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J. Pat Carter / AP

Doctor on Demand, a telemedicine firm that connects physicians and patients via video, is partnering with lab diagnostic companies Laboratory Corporation of America and Quest Diagnostics to expand into lab work.

CEO Hill Ferguson, a former PayPal executive, believes expanding into labs is the next logical step for the four-year-old company. "One of the things that we hear from our doctors and patients is, 'I want to be able to do more with this platform,'" he said. We spoke this week about Doctor on Demand's new lab venture, but also about where telemedicine is going.

Read on for an edited and condensed version of our conversation.

What's the gist of this lab agreement with Quest and LabCorp?

The goal is to help people find nearby labs after a video consultation with a doctor. "Luckily with these two partnerships, we're able to cover the entire U.S. You tap the lab you want to go to, and that order is sent digitally to that location. You just show up at the lab, and they'll have your order."

How do people know if the lab is in their insurance network?

"It's a very byzantine system. We do our best to estimate what that will cost based on your insurance. It's an estimate, but it's more than what you get today."

Doctor on Demand works with big commercial insurers. But one of the largest insurance programs in the country, Medicare, still doesn't cover a lot of telehealth services over concerns it will blow up spending. Do you see that changing as Congress takes an interest?

"We can't predict what Medicare's going to reimburse and how that's going to work. We are working with a few plans on their Medicare Advantage plans. We're excited if Medicare decides to cover more telemedicine."

Can you break down your user base more?

"We have roughly half of our users who are living in metro areas, where they have a primary care physician ... But they are busy, have jobs, don't have time off. We're really solving a convenience problem for them."

"On the other half, it's an access problem. They live in health care deserts, where they may have to drive an hour each way just to get to an emergency room."

What's your response to the concerns that telemedicine may just serve an an addition or bolt-on service to in-person doctor visits?

"If we can get people engaged in their health and take preventive measures to, for example, find out if they're pre-diabetic, that is money well-spent."

"No consumer has any incentive to go do multiple blood draws. It's not like it's something that's really fun to do."

What do you see as telemedicine's limit? It's not as if virtual doctor visits can replace all or even half of in-person visits, right? People still need to see their doctor.

"There are 1.25 billion ambulatory visits a year in the U.S. When you look at the conditions treated, we believe our platform can diagnose 42% of them. I think that represents a ceiling, and I don't think we'll hit that ceiling anytime soon."

"For certain populations, we're really a complement to primary care. But for other populations, we may be the full front door to your health because you may not have a primary care physician."

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