Some observations

There are times when we can’t help but feel that as wacky as this world gets, just when you think you’ve seen every possible bit of wackiness along comes one more example that there is no bounds to wackiness in the wacky world of diabetes. First comes word that John Hancock, Verily and Onduo have teamed up to offer life insurance specifically targeted at patients with diabetes.

According to a press release;

“John Hancock Aspire offers customers living with diabetes the protection of life insurance paired with a technology-enabled program that provides coaching, clinical support, education, and rewards designed to help manage and improve their health. All John Hancock Aspire customers will also have access to an enhanced version of John Hancock Vitality, which is designed to reward steps customers take toward living longer, healthier lives, like exercise and buying healthy food, and now offers opportunities specific to the diabetes journey. Members have the potential to save up to 25 percent on their premiums.

Qualifying John Hancock Aspire customers with type 2 diabetes will be eligible to access Onduo’s virtual clinic and receive a blood glucose monitoring device which, when used in conjunction with the Onduo app, provide insights into the user’s diabetes management. Onduo’s virtual care team, made up of diabetes professionals such as dieticians, diabetes educators and doctors, offers personalized guidance and support regarding diet, activity, lifestyle habits and medication management. Those using Onduo to manage and improve their health can earn points to further boost their overall Vitality rewards and lower their premiums.”

This news comes just as Livongo is teaming up with MDlive and Doctor on Demand to integrate virtual care into their platform. While this integration will initially be targeted at Behavioral Health the company says it plans on expanding into diabetes.

Now a few points here first and foremost we actually like the idea of incentivizing patients with something other than a pat on the back. As everyone knows we have long maintained that giving patients real skin in the game, incentives which are real, and tangible is a strong motivational tool. This really isn’t a new concept as auto insurance companies have been using this tactic for years. So kudos to Hancock, Verily and Onduo for applying this concept to diabetes management.

Next this also shows that Livongo isn’t the only digital diabetes platform. Again as we have pointed out on numerous occasions Livongo has many competitors and isn’t alone in this field. The reality is you can’t swing that poor dead cat without hitting digital platforms all of which combine data collection with patient coaching. Which again as we have said before will only drive costs lower making it more difficult for companies like Livongo to make money no matter how many patients they enroll.

We hate to be Captain Obvious here but Verily/Onduo has far greater resources than Livongo which if used aggressively could place Livongo in a very difficult position. What’s to stop Verily/Onduo from going 100% at risk offering their platform for FREE and only getting paid for producing real verifiable improvements in outcomes. We may not be the sharpest tool in the shed, but we do know that FREE is pretty cheap and employers faced with ever growing costs like FREE.

While the folks at Livongo want everyone to believe that what they’re doing is unique and special it’s not. Which perhaps is one reason short interest has been growing just as shares in the company have been coming off their lows. Not to be redundant but since Livongo went public we felt this was a classic pump and dump. With shares coming off their lows and short interest growing this now looks like a double pump triple dump scenario developing.

The key as we keep noting is not how many deals Livongo signs and to certain extent it’s not all about getting and keeping patients enrolled. The other issue facing Livongo is fending off well-resourced competitors like Verily/Onduo who can eat them for lunch by going 100% at risk. Just as other areas in diabetes have commoditized driving costs lower so too is the digital diabetes space. There are few barriers to entry here which to us means that the company with the greater financial resources combined with the willingness to use them stands a better chance than a start-up like Livongo.