Hill Ferguson, CEO, Doctor on Demand
Scott Mlyn | CNBC
The Covid-19 era shaped billions of dollars worth of online healthcare companies and produced one of the largest acquisitions of 2020 when Teladoc acquired Livongo for $ 18.5 billion.
Now, a year after the pandemic began, two corporate-backed health tech companies – Grand Rounds and Doctor on Demand – are joining forces to address some of the deepening complexities of the U.S. healthcare system. The companies will keep the Grand Rounds name for the time being and their CEO, Owen Tripp, will lead the combined company, while Doctor on Demand CEO Hill Ferguson will continue to lead that side of the company and join the board of directors.
Grand Rounds is a service that companies offer their employees to find the right care, coaching and expertise for specific diseases and diagnoses. Doctor on Demand is a virtual healthcare provider that connects patients with doctors and mental health professionals. Both companies have seen an increase in usage since early 2020.
“As we began to realize that virtual care was ushering in a new wave of adoption and changing people’s perspectives in real time, we both realized that there is an opportunity to do something to really move forward.” Pack, “said Ferguson in an interview.
Ferguson and Tripp said they began discussing a possible deal in the early days of the pandemic, but quickly got too bogged down by patient demands to make a difference. They said the transaction finally started in December while they were both on vacation.
Owen Tripp, CEO of Grand Rounds Health.
“We ruined each other’s family vacations,” said Tripp.
Grand Rounds was last valued at $ 1.34 billion in a funding round in mid-2020, while Doctor on Demand was valued at around $ 820 million around the same time, according to SharesPost. No new valuation will be carried out with the merger, as it is an all-stock combination with no fresh capital from external investors. The companies claim to have combined annual sales of hundreds of millions of dollars.
Tripp and Ferguson say the central issue they are addressing is a lack of coordinated care for patients. The fragmented and disorganized healthcare system in the United States is burdening patients with figuring out who to see and when, and whether a particular provider or procedure is covered by their insurance. Medical records remain difficult to track and providers are often overworked and have little financial incentive to get the best results for patients.
“It’s crazy for both of us how non-user-centric health care is,” said Tripp. “It’s grossly uncoordinated.”
Tripp co-founded Grand Rounds in 2012 to create a service that would navigate the system on behalf of the patient and help them find the right answers, whether that means finding the best specialist or understanding insurance claims. Grand Rounds competes with Accolade, which went public last year and is now valued at around $ 2.5 billion.
Doctor on Demand was founded in 2012 by a team that included Phil McGraw (also known as Dr. Phil) and his son Jay McGraw. Hill joined as CEO in 2016, replacing third co-founder, Adam Jackson.
Ethan Miller | Getty Images Entertainment | Getty Images
Doctor on Demand is a leader in the telemedicine market that exploded last year when patients tried to avoid hospitals and clinics except in emergency situations.
The company competes with Teladoc, which has a market capitalization of nearly $ 31 billion after acquiring remote health management provider Livongo last year. Other competitors include Amwell, which went public last year and is valued at more than $ 5 billion, and MDLive, which Cigna acquired in February for an undisclosed amount.
As virtual care becomes more of a commodity and some telemedicine visitors return to their doctors, the challenge is to create a sustainable company that connects more than just patients with available medical experts. Tripp said Covid covered up many of the complexities of online health because telemedicine providers were so busy dealing with the volume.
“In my opinion, this deal signals the future of digital health,” said Tripp. “It’s not really a comment on the year we just went through.”
The new board includes Bryan Roberts from Venrock, who supported both start-ups, as well as an investor from each company. Kathleen Sebelius, former US Secretary of State for Health and Human Services, is also a member of the Grand Rounds Board.
Disclosure: Comcast Ventures, Comcast’s investment arm, has an interest in Accolade. Comcast also owns NBCUniversal, the parent company of CNBC.
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