Impact of the COVID-19 pandemic on the telehealth industry

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Consultation by a doctor through telehealth

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Telehealth is the practice of providing healthcare through online access methods such as through a smartphone, tablet, or computer. Telehealth is used to meet with a doctor live or patients can send messages through email or secure messaging.^[1] A doctor can also use remote monitoring to check on a patient at home.^[1] When the telehealth industry was first founded, it was primarily used to provide services to underserved and rural areas.^[2] Telehealth allowed people in these regions to be connected to specialists that were far away from them.^[2] Until recently, telehealth was predominately used for specialties such as cardiology, neurology, mental health, and dermatology.^[2] Telehealth has expanded to include many new applications such as physical therapy through digital monitoring tools and surgeries being done remotely by using robots.^[3] The telehealth industry started to become more developed in the early 2000s. The first major telehealth company, Teladoc, was founded in 2002 and since then the industry has grown to include companies such as Amwell, MeMD, and iCliniq.^[4]

COVID-19's impact on telehealth[]

Early stages of the pandemic[]

The telehealth industry before the pandemic was growing at a slow rate. Most patients preferred seeing a doctor in person and were concerned about privacy issues over a video call. When COVID-19 began to spread in early 2020, many hospitals, doctor's offices, and other healthcare professionals were forced to stop seeing all patients in person due to concerns about the virus spreading. Doctors needed a way to connect with patients that had problems that were not life-threatening without having them come to their facilities. Telehealth solved this problem and has seen an explosion in usage since the start of the pandemic. Telehealth usage increased by 5,000% from February to March 2020.^[5]

Growth in the industry[]

Telehealth companies since the start of the pandemic have seen growth in their business in terms of both the number of patients and their overall financial health.^[6] Between February and March 2020, the number of telehealth claims at the Blue Cross Blue Shield of Massachusetts grew by 3,500%.^[6] The NYU Langone Health's telehealth platform added over 1,300 new healthcare providers during the pandemic, demonstrating the rapid explosion in the growth of the telehealth industry.^[6] The COVID-19 pandemic has allowed telehealth companies to reach millions of patients more easily than it would have if not for the environment the pandemic created in healthcare. The sheer number of new customers has allowed companies such as Teladoc to reap the rewards of this new high growth potential market.^[6] In 2020, Teladoc saw its stock valuation increase year to date by 168%, and telehealth's second-largest company, Amwell went public on September 17th, 2020.^[6] The top 60 virtual health companies have seen their total revenue grow from $3 billion in 2019–2020 to $5.5 billion in 2020–2021 which is an 83% increase.^[7] The telehealth industry overall has seen keen interest from venture capitalists and other investors that are trying to get in on the expansion the telehealth industry is experiencing due to the pandemic.^[6] In the first quarter of 2020, venture capital raised $788 million for telehealth companies.^[6] That amount was over three times more than that was raised in the first quarter of 2019.^[6] Telehealth startups also saw a year-over-year increase of 1,818% of funding in 2020.^[6]

Logo of the second largest telehealth firm, Amwell

Growth in usage rate[]

In 2020, over 50% of all outpatient care was being delivered completely virtually at its peak during the pandemic.^[8] The number of patients using telehealth has grown from 11% in 2019 to around 46% in 2021.^[9] Analysts believe that this growth will be somewhat sustained due to the pandemic allowing telehealth to overcome its biggest obstacle which was its lack of awareness among patients and providers.^[6] Millions of patients and providers have now used telehealth to fulfill part of their healthcare needs.^[10] Not only has telehealth become known among the public, but providers have also had extremely positive interactions with these services.^[11] 57% of providers view telehealth more favorably than before the pandemic and 64% of providers are more comfortable with using telehealth platforms.^[11] Patients’ exposure and providers’ positive views on telehealth services appear to paint a bright future for the industry.

Potential barriers to growth[]

Lower usage rate[]

The weekly average of daily telehealth visits has been declining since April 2020.^[6] In April, the visits were peaking at around two thousand per week and they have dropped to around five hundred a week in June 2020.^[6] Experts believe that the high peaks of telehealth usage during the pandemic will come down even more and that it is unrealistic to believe that this peak in usage will become the new norm.^[6]

Cross-state practice[]

Most states require that the healthcare professional, that is using telehealth, have a form of license to practice in that state regardless of whether they are located in the state.^[12] Cross-state practice issues can inhibit the growth of the telehealth market due to it affecting the staff composition at these companies.^[12] These companies will have to make sure that they have professionals that are licensed in the states that the patients are from in order to service the patients.^[12] This could inhibit the growth of the industry since these companies have to allocate a certain amount of workers to be in each region instead of just having certain types of healthcare professionals.

Coverage and reimbursement issues[]

Medicare, Medicaid, and commercial payers all have a unique set of rules and criteria for coverage and reimbursements for telehealth services.^[12] Lawyers believe that these rules and criteria can be inconsistent at times and can be not fully comprehensive.^[12] These unique rules and inconsistencies could potentially add another layer of complexity for providers to have to go through in order to get paid for their services.^[12]

IT and security issues[]

Experts believe that telehealth services hinge upon the success of their IT services.^[9] These services include software security, software compliance, and data interoperability.^[9] Constructing and maintaining these IT services can be expensive and can be hard to fund due to competition.^[9] With the growing number of potential patients, these startup companies could require funding to expand their IT services.^[9] Without this expansion, these companies could have lower service quality and put at risk the data and privacy of their consumers.^[9]

Provider-patient relationships[]

States require that patients and healthcare professionals to establish a relationship.^[12] This relationship was normally established when the patient met the provider in-person.^[12] This requirement has evolved in some states to focus more on the existence of several factors such as the patient's medical history or the provider's affirmative acts.^[12]

Remote prescribing[]

Some states require that an in-person examination happen before allowing for the remote prescribing of drugs.^[12] Other states allow remote prescribing without an in-person visit, however there needs to be an interaction via a face-to-face video call.^[12] All states do not allow for remote prescribing of drugs if the patient only submitted an online questionnaire.^[12]

Future opportunities/future size of industry[]

Lower cost to patients and healthcare facilities[]

Telehealth can result in significantly lower costs and time commitments than traditional in-person meetings.^[5] At the University of Michigan, it was found that on average patients travel a total of 110 miles to attend a clinic visit.^[5] Many patients are forced to make a day out of this large time commitment and are forced to take time off work and hire babysitters.^[5] By using telehealth, patients can meet with their doctors from anywhere and could not have to take time off of work.^[5] Telehealth can provide cost savings to hospitals and healthcare offices.^[5] Since some portion of patients would be meeting online with their doctors, the need for large waiting rooms would be reduced.^[5] This will allow healthcare facilities to be smaller which will result in cost savings due to less overhead being spent on rooms and facilities for patients that do not need to be seen in person.^[5]

High penetration in telepsychiatry[]

In July 2021, telehealth made up 50% of psychiatry.^[11] In June 2021, 40% of appointments to a psychologist or psychiatrist were through telehealth, compared to only 37% in-person and 23% over the phone.^[7] Experts believe that these high percentages could not only be sustained but could potentially grow in a post-pandemic world.^[7] Experts believe that telepsychiatry has a high potential for growth due to its many benefits.^[11] One benefit is the reduction in psychological barriers.^[13] Some clients experience anxiety about leaving their homes to get therapy.^[13] Telehealth allows these clients to stay in their homes, where they are more comfortable, which increases their chance of getting the therapy they need.^[13] Researchers at the McLean OCD Institute also found that overall at their hospital they have seen an increase in the number of telepsychiatry appointments being retained and a reduction in cancelations.^[14] The researchers believe that this is due to the elimination of travel and schedule barriers involved with in-person sessions.^[14] Telehealth can help solve one of the major issues in the psychiatry industry which is the lack of psychiatrists in most areas.^[7] In 56% of counties in the United States, there are no psychiatrists, and in 64% of counties there is a shortage of mental health providers.^[7] In 70% of counties there are few child psychiatrists.^[7] Experts believe that telepsychiatry could help solve this shortage by connecting patients with psychiatrists that are in other counties through the use of video conferencing.^[7] Experts believe that because of the reduction in psychological barriers, its convenience, and the shortage of psychiatrists in counties, there is a potential for telepsychiatry to grow even more post-pandemic.^[14] The global telepsychiatry industry was valued at $7.74 billion in 2020, and analysts believe that the industry will have a CAGR, compound annual growth rate, of 24.7% from 2020 to 2027.^[15] Analysts predict that revenue will grow to $36.30 billion in 2027.^[15] The pandemic's impact on everyone's lives has created a higher demand for telepsychiatry.^[15] In March 2020, around 47% of Americans reported negative mental health effects from staying at home.^[15] Out of those Americans, 21% reported major negative mental health due to the pandemic.^[15] Due to the significant impact of the pandemic on the mental health of many Americans, it is believed that there will be a larger demand for mental health services.^[15]

Substance abuse treatment[]

In July 2021, telehealth made up 30% of substance abuse treatment.^[11] Experts believe that there could be substantial growth potential in substance abuse treatment for the telehealth industry.^[14] Telehealth is convenient for patients and makes it easy for them to get the help that they need.^[14] Telehealth has also been linked to higher treatment retention.^[16] Studies have found that when telehealth video conferencing was incorporated into outpatient treatment programs, 88% of the patients kept their appointments as compared to only 77% that had solely in-person appointments.^[16] Due to these benefits there is a potential for telehealth to increase their market share of the substance abuse segment of healthcare.

Telerheumatology[]

In February 2021, 17% of outpatient and office visit claims relating to rheumatology were done through telehealth.^[7] Clinicians believe that telehealth could play a role in the treatment of rheumatoid arthritis and other symptoms associated with arthritis.^[17] Even though clinicians believe that telehealth does not improve diagnosing rheumatologic conditions, they believe that telehealth can help with managing the pain of rheumatoid arthritis.^[17] Clinicians consider gout, rheumatoid arthritis, fibromyalgia, and osteoarthritis as the most appropriate to manage using telehealth.^[17] Although clinicians believe that the use of telerheumatology is dependent on the phase of care, they believe that it is vital to increasing the access of care for patients with arthritis.^[17]

Present/future usage rate[]

As of July 2021, telehealth usage has stabilized at a level 38 times higher than before the pandemic.^[7] Telehealth usage rate across all specialties has stabilized to around 13% to 17%.^[7] While the usage rate has gone down since its peak during the pandemic, experts believe that telehealth will still play a major role in healthcare.^[8] Experts predict that at least 20-30% of all healthcare will be provided through telehealth in 2021 and beyond.^[8]

Future market size[]

Analysts are predicting a high amount of growth in the telehealth industry in the United States and globally.^[18] In the United States, there are predictions that around $250 billion of Medicare, Medicaid, and Commercial OP could become virtualized, which would represent 20% of the total market share.^[7] Research analysts believe that the global market size of the telehealth industry will grow from $62.45 billion in 2020 to over $475.50 billion by 2026.^[18]

References[]