Telemedicine: A responsive call to healthcare needs
09 October 2019
When Healthcare Costs Go Up, Telemedicine Cuts Them Down
• In the U.S., the average yearly cost of employer-provided healthcare insurance for a family plan (four members) is now >$20k mark.
• Rising coverage prices paid by insurers and employers are significant drivers for healthcare inflation.
• According to the American Medical Association (AMA), telemedicine can help an employer save approximately $300 per year for a single employee or more than $1'000 per year for a family of four.
• Telemedicine is the use of Information and Communications Technologies (ICT) to improve patient services in terms of care and medical information access.
• When distance is a critical factor, the delivery of health care services can exploit ICT for diagnosing, treating, and preventing diseases and injuries.
• Telemedicine main features are:
• providing clinical support,
• overcoming geographical barriers,
• involving various types of ICT,
• improving health outcomes,
• reducing healthcare expenditure.
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Is Everyone Ready For Not Visiting The Doctor?
• The global telemedicine market was valued at $21.45bn in 2018 and estimated to be worth $60.45bn by 2024, a CAGR of 18.50%.
• The U.S. is ready to expand customer adoption.
• 96% of U.S.-based large employers provided telehealth services in 2018.
• Telehealth Original Medicare (Medicare Part A & Part B) coverage has been until recently restricted to services offered in rural areas.
• Specific conditions apply about the venue where services are provided.
• Private homes are not included in Medicare reimbursement.
• Such restrictions will be lifted starting in 2020, when Medicare Advantage Plans may offer more telehealth benefits than Original Medicare.
• No matter where the customer is located, under Medicare Advantage, telehealth services will be covered, even if used at home instead of going to a health care facility.
• The state of California is likely to convert to law a measure that would require insurers to pay providers equally for telehealth and inperson visits.
• Europe is slower in the adoption of telemedicine services.
• A weak regulatory framework, insufficient funding, and inadequate IT infrastructure are barriers to its widespread implementation.
Faster, Cheaper, Broader
• The United States market is currently the most active for telemedicine.
• Teladoc Health Inc. (TDOC US), American Well (not listed), Doctor on Demand (not listed), and MD Live Inc. (not listed) are among the most prominent players in the field.
• Some of these companies are expanding their worldwide presence by acquiring smaller competitors abroad - as it was the case for the French MédecineDirect, acquired by Teladoc Health.
• On average, a telehealth visit costs about $79, compared with about $146 for an office visit.
• Teladoc Health Inc. alone completed approximately 2.6mn telehealth visits in 2018, through a network of more than 3'100 health professionals.
• The company hires physicians as contract employees, leaving them flexibility in their practice.
• Physicians are paid $23.50 per phone visit and $28 per video visit - on average, they complete 3 to 5 video visits per hour.
• These companies distribute their offerings by being included in the health plans that insurers sell to employers.
• The advantages brought forward are a faster patient-doctor interaction for employees, lower visit expenses for employers/insurers, and broader patient coverage for physicians present on the platform.
• General health, global care, behavioral health, dermatology, and expert second opinion services are often available through telemedicine providers.
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Catalysts:
• Advancements in the 5G ramp-up will allow faster and higher-quality connections, building an optimal channel for transmission.
• Remote locations currently served by a slow and intermittent, if not lacking, connection, will be effectively served by telemedicine services.
• Reimbursement decisions by both public and private payers.
• U.S. customers' usage is dependent on transparency and applicability of reimbursement for the category.
• Adoption will foster adoption.
• As with many new services, being considered reliable and conquering customers' trust is key to exponential growth.
Risks:
• Incumbent players may face unexpected competition from employers, providing themselves the services to their employees.
• Recently, Amazon launched Amazon Care, a virtual medical clinic dedicated to its employees.
• Any delays in developing the necessary infrastructure will impact the adoption rate growth.
• Slow or lacking connection still affects many potential users in accessing the services.
Bottom line:
- The rising necessity to keep costs under control, while offering improved health services, is boosting telemedicine take-off.
- In the United States, authorities are fostering telemedicine support through increased Medicare coverage effective from 2020.
- More partnerships between health plan providers and telemedicine players are helping extend population coverage and reach.
- Awareness about the efficiency and convenience of telemedicine is paving the way for users' adoption.
- The majority of the telemedicine players are still privately-held at the moment: American Well, Doctor on Demand, and MD Live Inc., to mention just a few.
- Teladoc Health (TDOC US) is the only opportunity to get a pure-play exposure to the sector, and is part of AtonRâ Bionics certificate.
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