Last year was a tough one for pretty much every Canadian business. As COVID-19 pushed Canada into a deep recession, the economy shrank by a wrenching five per cent. But it wasn’t a bloodbath for everybody. Take Darren Entwistle, for example. As CEO of Telus, Canada’s third-largest telecom company, his 2020 pay totalled $16.04 million, which represented a 24 per cent increase over the previous year. Telus “significantly outperformed our national peers,” the company boasted last April.

One of the reasons Entwistle found himself whistling to the bank was that few companies were as well prepared for the pandemic as Telus. Indeed, it’s almost as though Entwistle saw COVID coming: over the past decade, Telus has invested at least $3 billion in an impressive array of health-care technology platforms that now connect it—electronically, for the most part—to tens of thousands of Canadian doctors and pharmacists, and to tens of millions of their patients.

“For me,” Entwistle explained in an email interview with The Logic, “this commitment stems from personal experience: I lost my dad as a result of an avoidable error; when he was accidentally—and heartbreakingly—given penicillin to treat an infection, despite wearing a MedicAlert bracelet clearly warning of his severe allergy to the drug.”

From Entwistle’s perspective, he’s hardly alone in suffering severe misfortune due to inept Canadian health-information management. “Tragically, similar stories and experiences are shared by hundreds of Canadians: wherein arcane scribblings on an antiquated paper chart caused grave harm to a loved one; or an incorrect prescription led to a negative reaction; or the inability to send timely information resulted in serious delays in care.”

Propelled in good measure by these seemingly banal yet severely punishing realities, “over the course of a decade,” said Entwistle of Telus’s health-care investments, “we have made significant investments in health to build scale and grow the business, allowing us to improve health outcomes and create a truly connected and collaborative health ecosystem.”

Thanks to all of this, when COVID shut down doctors’ offices and much of Canadian primary health care began going virtual early last year, Telus was ready to help usher Canadian patients online. “I have every confidence that we are on the cusp of a friendlier future where technology in health will be truly ubiquitous,” Entwistle enthused.

Another reason Entwistle won the Canadian corporate-paycheque lottery in 2020 stems from his leadership in carving out a chunk of Telus’s operations and launching it as a standalone company.

In February of this year, Telus International made its public-market debut, breaking a TSX record to become Canada’s biggest-ever tech IPO. The new spinoff, Telus said at the time, delivers “next-generation AI and content management solutions for global brands across the technology and games, e-commerce and fintech, communications and media, health-care, travel and hospitality sectors.”

Stock-market investors snapped up shares in a frenzy that put well over a billion dollars in Telus’s coffers.

For Entwistle, it was a deft piece of financial footwork that paid a huge dividend.

But an even more spectacular arabesque—this one involving Telus’s booming health-care business, which is also on track for what could be another vastly lucrative spinoff—is clearly in the works.

Francois Gratton is a lifelong Montrealer who started his career within Emergis, a unit of Bell Canada devoted to health-care data. When Bell sold Emergis to Telus in 2008—at a time when Bell was rapidly buying up media properties such as CTV, as well as a big stake in The Globe and Mail—Gratton joined the new parent company, attracted in part by what he calls its “social mission” to help open up “access to health care and improve health outcomes for all Canadians.”

A dozen years later, Gratton is executive vice-president at Telus and group president of Telus Health. Through it all, Gratton has worked with Entwistle on a dizzying array of health-technology acquisitions, licensing deals and product-development efforts in an investment spree that amounts to a highly ambitious foray into what Gratton calls “social capitalism.”

Telus’s involvement in health-care businesses traces back to its origins as an Alberta Crown corporation, founded in 1990 and entrusted with managing public health-care records in both that province and B.C. When the government of Alberta privatized the company in 1999, Telus retained contractual control over large health records databases in both provinces. Entwistle took the reins at Telus in 2000, after years as an executive at a British telecom, and recognized health-care data—at the time, loosely termed “e-health”—as a growth opportunity for the company.

Entwistle wasn’t alone in recognizing that e-health—or digital health, as it’s now labeled—would become a hugely important enterprise area within health care, which was then, and still is, Canada’s largest industrial sector.

In 2001, the federal government began investing in a multibillion-dollar e-health program aimed at boosting digital transformation across Canadian health care through a series of partnership deals with the provinces and territories.

Tragic amounts of this public e-health money was devoted to misbegotten mega-blunders.

Even so, considerable amounts of it were sensibly devoted to subsidizing doctors who wanted to buy electronic health-record systems. Gratton and Entwistle were taking notes, and after the federal government helped more than 20,000 doctors buy a system developed by the Canadian Medical Association (CMA) known as Practice Solutions, Telus swooped in and bought the technology from the CMA. Then, in 2012, Telus won a key federal contract to work with pharmacists on developing a national e-prescribing system that would connect doctors, pharmacists and patients.

With these two key forays into health care, Telus was in on the ground floor of pretty much the whole edifice of digital health in Canada. 

Increasingly, that edifice pays handsome rents to Telus, in the form of contracts to deliver services to the provincial health ministries, as well as to companies with employee health benefits plans, and from the sale to patients of health care-related services, such as home monitoring systems. “We’ve built quite an ecosystem,” said Gratton, with obvious pride. “We’ve gone from being a telco to being a truly integrated health-care company.”

Entwistle seems pleased, as well. 

“As we look toward a period of recovery,” he wrote to The Logic via email, “Telus Health will continue to prioritise improving the health-care experience in Canada as we strive for a future where access to health care is personal, precise, predictive, preventative and amazingly universal.”

When the COVID-19 pandemic began, “it became evident to us that our urgent-care system would become fully devoted to coping with incoming COVID patients,” Gratton said. “And that meant that everyone else would have to find new ways to access care. Because of that, virtual care uptake rapidly intensified.” 

It’s a development for which Gratton and Entwistle spent years positioning Telus.

Over the course of the pandemic,” Entwistle said, “we have worked with provincial health authorities to offer access to virtual-care visits between patients and their doctors.” Similarly, he added, Telus Health offered technological resources to support the vaccine rollout, including call-centre administration in B.C., supporting electronic vaccination records in Quebec, and offering vaccinations through mobile clinics across the country.

Telus’s current push into virtual health care began in earnest in 2019, when it licensed Babylon, a virtual health-care platform pioneered in the U.K. and widely adopted by the U.K.’s National Health Service. Over the past couple of years, the B.C. Ministry of Health and Alberta Health have used Babylon by Telus to deliver virtualized health consultations to growing numbers of patients in that province—an approach that amounted to a large pilot project that proved the case for virtual care to health ministers right across the country. 

Ottawa also seems to have been impressed: last year, the federal government pledged $240 million to help the provinces and territories boost virtual health care, and in the election platform that helped them get re-elected in September, Justin Trudeau’s Liberals promised another $400 million over four years “to build on the growing demand for virtual care that arose during the pandemic.”

Now, having helped prove the case for virtual care, Telus Health is moving quickly to fence in its market-share domination.

On March 31 of this year, Telus Health announced a new step in integrating public health doctors into its proprietary platforms.

It did this, it said in a press release, “by becoming the first digital health provider in Canada to enable direct communication between its employer-focused virtual care platform, Akira by Telus Health, and its 30,000 [electronic medical record] users across the country.” At the same time, Telus announced that it had locked in access to 12,000 Ontario clinicians through the provincial Health Report Manager technology platform.

A month later, the company launched what it dubbed Telus Health Virtual Care, which aimed to capture the booming demand for virtual health-care services within Canada’s vast employee health-care sector. This boasts excellent initial prospects, according to a Telus press release. In August 2019, Telus Health bought Akira Health, a provider of virtual health services, including video and text. Financial terms were not disclosed. By merging Akira and EQ Care—a recently acquired virtual-care company “that delivers specialized virtual-care functionalities and advanced employee assistance features,” according to the company’s press release—Telus said at the time that its virtual-care platforms connected more than 2.8 million Canadians “with confidential access to nearly 500 health-care professionals from a variety of disciplines.”

Meanwhile, with the integration with clinicians Telus announced on March 31, the company called its virtual care system “the first service in Canada to be able to securely share patient information, with appropriate consent, with any one of … 30,000 clinicians.” It made a particular pitch to employers, saying its offerings “increase productivity, reduce absenteeism and minimize benefits costs.”

As a family physician at St. Michael’s Hospital in Toronto, and the Fidani Chair in Improvement and Innovation at the University of Toronto’s Faculty of Medicine, Dr. Tara Kiran has published an impressive array of analyses probing the dynamics that are constantly reshaping Canada’s constellation of 17 provincial, territorial and federal health systems. 

In propelling a huge surge in virtual care, the COVID pandemic, she warned in an April Globe and Mail op-ed, “has sparked a corporate stampede into primary care.” 

For evidence, she points to how the Loblaw grocery chain, which bought Shoppers Drug Mart in 2014, recently harnessed Toronto startup League’s telemedicine platform to launch a health and wellness app that offers reward points at its grocery stores. “Every corporation—from telecom giants to technology startups—seems to want a piece of the pie,” Kiran wrote.

Nor has Telus’s domination of the market for physician medical-record systems, and its move into virtual care escaped her attention, she observed in an interview with The Logic.

Virtual care is attractive to corporations because it offers better margins than in-person care, Kiran noted, citing a warning from Ontario’s auditor general that many companies bill patients for services such as medical advice, prescriptions, medical notes and lab-work requisitions, which are items that would usually be provided free of charge during an in-person visit. Companies save money, she observed, by running fewer brick-and-mortar clinics and using virtual scheduling assistants instead of receptionists.

“It doesn’t have to be this way,” Kiran said. “Instead, we could use public funds to invest in primary-care models that incorporate new technologies in a way that improves timeliness and convenience, but also enhances care continuity, reduces costs and ensures all people in Canada have access to high-quality primary care.”

One solution, she suggested, would be to expand virtual health-care delivery within not-for-profit models—where family doctors work in groups with other team members like social workers, nurses and pharmacists, and have accountability for providing after-hours care.

These models, she argues, have been linked to better care and lower health-system use, but are still a rarity in Canada.

Like many tech-savvy family physicians in Canada, Vancouver-based Dr. Essam Hamza agrees with Kiran that the advent of virtual care is now driving a total rethink within Canadian primary health care.

But that’s about all that Hamza and Kiran agree on.

Hamza has long fumed at the provincial public health systems’ inability to do what the banking and travel industries did long ago by harnessing digital information systems to deliver better, faster and cheaper services to the public. But unlike most doctors, Hamza knows how to write code. And he’s also highly entrepreneurial. So a few years back, he decided to tackle the problem on his own.

With backing from investors, Hamza assembled a cluster of four clinics in Vancouver and plugged them together around an electronic medical records system he designed. Then he began to institute a series of virtual care offerings to the patients enrolled with his clinics.

“About 70 per cent of all patient visits for primary care are talk, not touch,” he told The Logic. “At its core, virtual care is a practitioner-led, patient-centric approach, in which the health team forms a circle of care around the patient.”

Starting from these beginnings, Hamza rapidly built his ideas and investments into CloudMD, a national virtual health-care company complete with its own TSXV listing. And suddenly, CloudMD—a startup driven by deep clinical insights and a relentlessly accretive spirit that has driven more than 20 acquisitions—is playing in the same league as Telus Health.

According to the company’s disclosures, “CloudMD currently services a combined ecosystem of over 7,000 psychiatrists, approximately 4,500 therapists and counsellors, approximately 4,000 psychologists, over 22,000 family physicians, over 34,000 medical specialists, over 1,500 allied health professionals, over 500 clinics, and over five million individuals across North America.”

Furthermore, CloudMD said, its “Enterprise Health Solutions Division includes one of the top four Employee Assistance Programs in Canada and offers a comprehensive, digitally connected platform for corporations, insurers and advisors to better manage the health and wellness of their employees and customers.”

And perhaps most importantly of all, the company is transparently growing.

In its Q2 earnings report at the end of August, it reported revenue of $15.7 million—an increase of 461 per cent compared to Q2 2020. “The increase is primarily attributable to acquisition growth with four acquisitions completed in the quarter, and 14 acquisitions completed in the last twelve months,” the company said, adding that it “achieved organic growth across all of its businesses, aided by market adoption of telehealth services.”

This announcement came shortly after news in April that CloudMD had acquired Oncidium, which it described as one of Canada’s leading health-management companies with a client base of over 500 corporate and public-sector clients across various industries.

The Oncidium deal, said CloudMD, immediately connected it to the $19-billion employer market, which it said is the fastest growing area in health-care spending and is expected to grow 130 per cent by 2025. It also increased CloudMD’s annual revenues to $120 million.

“This acquisition accelerates the positioning of CloudMD as the leading service provider in the employer market,” the company boasted.

Then, in September, CloudMD announced it had partnered with 19 new post-secondary institutions across Canada to provide “multi-layered mental health resources to over 167,000 additional students.

These acquisitions appear to be yielding results: in preliminary third-quarter results released Nov. 9, it anticipated revenue in the “range of $38 million to $40 million” and annualized revenue from $140 million to $155 million.

In Hamza’s view, the era of virtual health care is just beginning. And it’s going to be huge.

“We believe the future of health care is 100 per cent virtual triaging,” he explains. “The walk-in clinics are starting to go out of business.”

To be sure, there have been some bumps along the way, both for Canada’s virtual health sector and for Telus’s health play.

Almost two weeks ago, CloudMD announced perhaps its highest-profile acquisition yet, snapping up TSX-listed MindBeacon—which had only gone public only 11 months earlier in an oversubscribed $75-million IPO. It had enjoyed some initial success on the market, amid the general pandemic-inspired bullishness in the digital health sector. But CloudMD’s $116-million cash and stock deal is worth roughly one third of MindBeacon’s peak market capitalization. With its focus on virtual delivery of mental health care, MindBeacon fits the suite of services CloudMD is assembling. But as Hamza told the Globe, it would have been hard to justify the acquisition had MindBeacon’s stock been higher.

In late March, Montreal-based Dialogue Health looked like another runaway winner. It raised $100 million on the TSX through an initial public offering that saw its shares, offered at $12 on its debut, quickly rise in trading to just above $20.

Much like Telus and CloudMD, Dialogue described itself as “Canada’s premier virtual health-care and wellness platform, providing affordable, on-demand access to quality care.” A prospectus Dialogue filed along with its IPO showed it had partnered with Canada Life, Beneva and Desjardins, and counted National Bank, Lightspeed, Ubisoft, Samsung, Sobeys and Sephora as customers.

The market, however, has lost its initial enthusiasm for the stock. It has spent much of the fall in the $8–$9 range, dipping as low as $5.72. While its Q3 results this month showed year-over-year revenue growth and an increasingly varied mix of revenue sources, it missed the consensus revenue estimate of $18.2 million by a million dollars.

Telus’s financials have shown reason for continued optimism about its health play. July’s quarterly earnings boasted 26 per cent revenue growth for its health division, Q3 results at the start of November showed a $14 million in revenue growth from the division, a 12 per cent increase the company said was “mainly driven by business acquisitions and growth in health-benefits management services.”

In July, however, the Office of the Information and Privacy Commissioner of Alberta found that the collection and use of individuals’ government-issued ID and selfie photos for identity verification and fraud prevention by using facial-recognition technology through Telus’s Babylon platform was not compliant with provincial law.

“Babylon did not establish that it is reasonable to collect this extent of personal information in order to verify identity, and detect and prevent fraud,” the OIPC found, while also noting that “collecting and using copies of government-issued ID and selfie photos from patients through the Babylon app goes beyond what is essential to verify identity and provide health services. Other simpler, effective methods exist for this purpose.”

The company responded by stating it is “concerned by some of the interpretations and points raised by the OIPC that go against the foundation of globally accepted standards of high-quality care and clinical governance, such as the suggestion to stop certain ID-verifying technologies, as well as the audio recording of digital consultations. These features were introduced after careful consideration by Babylon with feedback from regulators in other territories.”

And Telus spokesperson Jill Yetman told The Logic that “protecting our customers’ privacy and safeguarding their personal information is paramount to our health business.”

It’s a reminder that for all the optimism about telemedicine’s upside, health care is no simple business.

The competition will be fierce.

In an interview prior to the MindBeacon acquisition, Hamza was short on praise for his competitors. Dialogue, he said, has yet to find a way to make profits. And Telus Health, he sniped, is more of a “holding company” than a truly integrated clinical care enterprise.

According to Hamza, it comes down to the “circle of care”—and whether large corporate entities can tailor this kind of care appropriately for each patient.

To get that right, Hamza argued, you have to get extremely close to patients, and their doctors. Or better yet, he suggested, you have to be one of those doctors.

But whose vision of virtual care will prevail among Canada’s doctors? Will it be Hamza’s profit-seeking vision, or will it be Kiran’s non-profit vision?

It’s a big dilemma. And, especially after yet another federal election campaign where the prospect of privatization in health care was used as a wedge issue, it’s one that seems destined to play a decisive role within the future of Canadian health care as a whole.

Entwistle, however, insists it’s not a subject for legitimate debate.

The need for private-sector leadership in driving technological change through Canada’s change-averse public health systems is an incontestable truism, he told The Logic.

“The pandemic has unearthed the urgent need to address affordability and efficiency in our health system,” Entwistle wrote.

The change that’s needed, he insisted “can only be achieved through significant investments in innovative information and communications technology, and the collaborative efforts of the public and private sectors.”