Finding Opportunities in the Growing Telemedicine Market

The COVID-19 pandemic has upended day-to-day life in numerous ways, prompting Americans to shift their habits and increase their use of technologies and services they may have been skeptical about previously. A recent report from the Department of Health and Human Services (HHS) found that "in April, 43.5% of Medicare primary care visits were provided through telehealth compared with 0.1% in February."

In response to patient needs brought on by the pandemic, previous barriers to widespread adoption of telehealth, such as availability, cost, and licensing restrictions for providers, have fallen, at least for the time being. What does this sudden ramping up mean for the future of this industry, and what might be its impact on the wider healthcare landscape?

The Telemedicine Market Today

With a reported market size of $45 billion in 2019 and projections for growth to more than $175 billion by 2026, telemedicine—the use of technology to deliver care remotely—had already been on the rise for the past decade. Companies like Teladoc—one of the first telemedicine providers in the U.S.—as well as AmWell, MDLive, and Doctor on Demand, have experienced consistent growth in the past five years. Teladoc, for instance, experienced 67% sales growth from 2016 to 2019. Overall, from 2014 to 2018, the telemedicine industry grew 624%.

In recent months, health systems and physician practices have had to adapt quickly to meet the increased demand for telemedicine, a shift that has transformed the experience of patients, providers and policymakers. The Journal of the American Informatics Association recently reported that from March 2 to April 14, virtual urgent care visits at NYU Langone health system grew by 683%, while non-urgent care visits grew by 4,354%.

This increase in the use of telemedicine has been facilitated by several policy changes. Health IT consultant Lisa Bari says, "Telemedicine adoption during the COVID-19 pandemic really accelerated when Health and Human Services (HHS) regulators quickly implemented waivers and flexibilities to both allow the use of consumer-grade platforms (FaceTime, Skype, etc.) and allowed reimbursement at-parity to in-person office visits." Many states soon followed, enacting similar waivers and payment flexibilities.

Opportunities and Challenges in Telemedicine

Prior to the pandemic, some of the benefits of telemedicine were already being demonstrated. For instance, in 2019, Harvard Business Review highlighted some of the ways telemedicine has improved care for people based in rural areas by enabling local healthcare providers to consult with specialists about their patients’ care.

In a recent report, McKinsey highlighted several areas of opportunity in the telemedicine market, including:

• Virtual Urgent Care: While the COVID-19 pandemic has continued, people still have a need for urgent and after-hours care. In addition to offering these services, providers like MDLive, are offering patients guidance on how to determine when they need to visit a doctor.
• Hybrid Virtual Office Visits: This approach to telemedicine combines virtual office visits with access to care at local sites such as retail clinics or testing providers. For example, following a virtual consultation with their physician, a patient could visit a testing provider or in-store clinic near their home. The pandemic has highlighted the need for this type of care, as physical distancing continues to keep patients at home.
• Virtual Home Healthcare: This type of telemedicine allows healthcare providers to combine virtual office visits with digital patient engagement tools and remote patient monitoring (the use of consumer tech products like smartwatches to gather data about patients) to provide patients with physical therapy, occupational therapy and other services.
• Remote Medication Administration: For patients that require ongoing treatment through infusible or injectible drugs, remote administration of medication would allow patients to receive their needed therapies at home. This could be done by using remote patient monitoring tools to help patients manage symptoms and treatment.
• Hospital & Telemedicine Partnerships: Hospitals and health systems have increasingly been partnering with virtual healthcare companies on consumer-facing telemedicine programs. In early 2020, Cleveland Clinic announced a partnership with telemedicine software provider GYANT to help providers have better post-discharge communications with their patients. And SOC Telemed has recently partnered with clinical practice management company SCP Health to provide acute and emergency care via telemedicine.
• In-Patient Telemedicine: While telemedicine has largely been used to provide at-home care for patients, in-patient telemedicine is another potential avenue that hospitals and health systems can implement to extend services to patients. In a recent column for the Healthcare Financial Management Association (HFMA), Ezra Mehlman, and Dave Tamburri, managing partners are New York-based Health Enterprise Partners LP, wrote, "By deploying hard-to-recruit specialists into an inpatient setting, typically through a video cart, tablet or bedside monitor, executives can add service lines to hospitals where the barriers to providing these services on in-person basis would be insurmountable."
• Partnerships with Big Tech: Tech companies, who have been trying for years to establish a foothold in telemedicine, have been using the pandemic period to pursue a variety of telemedicine initiatives. In April, Microsoft launched its ‘plasmabot’, a chatbot that walks recovered COVID-19 patients through a series of questions to determine if they’re eligible to donate their plasma for study. And Google recently added new features to its Search and Maps products to help people find virtual care options.

Despite this burgeoning growth, the telemedicine industry still faces several challenges to widespread adoption. These include:

• Payment Parity: Telemedicine payment parity requires private payers to reimburse for telemedicine visits at the same rate they would for in-person visits. Currently, 28 states have passed payment parity laws, but the provisions within and enforcement of these laws have been inconsistent, leading some healthcare providers to proceed with caution when thinking about offering telemedicine services. If telemedicine is to be adopted more widely by patients and providers, there will need to be greater clarity around payment for telemedicine services.
• Standards of Care: Dr. David Blumenthal, president of healthcare research nonprofit, the Commonwealth Fund, wrote recently in the Harvard Business Review about some of the ways telemedicine can fall short, specifically citing the loss of in-person interaction between patients and doctors. "I…know that well-trained clinicians use all their senses—not just hearing and vision," Blumenthal writes. "They appraise the whole patient: Is there a new limp, a shift in posture, a new pallor? Often, it’s what patients don’t notice or complain about that is essential."
• Licensing Issues: According to the Cleveland Clinic, "Federal law requires [healthcare] providers to be fully licensed to practice medicine in the state where the patient is physically located." In light of the pandemic, some states have waived in-state licensure requirements, but it remains to be seen whether the increased use of telemedicine will prompt states to make those waivers permanent.
• Privacy Concerns: While some HIPAA and Privacy Standards have been loosened to allow the use of video conferencing for virtual visits, privacy attorney David Holtzman of CynergisTek, a security consultancy, noted in a recent interview with bankinfosecurity.com that "there is understandable confusion among healthcare providers and patients over what privacy and security protections are required when using telehealth services during the coronavirus crisis." Telemedicine and healthcare providers, as well as patients, will need to be aware of various risks and establish protocols to mitigate them.
• The Digital Divide: The digital divide could prove another barrier to telemedicine access for the estimated 48 million Americans who do not have access to a broadband connection. This gap in broadband access may leave many people behind as use of telemedicine expands. Speaking in a CNBC documentary, Dr. Jessica Bender, a clinical instructor at the University of Washington, commented, "Telehealth has the risk of exacerbating existing inequities in healthcare—in either access to care, or in health outcomes."

The Future of Telemedicine

McKinsey reports the industry could grow to be a $250 billion revenue opportunity. Bari says, "I’m excited about the long-overdue idea of hospital-at-home, which brings equipment and appropriate intensive care to people’s homes in order to keep them safe and comfortable."

There’s already some evidence that the recent increase in telemedicine use has changed patient and provider perspectives on the service. In their report, McKinsey found that "76% of consumers say they are highly or moderately likely to use telehealth in the future, while seventy-four percent of people who had used telehealth reported high satisfaction." And in a survey of providers, 57% said they view telehealth more favorably than they did before COVID-19, and 64% are more comfortable using it.

Other factors driving increased opportunity in the telemedicine industry include:

• Changing Patient Expectations: As people have increased virtual interactions across all aspects of their lives, they may increasingly come to expect telemedicine as an option when looking for a new healthcare provider.
• Evolving Government Regulations: In response to the pandemic, the federal government loosened restrictions on or implemented waivers for Medicare and Medicaid recipients’ use of telemedicine, paving the way for wider adoption. Seema Verma, Administrator of the Centers for Medicare and Medicaid Services (CMS), remarked in the recent HHS report, "Countless clinicians and beneficiaries received important care while avoiding unnecessary exposure to the virus. Now that providers and patients have had a taste, it's difficult to imagine the telehealth genie going back into the bottle." Indeed, HHS found that even when Medicare in-person visits were allowed to resume, demand for telehealth services remained steady. A survey of practitioners by IQVIA found that during the pandemic, 51 percent of their patient interactions took place via telehealth, and the survey respondents expected it to remain at 21 percent post-pandemic.
• Increase in Remote Monitoring: The ability of providers to deliver care remotely with the help of wearable technologies is only just being tapped. As Samantha F. Sanders, Ariel D. Stern and William J. Gordon write in Harvard Business Review, "By making the collection of valuable patient data feasible outside of the clinic, remote monitoring can facilitate care for conditions ranging from chronic diseases to recovery from acute episodes of care."
• More scrutiny of video solutions: Despite restrictions around video conferencing being lifted, healthcare providers will increase their scrutiny of video solution vendors to comply with HIPAA and meet patient privacy expectations.

The COVID-19 pandemic has shifted telemedicine from a nice-to-have to a must-have. Those companies best positioned to take advantage of this burgeoning market will have a keen understanding of the opportunities as well as the challenges facing the industry.