock go like this, and what is most frustrating is that I expected I was going to go out on the Street, on the road show, talk to 200 plus investors, and they were all going to get it, right? Because they’re writing big checks, multimillion dollar checks. They must really understand the story. As it turns out, not so much. They don’t really understand until they hear it 3, 4, 5 times because we’re the first company of our kind of there. So they’re not sure what metrics are the right ones to look at, and the value proposition, and you know, and we’re a high growth company that’s losing money, and as a result, there’s a little bit less risk tolerance. And so people get spooked easily. But it means I have to do a lot of educating, which is, I guess, it’s really the second time over the Teladoc stint that I’ve had to do a lot of educating. First, when I came to the company, I did go scream from the mountaintops about the importance of telehealth as part of the overall healthcare landscape and environment and how it could really change how people get healthcare. We were successful in doing that, and therefore, we got the growth, we’ve gotten great traction. Now I have to go educate the investment community. But I think that’s just part of the gig.
TS: Yeah. What is the bigger hiccup? Is it just the risk involved in the company? Or is being tied to healthcare these days more of an albatross?
JG: Yeah, it’s pretty interesting. I would never have guessed that a pharma company who was overcharging for its drug would have an impact on my stock price. Right? But when that happens, and then Hillary comes out and says that she’s going to regulate that, everyone assumes that she’s going to regulate profitability and the entire healthcare sector, and that has a negative halo effect on us. And again, that’s something I would not have guessed. So that’s frustrating. But I have to recognize what I can control and what I can’t.
JG: And so the best thing I can do is make sure that our company stays very focused on delivering every quarter. But more importantly, delivering for our customers and really solving the healthcare access problems and driving down the cost of healthcare and improving people’s health. Because if we do that, we’re going to be successful. You know, it’s a massive, massive market opportunity. We talk about our market opportunity, just the one that we’re addressing today is about $17 billion. And we’re in the – we’re just launching into a new one that’s another $12 billion. So for me, if we keep our eyes focused on that prize, we’re going to have a great company, but more importantly, we’re going to help a lot of people get better care.
TS: Looking within healthcare and building a business within healthcare, what party has been the most resistant or needed the most educating? Payers, the patients, the physicians?
JG: Hm. So I would say that the trick to our business is getting consumer engagement, right, and really getting the – building the awareness and adoption among consumers. And that’s hard, very, very hard. One of the things that we talk about on our earnings call, we’ve talked about on both of the last 2 calls, 11 quarters in a row we’ve now had the growth of the telehealth visits outpace the growth of our membership. Right. So that means people are adopting at a more and more rapid rate. That’s a great, great sign of the health of our business. Because it means that we’re being successful in engaging consumers. You know, I didn’t invent telehealth, right? Telemedicine’s been around for a long, long time. You heard David Brailer talk about Oxford On-Call, which I built in the early 90’s. It was one of the first nurse lines. Well, that was some form of telehealth. And then I remember a year or two later we were looking at an Intel device that was going to be in the home, and the senior was going to interact remotely with people, and they were going to be monitoring devices as part of it. And that really never took off. The technology’s been there for a long time. I think there are accelerants. You know, you and I were talking earlier about the accelerants associated with mobile adoption. You know, the Affordable Care Act is an accelerant for telehealth. But the one thing that really nobody had cracked the code on was engaging consumers and building awareness and adoption. And that’s part of the secret sauce of what we do at Teladoc. You know, we’ve really – we’ve done over a million telehealth visits now. So we really have great data about who uses and why they use, and that enables us to get very, very micro in terms of segmentation, targeting, communications, and knowing exactly what drives adoption.
TS: How do you fit Teladoc into the larger narrative of saving money in healthcare? Because I think anything, when it becomes easier to do, people do it more readily. So it’s wonderful that you’re giving care to folks who might not otherwise get it, and that’s why everyone in the room is here. But if I’m paying for this, you know, someone who has a cold doesn’t want to go to the doctor, we’ll see what happens in two or three days, and the cold goes away, now they may just call up the doctor and they may create a charge that wasn’t previously there. How do you make an argument that you’re actually contributing to the savings of money in healthcare?
JG: Yeah. So this is great. I can talk about all the people who are on the video. So you saw Niteesh Choudhry, who’s a Harvard researcher. We retained – and a great physician. We retained him to do an analysis of actual medical claims for two populations who we’d been serving for a long time. And he was able to compare the populations, and those people who use Teladoc versus those people who use the traditional delivery system. And on average, it proved out to about $700 of savings every time someone uses the Teladoc platform. Now, there are a whole bunch of reasons for that, and we’ve been very open and transparent and encouraging of independent analysis of what we do. Because you know, look, I mean we have a vested interest in saying that what we do is great. It’s much better to get somebody independent to look at it. The Rand Corporation did another analysis, and it proves out universally that people who use Teladoc have far fewer follow up visits for the same problems in the healthcare system. Right. So people who go to the emergency room for a sinus infection more than three times as likely to end up back in their doctor’s office within the next 30 days for something sinus related than people who get a visit from Teladoc for the same condition. And the reason is pretty simple. Nobody walks out of the ER without a piece of paper that says go follow up with your doctor in the next 7 days. And fee for service, right, we heard earlier fee for service isn’t going away. Doctors are incented, unfortunately, to create more volume and to practice defensive medicine. We don’t have those same incentives. And so it turns out that we save an awful lot of money. And the other thing I would say is at $40 per Teladoc visit, you can have an awful lot of visits that wouldn’t have occurred otherwise, and not even make a tiny dent in the savings that we’re creating.
TS: That’s a great argument. Let’s get – you talked about your early days at Oxford. Tell us how you found your way into healthcare. Did your mom dream that you’d be at Teladoc someday, and you’re living her dream?
JG: Yeah. My mom really wanted me to go to health insurance. So I was supposed to be fourth generation in my family’s business. My family was in the antique silver business, and the new and antique jewelry business. And it goes back to Czechoslovakia four generations ago. And –
TS: Is that business still in business?
JG: Yeah, the business is still in business, yes. It’s sort of small and run out of my father’s home. But –
TS: Good call.
JG: Yeah, exactly. So I went one of my summers in college, and I went to be a manager in one of his stores. And I pretty much hated it. I thought it was just not for me. I appreciate the fact that it put me and my two stepbrothers through college, but it was not my favorite thing to go hang beautiful pieces on these people who would walk in and tell them how wonderful they looked. It just wasn’t – it’s very important and, you know, I appreciate all the people who do that because it’s, again, it helped me to get where I am today. But it wasn’t for me. So the prior two summers, I had actually run house painting companies. And so that was also not so fun, out there 5:00 in the morning and covered head to toe in paint. But what I really liked about it was the marketing. I really liked generating the enthusiasm and the opportunities. So I was looking for something in marketing. It was ’92, it was I guess the first Clinton healthcare debate. And I thought, you know, here’s somewhere where I can make an impact. Oxford was interviewing on campus at Penn, and they were interviewing for a marketing position. So I was able to put those two things together and had no idea where it would go. The great thing about being at Oxford in those day, and we really tried to have this kind of a culture at Teladoc, is that it was a totally open environment. And so you know, I would have interactions with Dave Snow and with Steve Wiggins and Jay Silverstein on a daily basis for things that maybe I was working on and maybe I wasn’t working on, but the exposure to that kind of an environment and those kinds of leaders was very, very instrumental and formative for me in thinking about what was possible, and really not being satisfied with the status quo in healthcare.
TS: But the first thing you did, or one of the first things you did with Oxford was the Call Center you mentioned. And then you went on to head up Lumenos, which was the consumer directed insurance program. It seemed like your life has become centered around moving healthcare sort of out of its comfort zone and bringing it closer to the patients. Was the intentional? Or is this just one of those things, these stories that unfolds and you don’t know how it ends until it ends?
JG: I don’t think I really got what was going on and what I was doing and the patterns that I was creating until later in my career. I always gravitated toward those things that could really touch people in a way and engage people in the healthcare system differently than they had ever conceived of it. You know, I mean that’s what we’re doing today. We’re changing people’s thought process from I’m sick, I need to go do the doctor to I’m sick, what’s the best way for me to get care. And that’s a somewhat subtle difference, but a huge change. And so you know, having a nurse advice line for someone to call in the middle of the night doesn’t seem novel today. But in the early 90’s it was pretty novel. And we had to do a lot of selling to doctors in those days. You know, we had to go out and explain to the doctors why this was going to work for them. And in fact, we started Oxford On-Call and it was going to be a backup service for the doctors. And we pretty quickly learned that they didn’t want us to be their backup service. And so instead, we pivoted away from selling to the doctors and said, Let’s provide this directly to the consumers because that’s the right thing to do.
TS: And you left Oxford for a brief – or left Oxford in ’98 and it seemed like for a brief time you were at Mail.com. Did you follow, like a lot of our colleagues did, into the tech industry to see if there was gold in them thar hills?
JG: Yeah. So I was enamored with the dotcom boom. And it was fun. It was a great experience. So that was my first IPO. We took that company public in ’99. It went like this, and just like all the other dotcoms of the era. But it was a great experience for me. It gave me exposure to raising capital. On the private level, it gave me great exposure to sort of business combinations, business development and opportunities to join different parts of emerging businesses. And then it was the catalyst for me to move it. So then I started a business, ultimately going back to the jewelry area, which was an e-marketplace for the jewelry industry. Was raising my first round of professional capital when the towers came down and all the money for anything that sounded like luxury goods in New York City dried up. And then Dave Snow had tried multiple times to recruit me. He was the president at Empire Blue Cross/Blue Shield then. And so he had the right opportunity, and that was my return to healthcare.
TS: So you’ve been through some booms and busts, I think both in healthcare and out of healthcare. Have you become able to sort of identify where you are in a cycle? And perhaps what some red flags might be if things are starting to maybe head over, crest over the hill a little bit? And I hope you have, because if you have, can you give us a sense of where we are today with not digital health necessarily exclusively, but the whole healthcare movement? Is this something that is still very much building? Or do you feel like we’re at the top of the roller coaster looking down?
JG: Oh, no. I mean you know, I think maybe we’re at the late – the end of batting practice. I’m not sure – maybe we’ve seen the first pitch. But to be honest, this is – I mean there is massive, massive opportunity in front of us. And unlike I’ve ever seen, and having watched the video, I feel really old now, but I feel like I’ve seen a lot, and we are just starting to see this emerge and scratch the surface of what we can do. And you know, Teladoc’s a good example. There are 400 million addressable visits for telehealth, and the whole industry will do less than a million this year. So we’re just, just in the early stages, which is you go back to the investor question. Investors ask me about the competitive landscape, and I say, Look, we’re going to win; I’m confident we’re going to win, but it doesn’t really matter, right? I mean the opportunity for growth is so massive, and we can really change the landscape. And you know, what’s most exciting is this is the first time I presented, I think, was at the 2012 New York Digital Healthcare Summit, and I think about who was in the room and what kind of companies were part of the discussion. And even in the last 3 years it’s changed so much. It’s evolved so quickly. So I’m very, very encouraged. And you know, then we were doing 60,000 visits a year. This year we’ll do north of 550,000 visits a year. So I think that kind of a growth curve is sort of synonymous with what dong on in digital health overall.
TS: Terrific. And that’s perfect timing with the clock. Thank you very much for your time today.
JG: Excellent. Thanks so much, and I really appreciate the honor.
TS: Well, thanks, Jason Gorevic for joining us at the Digital Healthcare Summit in Boston. It was great to have you there, to hear more about Teladoc, and of course to bestow the Innovator’s Award upon you for the great work that Teladoc has done. It was a great conversation and a great day. So think you, Steve Krupa, for letting me sit in the big chair for a week, and share this interview with Jason. If you’d like to see the video that we put together honoring Jason, go to digitialhealthcaresummit.com, look under media and under videos, and you’ll see the video that we put together, collecting interviews from Jason’s friends and colleagues. You’ll also see the video that Steve and I did at the day of the conference, sort of wrapping the day’s events. If you’d like to get more of this content sent directly to you, sign up for the Breaking Health email newsletter. We’ll send out weekly reports from our editorial staff, and also fresh content, videos, podcasts and such from our conferences and our regular interviews with leaders in the digital and healthcare space. So thanks for joining us, and tune in next week for another tale of innovation on the Breaking Health Podcast.