The phenomena of patient engagement, patient monitoring and wearable technology, have all contributed to the growth of the telemedicine market. According to Massachusetts-based BCC Research, the telemedicine market should grow from $6.5B to over $24B by 2020. Mordor Intelligence, a globally recognized market research firm, estimates the telemedicine market at $34B by 2020.
There are a myriad of reasons why the market is growing so fast:
- Efficiency. Telemedicine enables increased demand without unacceptable delays or service rationing. This becomes increasingly important as the shortage of healthcare practitioners declines (estimates forecast a shortage of 91 thousand doctors by 2020).
- Cost savings. Willis Towers Watson estimates that telehealth could save as much as $6B annually in US healthcare costs. The main areas of cost reduction include those of: readmission, patient transportation, staff utilization—via reduced unused capacity among providers—and patient satisfaction. In fact, CVS achieved patient satisfaction scores of 90% after implementing telehealth in its Minute Clinics. Furthermore, telemedicine facilitates increased physician follow-up with chronic-condition patients without incurring significant costs; and at-home triage services through nurse televisits reduces unnecessary emergency room visits.
- Government support. At least thirty states have now mandated commercial payor reimbursement for telehealth care; additionally, nearly every state has a policy for extending telehealth to its Medicaid enrollees.
- Popularity. Consumers are increasingly demanding immediacy, choice and control over how they procure health services: many of the 110M annual visits for minor illnesses such as rashes, coughs, and earaches can easily be attended by virtual rather than in-person visits. Telemed services are also gaining popularity with employers as a cost-effective and efficient healthcare option for their workforces. Telemed is also gaining popularity among the elderly who are becoming increasingly comfortable using technology; and finally telemedicine improves health literacy and more efficiently overcomes language barriers.
- Technology advances. As technology becomes faster, more secure, and more reliable healthcare communities are better able to leverage the advantages of improved teleradiology, telepathology, telepediatrics, telepsychology and teledermatology.
Early adopters that are leveraging technology to deliver healthcare are expanding. For example:
- Of the 110 millionpeople treated through Kaiser Permanente last year, 54% connected through online portals, virtual visits or via their other applications. (The data offered does not separate interactions through email or online appointment scheduling; however, so it is difficult to ascertain how many were true healthcare encounters.) Kaiser Permanente’s Chief Executive, Bernard Tyson, describes the shift to telehealth: “Because we were ‘all knowing’, we built the entire healthcare industry where everyone had to come to us, but now we are reversing the theory—and are spending billions in technology platforms”.
- The Mayo Clinic forecasts 20 million patients by 2020—many of them outside the United States and most remotely.
- In 2015, the Cleveland Clinics announced an alliance with Cox Communications to improve in-home patient monitoring and treatment services. In addition, their Chief Innovation Officer, Thomas Graham, announced recently that they are developing “walk in kiosks” enabling patients to videoconference with physicians.
- The University of California at San Diego Health System has initiated a telemedicine pilot program enabling on-call physicians outside of the hospital to link remotely with patients.
- American Well, a large telemedecine provider,experienced 1100 percent year-over-year growth in the past 2 years, and patient visits to Teladoc jumped from 127,000 in 2013 to 300,000 in 2014.
- Finally, investment in telehealth is increasing. The Mercom Capital Group reports that in the second quarter of 2015 alone, telehealth companies enjoyed record fundraising and secured over $155M in 18 deals.
Despite increasing interest in telemedicine among investors, health care providers and consumers alike, barriers to expansion persist.
- First, although Congress passed the Medicare Access and CHIP Reauthorization Act in 2015 which included provisions to incentivize telehealth, it is not consistently offered to Medicare Advantage members nationally: the state and federal support, while gaining, is currently lacking.
- Rapid adoption within government as well as other organizations may because of concerns with service instability resulting from currently-deficient telehealth business models; HealthSpot, for example, was shuttered even after having raised more than $40M and signing customers like Rite Aid.
- Also, while data systems and telemedicine technology itself are improving, they do not yet connect with home devices or medical peripherals (otoscopes, digital stethoscopes, etc.), thus seamless access to patients’ information regardless of the collection location or device is inhibited.
- Data integration presents further challenges. Electronic medical records systems (EMRs) and telehealth data remain segregated and therefore complicate the use of telehealth data in the clinical workflow. Advancing the integration of telehealth with traditional health care delivery requires a shift from enterprise-host data systems to those cloud based—a time consuming and expensive endeavor. However, transition to the cloud would also improve the services’ scalability thus making it more affordable to smaller healthcare providers.
- Despite increasing comfort with technology among the elderly, gaps still remain among this population (the heaviest consumers of healthcare). Additionally, the digital divide limits access to telehealth among other populations where it may be most useful.
- Although consumers are increasingly requesting telehealth options, doctors concerned with the increased risk of malpractice suits caused by virtual patient visits, often resist broader adoption.
- Because of these challenges, only those who can afford the risks inherent to new technology implementation are able to foray into telehealth, and telemedicine has not expanded far past early adopters.
Much remains to advance the initiative and it will not receive wide-scale adoption until telemedicine:
- provides convenience and increases access while also reducing costs;
- successfully addresses acute as well as chronic conditions without compromising outcomes;
- systems are fully integrated enabling data sharing that enhances clinical decisions; and
- stakeholders—consumers and practitioners alike—are comfortable with the shift from inpatient and in-person care to that virtual.
In sum, telehealth can be integrated into all aspects of population health management from clinical care, to patient monitoring, and health education. Further, it solves many of the biggest challenges in healthcare today, including those of improved clinical outcomes, expanded access, increased efficiencies and reducing cost.
The largest players within the healthcare markets (such as McKesson, Philips, GE Healthcare and Cerner) recognize the promise of telemedicine and are increasing their investment in the initiative. Telehealth innovation is liable to disrupt those that do not follow their lead.
As this market scales, leadership will be needed to add to the depth of talent in this space. If you or your PE firm is interested in learning more about our Search and Consulting capabilities in HCIT and Healthcare Services- please reach out.
Jim Utterback is Managing Director, Healthcare Services & Technology for Horton International. Including his work within executive search, he has acquired and merged companies, built leadership teams and cultures, and developed an expansive global network within the healthcare and life sciences industries.
Jim has held corporate officer positions with publicly traded Covance (formerly Corning Life Sciences) and Rhone-Poulenc Rorer Pharmaceuticals (now Sanofi). He began his career in the General Management program at General Electric’s Medical Systems Division.
Jim has a Master of Science in industrial psychology from Virginia Tech and has worked and lived in the US, EU, Africa and India. In addition to his advisory and executive search services, Jim volunteers at a number of charitable healthcare organizations and industry associations (CHIME and DIA).
Horton International – North America, a principal partner of Horton Group International Limited (HGIL), a global boutique retained executive search and advisory firm, was founded in 1978. In the 1980s, the firm began its international expansion into Europe, the Asia-Pacific region and the Americas. HGIL, now a UK-based holding company, continues to serve as the governing body for the firm, establishing global policies, procedures and guidelines for all international operations.
For more information about Horton International – North America, visit www.horton-usa.com.