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These Brothers Have Been Building Telehealth Tech For Over A Decade. The Coronavirus Pandemic Is Putting It To The Test

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In early January, Ido Schoenberg was on a trip in Shanghai, China, when he started hearing reports of the novel coronavirus in Wuhan, more than 500 miles away. As the co-CEO of the telehealth company Amwell, he immediately recognized virtual doctor’s visits would play a crucial role. “We are at the center of a lot of data that allowed us to realize — I think sooner than the average person — that this is moving. This is much more serious than people realize. And the things that were hypothetical yesterday are actually the reality today,” Schoenberg recalls. 

But even with a read on the U.S. healthcare system as a technology company connecting doctors, patients, health insurers, and hospital systems, the speed with which COVID-19 swept the globe still caught him by surprise. “Picture a tidal wave” Schoenberg says, when describing the spike in users over the past month and the tens of thousands of visits the company is processing a day. Urgent care visits across Amwell’s clients were 490 percent higher than normal last week, the company says. 

While healthcare systems worldwide scramble to contain the pandemic, which has resulted in more than 1.2 million confirmed cases and more than 65,700 deaths, virtual doctor visits are booming. It’s the moment Ido and Roy, his younger brother and co-CEO, have been preparing for since they launched the company in 2006. Amwell — a portmanteau of American Well — has roughly 700 employees and has raised more than $600 million from investors, such as Philips, Allianz X and Teva Pharmaceuticals, with the goal of connecting patients to healthcare providers remotely. The brothers declined to reveal Amwell’s revenues or the company’s most recent valuation. “We are definitely in the billions, but I'm not going to give a specific number,” Ido says.

Prior to the coronavirus outbreak, the telemedicine arms race was already in full swing. Teladoc, the major public company with a market cap of $11.4 billion, has been on a consolidation spree, spending hundreds of millions of dollars buying up smaller competitors, including $600 million in cash and stock for InTouch Health in 2020. Amwell has been fighting to keep up, acquiring Avizia in 2018 to boost its acute care services and Aligned TeleHealth in 2019 to expand its telepsychiatry offerings. (The company also declined to provide the terms of these acquisitions.)

 Marty Felsenthal, partner at Health Velocity Capital in San Francisco, was formerly an investor and board member at Teladoc and is currently an investor and board member at Amwell competitor MDLive. As an investor in the space for 11 years, Felsenthal says telemedicine utilization has been increasing roughly 50 percent year-over-year, and moving towards platform plays. These companies, Felsenthal says, all started off doing urgent care visits but over time are adding telepsychiatry, dermatology and a range of other specialties in order to become one-stop shops, much as Amazon evolved from bookseller to a provider of everything from electronics to streaming video.

Now companies are rushing to meet skyrocketing demand driven by the coronavirus pandemic. This new wave of patients isn’t just people who want to get screened for coronavirus symptoms, but they are affected by it all the same. For example, there are patients who can’t leave their homes because of exposure risk but need to manage chronic conditions. Similarly, telemedicine tools enable doctors in quarantine to continue seeing patients and increase staffing levels as coronavirus cases flood hospitals. “One benefit of this tragic experience we’re sharing as a country — and I hate to even use that word benefit — is telehealth reaches an inflection point, where it’s not 10 million visits a year, it’s 100 million visits,” Felsenthal says.

Roy, 52, and Ido, 55, have spent the better part of the last quarter century trying to figure out how to solve healthcare problems using technology. The brothers grew up in a village outside of Jerusalem and both attended medical school in Israel. Roy completed his mandatory military service as a doctor, while Ido served in the military prior to his studies.

The two brothers soon became entrepreneurs. In 1996, Ido and his wife Phyllis Gotlib founded iMDSoft, which automated the collection and analysis of patient data in hospital critical care units. One of the company’s original investors was Sheldon Adelson, CEO and chairman of casino company Las Vegas Sands. 

A few years later, Roy founded CareKey, which developed a consumer portal for patients to access their healthcare data. Ido soon came onboard as CEO. After selling CareKey in 2005 to TriZetto Group for $60 million in cash and $40 million tied to customer retention and financial milestones, Ido and Roy decided to find a way to connect all of the players in the system through technology and started working on Amwell, basing the company out of Boston.

Anyone can log onto the Amwell website and get in line for a virtual urgent care visit for a fee of $69 without insurance (other services vary in price). Patients with insurance typically pay less, as the company has contracts with some of the biggest health plans in the country, such as UnitedHealthcare, Anthem and many Blue Cross Blue Shield plans. But the brothers say the company’s real differentiating factor is its underlying technology, which goes far beyond connecting two people via video. For example, if a doctor is doing a virtual visit with a homecare patient, they can see clinical information from connected devices in their patients’ homes, like a blood pressure cuff or thermometer.

Under normal circumstances, patients wait a matter of minutes for a video visit. But the recent surge has people in some places staring at a blank screen for nearly an hour as the number of people requesting visits outpaces the number of available providers. “One thing that is undeniable, even if the technology works, there is a supply issue,” Roy says, but he adds Amwell is working on a better waiting experience, including notification capabilities and video call-backs. The company says average wait times are anywhere between 6 and 49 minutes depending on location and the type of provider.

Beyond the immediate capacity issues posed by coronavirus, Amwell’s biggest challenge is growing the number of users. So far Amwell has signed up more than 240 health systems (totaling 2,000 hospitals), 55 health plans and 36,000 employers. The brothers say 150 million people have access to Amwell services, but they acknowledge only a small fraction of those people are actually using them. The company declined to provide visit numbers, but its competitor Teladoc, which counts 56 million people across members and fee-only users, also shows only a fraction of people take advantage of virtual doctor visits. It had only 4.1 million visits last year, which generated more than $553 million in revenue.

Amwell sells its technology by providing customers access to the platform, but it generates more revenue on top of that when people use its services — a key to the company’s growth. While the upheaval generated by the pandemic will likely bolster Amwell’s revenues, many investors are more interested to see if this will make telemedicine more popular in the long run. The first visit is always the hardest, says Donald Hooker, equity research analyst at KeyBanc Capital Markets. “That's the most challenging visit for any telehealth provider — to get that patient to try it once, have a good experience, recognize that they can use it for a lot of different things.”

While nowadays a patient’s first virtual visit may be to discuss coronavirus symptoms, Roy and Ido have much bigger plans for the future. They see Amwell as an “enablement” tool that ultimately will connect patients virtually with all the doctors they would normally go to for an office visit. “There is another trend, that's kind of hiding under the general trend,” Roy says, “of how regular healthcare — that is not coronavirus related — is beginning to shift into telehealth.” 

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