Sunday, June 14, 2015

The Enemy of My Enemy Is Still My Enemy

The old adage says that the enemy of my enemy is my friend.  Several lawsuits within new health care spaces -- telemedicine, wearables, and concierge medicine -- would seem to belie this conventional wisdom.

The first example is with American Well and Teladoc, two of the nation's oldest and largest telemedicine companies.  American Well is suing Teladoc for what it says are patent infringements.  It doesn't seem like it is a coincidence that Teladoc recently announced that they were getting ready to go public, or that in March Teladoc sought to get the U.S. Patent Office to invalidate the patents in question, which date back to 2007.

Both companies seem to be doing well.  American Well raised $81 million last December, while Teladoc secured another $50 million last September.  According to MobiHealth News' analysis of their IPO filing, Teladoc has close to 11 million members, and is on track for over 600,000 visits annually in 2015.  American Well claims to have over 23 million members, mostly through its various health plan and provider clients.

They're certainly not alone in the field -- MDLive and Doctors on Demand also seem to be doing well, as evidenced by MDLive's burgeoning deal with Walgreens and Doctors on Demand's new deal with Wegmans-- but they are the largest.  And now they're squabbling with each other in court.

They've got plenty of other battles that they should be focusing on.  Texas is ground zero, with the recent ruling by the Texas Medical Board to require in-person visits in order to write prescriptions, which is viewed as a major barrier for telemedicine (Texas is not the only state with such restrictions).  Teladoc sued the TMB, and recently got a ruling from a Federal District Court blocking the TMB ruling.

This is important stuff for telemedicine.  Much progress has been made on making telemedicine more mainstream, but there is still a long way to go.  For example, the AMA's ethics council appeared to be close to making some progress on their official attitude towards telemedicine, only to punt after pressure from the TMB (I'm guessing they figured that the AMA getting ahead of the TMB would weaken their court case).

Similarly, just this week the American Telemedicine Association criticized the CMS final rules on telemedicine in ACOs, organizational models that should be front and center in using it.

I don't know what American Well patents Teladoc may have infringed on, or if they did whether they had any right to do so, and I don't support industrial espionage in lieu of real competition, but telemedicine is not yet so well established that its leaders should be attacking each other instead of trying to further its reach.

Also under the cause of patent infringement, Jawbone is suing Fitbit.  It is actually Jawbone's second lawsuit against them in two weeks.  Not only is Jawbone claiming patent infringement, they are planning to take their complaint to the International Trade Commission, which could result in a ban on imports of Fitbit products or components.  Their earlier lawsuit related to loss of intellectual property caused by Fitbit hiring several Jawbone employees.

It, again, comes as probably not a coincidence that Fitbit is preparing for its IPO on June 17.

Analysts are predicting crazy growth rates for wearables, such as one prediction that the global market could be worth $37b by 2020, and estimates of 2015 sales ranging from IDC's 45.7 million units to Yanos Research Institute's forecast of 104.8.  The market would seem to have room for both companies.

I wish Jawbone and Fitbit were spending more time figuring out what they are going to do about competing with new entrants in the wearable space like Apple or Samsung, and how they can do a better job keeping consumers from giving up on them.  They are not each other's biggest problem.

These internecion legal wars are not limited to patent disputes.  The two leaders in concierge medicine -- MDVIP and Signature MD -- are in court over non-compete provisions.

To be more accurate, Signature MD is suing the much larger MDVIP.  MDVIP's contracts with physicians prohibit them from joining another concierge practice within ten miles of a MDVIP practice for up to two years after their contract ends.  SignatureMD says these provisions are unenforceable, and a federal court in Los Angeles has already dismissed MDVIP's effort to squash the suit.

SignatureMD claims that MDVIP has something like 70% market share, and that its contracts effectively lock up many major markets.  MDVIP points out that SignatureMD's market share estimates include only physicians practicing the model, which remains only a small fraction of available physicians.

Concierge medicine, and its related model of direct primary care, are darlings of reformers who feel that health insurance is distorting how health care is bought and delivered.  A 2014 survey by Merritt Hawkins found that 7% of physicians already practice some form of these models, with another 13% planning to.  To SignatureMD's point, there are a lot of untapped physicians out there.

I don't like non-compete provisions, but I understand that companies like to protect their investments.  There are reasonable limits and unreasonable limits, and courts will end up figuring out where the line is, but in the meantime their fighting in court is not doing much to move the cause of concierge medicine forward.

I worry more about health systems locking up physicians in their markets (e.g., see what is happening in Washington and New Mexico) than I do about 10-20% of physicians in a market being tied to a particular concierge medicine company.  I'd rather those companies seek to expand the number and range of physicians using a concierge approach in their practice.

Patent infringement and non-compete provisions are neither trivial nor unique to these health care spaces, and I don't mean to imply that they are.  All the companies I've mentioned are innovators who deserve to be commended for helping to break traditional health care paradigms.  They've won impressive battles to gain more acceptance for their approaches.  But the wars haven't been won yet, and with these various legal battles it feels like they are taking their eyes off the prize.

If they're going to go to court, I'd rather that they focused on the people and organizations who still seek to limit adoption of their services, not each other.

1 comment:

  1. Good post. These developments are happening faster than the legal system can accommodate them and the customer-patient wants them and is getting impatient. At some point a balance will need to be achieved so these innovations can flourish.