Teladoc Business Model & Its Implications

Paresh Sagar
blog updated dateUpdated Date: Apr 3, 2024

Teladoc business model

We all hear about the phenomenal acts written in the scriptures where a known and able man can easily diagnose and treat a patient from miles away. We do not discuss if it happened or not, but it does seem supernatural – to treat a person from miles and miles away.

Well, what we see today unfolding around us is true, if not more, then as equally magical. Technology has blessed us with the ability to diagnose a patient sitting countries away and henceforth provide proper medical treatment. If you’ve heard the word ‘telemedicine’, you’ve heard about this technology.
Teladoc has been a pioneer in the industry and sets quality standards for others to follow. In this article, we’ll look at the Teladoc business model to understand this industry, its implications, and things that its future will reveal.

What is Teladoc & How Teladoc works?

Before we explore the inner workings of this company, let’s first understand what is Teladoc. In the year 2002, two brilliant minds came forward with a simple idea: to infuse technology and healthcare. The idea took its root and Teladoc was founded in Dallas, Texas by G. Bryon Brooks and Michael Gorton. Today, Teladoc serves ove 130 countries with over 5,000 employees. But how does Teladoc work?

Telemedicine was coined in the 1970s from the Latin ‘medicus’ and Greek ‘tele’. It literally stands for ‘healing at a distance’

Teladoc, in simple terms, is a platform that uses communication technology to provide medical diagnosis, consultation, and treatment (wherever possible) to remote patients. It nowhere replaces the part where the physical presence of a doctor or a surgeon is required. For example, you cannot do surgeries using telemedicine. Here is how it works –

  • The patient signs up on the Teladoc app and creates a profile with their medical history;
  • The patient looks for licensed professionals according to their symptoms;
  • Teladoc’s telehealth app thus provides a list of doctors to choose from;
  • Once selected, the patient gets connected to the healthcare professional through
  • Text or chat
  • Phone call
  • Video call
  • The healthcare professional thus diagnoses the person and provides prompt and relevant treatment;
  • Depending upon the treatment, the patient is thus asked for follow-up care.

Now, it does seem like a brilliant thing to happen, but how does it happen at a large scale and be profitable for companies? To understand this, let’s look at the Teladoc business model.

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How does Teladoc Make Money?

How does Teladoc Make Money

We all understand how hard it is to get off bed, dress up, and visit the clinic or hospital to get ourselves treated. It sometimes even feels ironic – because you can’t get up due to sickness, you’ve to get up to get rid of your sickness. Teladoc saw the issues and thus filled the market gap with its revolutionary idea.

As far as it is about the revenue stream of Teladoc, the revenue flows from three channels:

  • Subscription Fee : The subscription model today is being the foundation of so many businesses today because it provides recurring revenue for businesses and predictable expenses for consumers. Teladoc charges subscription fees to its enterprise customers, such as employers and health plans, who provide the service to their employees or members.
  • Visit Fee : For those going against the subscription model, the company charges per-visit fees for its services.
  • Revenue Sharing : Apart from it, Teladoc also takes some share from the revenue of healthcare professionals using its platform to provide services.

Now, the revenue only flows when all the different aspects of a company work in harmony. Let’s have a look at the pillars on which Teladoc or any other telehealth app stands.

Teladoc Business Model & It’s Components

components of teladoc

Telemedicine infuses the potency of the healthcare sector and technology together to provide quick and easy diagnosis and treatment to those in need. These telehealth apps stand on a few key components that keep the business running in a good flow.

  1. Technology: If we speak of technology to be the neurons that provide pace and precision to this body, we won’t be wrong. Teladoc’s technology platform is the key component of its business model. This allows its patients to connect with healthcare professionals remotely and securely. Not only this, technology is the base of most businesses rising today. Take Uber for health for example, which has changed the way medical appointments used to happen.
  2. Healthcare Provider Network: Rarely can a company survive without a good and relevant network. This same stands true for Teladoc. It relies on a network of licensed healthcare professionals to provide telemedicine services to patients.
  3. Enterprise and Direct-to-Consumer Offerings: The Teladoc business model includes both enterprise offerings, such as its telemedicine services for employers and health plans, as well as direct-to-consumer offerings for individuals seeking telemedicine services.

But what is it that has put Teladoc to be the leader in the telehealth app market? Let’s look at some of the factors that empower it and help it have a competitive advantage over others and outrank them.

Telemedicine and Telecare found that telemonitoring reduced hospital readmissions by 20% among heart failure patients.

Competitive Advantage

Teladoc was founded in the year 2002 and has already been an established market leader in the telehealth industry. This gives it a strong competitive power over the newer entrants in the same. In 2020, it acquired Livongo, another telehealth company, for a massive $18.5 billion.

This deep-rootedness in the market has given it strong brand recognition. It is well-recognized and trusted by consumers and healthcare providers alike, giving it an extra edge in a crowded market.

Apart from it, its power comes from its strategies. Teladoc offers a wide range of telemedicine services, including mental health counseling, dermatology, and nutrition counseling. This has helped it spread its services into different sectors and given it an advantage over companies that offer only general telemedicine services. Apart from it, the excellent and peerless Teladoc customer service makes it outperform its competitors with ease.

Impact and Future of Telehealth Transformation

Technology has transformed the ways we used to work and interact with each other. A mere look at the Teladoc business model reveals how technology is working on enhancing the healthcare sector. Its recent acquisition of Livongo, a digital health company that specializes in chronic disease management, highlights its strategic focus on expanding its offerings and capabilities.

When we look at the impact of telemedicine on healthcare, we find it to be significant. Here is how it has helped the professionals and patients as well:

  • Telehealth has significantly increased access to healthcare services for people living in remote and underserved areas. With smartphones and the internet reaching every corner of the world, more and more people are able to take advantage of it irrespective of their geographical location.
  • An improved patient outcome has also been seen. Where people used to ignore the need to visit a doctor due to various factors, now they use it more due to the convenience provided by telemedicine. This has reduced hospital readmissions, improved chronic disease management, and provided timely access to medical care.
  • Not only this, but it has also benefited healthcare providers by reducing their burnout and increasing job satisfaction. Providers can work remotely and flexibly, reducing their commute times and enabling them to see more patients.

A study by the American Hospital Association found that telehealth programs have saved hospitals an average of $150,000 per year.

Numerous Teladoc competitors such as Whereby, Spruce Health, OhMD, etc., have their business models formed around it. But where is telehealth going in the future?

The onset of Covid-19 not only spotlighted the dire need for use of technology in the healthcare sector, but it also increased the pace of transformation. According to Statista, the global telemedicine market is expected to reach $459.8 billion by 2030. This indicates the human shift towards technology. To support this, numerous software development services are coming up to fill the market gap. Here are 4 future changes we might see due to the telehealth transformation:

  • Continued growth
  • Expansion of services
  • Regulatory changes
  • Increased patient engagement

Considering its pace, we should expect telehealth services to expand beyond traditional healthcare settings and include areas such as remote patient monitoring, digital therapeutics, and population health management.

Many experts predict that these temporary regulatory changes will become permanent as telehealth becomes more widely adopted and integrated into healthcare delivery. This means that patients will continue to have greater access to telehealth services, and healthcare providers will be reimbursed for providing these services.

Conclusion – Teladoc Business Model

By having an understanding of what is Teladoc and the way the Teladoc app works, we get a glimpse of the transformation happening around us. Although the recent Covid pandemic did indeed provide a boost to Teladoc, the transformation had to come anyhow. When technology improves, it takes up every other human aspect and enhances our lives.

Each year, more and more startups are rising around telehealth due to the need and its market potential. Not only are these becoming successful and generating considerable revenue, but they are also enhancing the lives of those who had no access to healthcare earlier.

The transformation is going to reach every person and phone soon. If you have a business idea for a telehealth app, look for an excellent telemedicine app development solution around you.

You can get in touch with aPurple for your Telemedicine App Solutions.

Paresh Sagar
Paresh Sagar, the innovative CEO of aPurple, is renowned for his passion for experimenting with new business models, technological aspects, and software solutions. His knowledge and insights are a must-read for entrepreneurs, tech experts, and avid readers alike, offering valuable perspectives on the ever-evolving landscape of business and technology. With a keen eye for innovation and a dedication to sharing his expertise on business digitalization, Paresh continues to inspire and inform professionals across the globe.

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