Industry Outlook: Telehealth Services

By Danny Restivo, 2/1/17

Healthcare remains a controversial topic among a wide swath of America. As a new administration pushes to repeal and/or replace Obamacare, millions are left wondering what future treatment will look like in the coming year. While lawmakers debate the best path forward, the demand for lower costs and increased efficiency has intensified.

In light of the acrimony, telehealth has surfaced as a potential remedy.

The Federal Health Resource and Services Administration has classified telehealth as “the use of electronic information and telecommunications technologies to support and promote long-distance clinical health care, patient and professional health-related education, public health, and health administration.”

Whether it’s over the phone, via email, or Facetime, technology now allows doctors and nurses to treat patients in a quick and convenient manner. Obviously, many patients require a healthcare professional physically present, but a large number do not. A recent medical study conducted by the University of Pittsburgh and the Harvard Medical School revealed that patients only spend 17 percent of their healthcare visits with a doctor. Furthermore, with the average out-of-pocket cost at $32 (on average, insurance pays $250 per visit), Americans spend roughly 2.4 billion hours a year on doctor’s visits, or roughly $52 billion in lost wages.

Visits to the doctor’s office monopolize our time and our money, which is why providers and customers have begun to view telemedicine as a viable option. Video-based telemedicine requests increased from seven percent in 2015 to 22 percent in 2016, according to Rock Health Survey. The survey found that 83 percent of patients found their service satisfactory, with a majority of users between the ages of 25-34. Those who were 55 or older were least likely to use telemedicine, but more than half had contacted a doctor via phone. Telemedicine can also serve as a practical option compared to costly emergency room visits. According to a 2013 study published by the Society for Academic Emergency Medicine, of 1,500 cases of acute care surveyed, more than a third were appropriate for telemedicine. Moreover, a 2016 HealthMine survey of 500 customers using telehealth revealed that 93 percent experienced a cost reduction compared to a traditional healthcare visit.

In light of these findings, The American Telemedicine Association predicts the worldwide telehealth market will expand at a compound annual growth rate of 14.3 percent, reaching $36.2 billion in 2020. In 2014, telehealth accounted for $14.3 billion. Increased demand for convenience, innovation and personalized healthcare are among the driving factors.

Healthcare professionals can use telemedicine to diagnose a number of ailments via phone or video chat. In a process known as store and forward, doctors and nurses can transmit X-rays, MRI images, and other digital content to help remote specialists make a proper diagnosis. For example, a cardiologist can receive an electrocardiogram on his phone and diagnose a heart attack without ever meeting the patient. In one case, a doctor in California used a high-resolution ultrasound on a flight to produce an image of a passenger experiencing chest problems. The physician determined the issue was not life-threatening and emergency landing was unnecessary.

More customers are demanding telehealth as an option on their health plan and insurance companies have obliged. According to a report from the National Business Group on Health, nine in ten employers said they plan to make telehealth available where it’s allowed. However, as telehealth increases in popularity, ensuring internet access in austere locations (where telehealth is most pertinent), as well as a viable pool of healthcare workers remains a hurdle.

With more demand, private insurers have started to tap into the telehealth market. Anthem, one of the country’s largest healthcare providers, has created a 24-hour a day, seven days a week portal for telehealth services. American Well, a telehealth company that supports Anthem’s online efforts, has created an online market where patients can select from a menu of doctors. Anthem is now offering telehealth plans to customers in Pennsylvania, Ohio and West Virginia. A number of other healthcare providers have also partnered with American Well, including the Cleveland Clinic and CVS Health, to expand their service options.

Reimbursement policies from insurance providers may also indicate the future of telemedicine. Mercer, a global healthcare consultation agency, reported 59 percent of large employers offered telemedicine policies in 2016, compared to only 30 percent in 2015. Mercer also stated that telemedicine could significantly cut costs as deductibles increase and healthcare providers try to improve transparency on prices.

Financial arrangements regarding patient needs and healthcare providers requires further streamlining. Ultimately, customer behavior may have the largest effect on how the telemedicine market evolves, but lawmakers and regulators could facilitate a stronger or weaker telehealth sector.

Up next: Telehealth Legislative Overview

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