Telemedicine Market Intelligence Landscape

James H. Moeller - Moeller Ventures LLC -  https://www.moellerventures.com/
Date: 2020-09-08
 

The Telemedicine Transformation

Telemedicine has been one of the most radically transformed markets due to the coronavirus COVID-19 pandemic. The sudden need for remote consultations with healthcare providers has thrust the industry forward by years, if not a decade or more, in the short span of three to six months. And the industry is capitalizing. Teladoc Health (NYSE: TDOC), the leading industry competitor, reported exceptional second quarter earnings results on July 29th and significantly increased forward guidance for the third quarter and full year, which includes significant organic growth and the inclusion of InTouch Health, acquired in July. In addition, Teladoc expects growth for 2021 in the range of 30% to 40% year-over-year. (1)(2)(3) Other competitors are responding as well with IPOs and financings announced by a number of other companies. Both Amwell and MDLive have announced plans for IPOs, and SOC Telemed plans to go public via a special purpose acquisition company (SPAC) merger with Healthcare Merger Corp. (4)(5)(6)(7)

But where does the industry go from here? With society working to settle into the new COVID-19 environment, the aggressive growth of telemedicine looks to be waning some. Recent reports have indicated that telemedicine visits are down compared to pandemic peaks, but still up dramatically from the pre-pandemic levels. A report from the Epic Health Research Network (a division of Epic Systems Corporation) indicates that telemedicine visits peaked in mid-April at 69% of visits but have since dipped to 21% of visits as of July. Prior to the pandemic telemedicine visits accounted for only 0.01% of visits. (8)(9)

Is Telemedicine Here to Stay?

There are also are questions about how long some of the temporary provisions, enabling telemedicine during the pandemic, will last or if those will be replaced with more permanent legislation and regulations. As a result of the passage of the Coronavirus Supplemental Appropriations Act on March 6th and the declaration of a National Health Emergency on March 13th, the U.S. Health and Human Services (HHS) department issued a Notification of Enforcement Discretion effectively allowing temporary rule waivers that immediately enabled more extensive telemedicine services for Medicare patients. (10)(11)(12) This dramatically improved the telemedicine healthcare landscape particularly in servicing Medicare patients, and further resulted in a spill-over effect of telemedicine usage in corporate and independent healthcare plans. But questions remain as to the full benefits to patients and if those telemedicine visits should cost the same as in-person visits, which is a significant adoption issue for many doctors.

Nonetheless, there are numerous efforts to make telemedicine permanent. Many industry trade groups have lobbied for it. (13) On July 16th the House Telehealth Caucus introduced bipartisan legislation to preserve it, entitled the "Protecting Access to Post-COVID-19 Telehealth Act." Then on August 3rd the Trump administration issued an executive order and rule proposal to make the temporary telemedicine rules permanent. (14)(15) From a governmental perspective the potential changes will ultimately fall across the domains of both legislation and regulation. (16)(17) In the private sector, some healthcare insurers are also beginning to make telemedicine reimbursement permanent. Blue Cross Blue Shield of Tennessee looks to have been one of the first to institute these changes allowing for reimbursement of in-network telehealth visits. (18) While telemedicine will never fully replace in-person care, it certainly looks like the momentum in unstoppable. To the extent that telemedicine can improve access and reduce costs, it could then also potentially begin to address some very fundamental issues in expanding healthcare to a larger percentage of the population.

Telemedicine's Future is Remote Monitoring and Medical IoT

One of the most important future trends for the telemedicine industry is its adoption and integration of remote monitoring and medical IoT, as well as its synergistic (yet privacy focused) usage of the resulting data collected from those capabilities. These are critical in advancing the industry past the basic functions of video conferencing and toward the capabilities of delivering truly proactive healthcare. We're already seeing substantial evidence of this trend and, interestingly, it is setting up a potential collision with "Big Tech", namely Apple, Google, and Amazon, as these companies figure out how to capture parts of the healthcare market.

A new report by KLAS Research (a healthcare industry research firm) published on August 27th interviewed 19 executives from 18 healthcare organizations regarding their challenges and solutions during the outbreak of the pandemic. (19)(20) Not surprisingly, telemedicine was the top challenge with 32% of the executives. Overall, though, 84% of the executives indicated that the telemedicine issues were already solved and the remining 16% indicated that the solutions were in progress. However, remote patient monitoring ranked as the second most significant challenge with 26% of the respondents. But furthermore, only 22% of the executives indicated the remote monitoring challenges were solved, with 33% saying it was in progress, and 45% indicating it was completely unsolved. This remote monitoring need is not necessarily new information for many industry competitors. On August 5th Teladoc Health announced an agreement to acquire Livongo, a company focused on remote monitoring and virtual health services for diabetes and related health issues. (21) Additionally, last October UnitedHealth acquired remote monitoring company Vivify Health. (22) There are many smaller, startup companies in this remote monitoring sector as well, so there is likely to be more acquisitions and consolidation.

The collision with Big Tech companies like Apple, Google, and Amazon results from the potential to combine more consumer-oriented health and fitness wearables with home connectivity personal assistant products and the remote monitoring services needed in telemedicine. That mashup is not only possible, but market evidence would indicate that it is already in progress. Combine all that with the data processing, machine learning, and AI capabilities of Big Tech and you've got an incredibility attractive market opportunity for these companies to disrupt telemedicine as well as healthcare in general.

From a consumer wearables perspective, Apple is the market leader with its smart watch, which is already showing medical applications beyond the basic fitness capabilities. (23) In addition, Google is in the process of acquiring Fitbit, and Amazon just recently introduced its Halo health and fitness wearable. (24) All of these companies also have home personal assistant devices with the connectivity capabilities that can potentially connect to not only their own wearables, but also a variety of third-party wearables. (25) Amazon is the dominant market leader in home personal assistants with its Echo Alexa devices, followed by Google's Nest, and Apple's Homepod a distant third. (26) Recently Google made a $450 million investment in ADT, Inc. with the aim of growing its home personal assistant deployments specifically in the home security market. (27) From a telemedicine perspective, Amazon introduced its pilot telemedicine program, Amazon Care, last fall for its Seattle employees. This service includes virtual primary care as well as home consultations and prescription drug services via Amazon's Pillpak division, a virtual pharmacy company Amazon acquired in 2018. (28)(29) More recently on August 24th Google announced it was investing $100 million in telemedicine provider Amwell. (30) The synergies mentioned in the deal specifically focused on Google's cloud computing services, but the intersection extends into its data processing and machine learning expertise and can potentially tap into its home personal assistant products for remote monitoring capabilities.

The transformation of telemedicine into remote monitoring and proactive, preventive healthcare will likely continue to involve various strategic investments, business collaborations, and full acquisitions as the ultimate solution combination comes together. For Big Tech, under the current environment, these activities are likely to attract even more scrutiny regarding information privacy and antitrust issues. Nonetheless, it is likely that we will see more deals that crossover between Big Tech and telemedicine as those industries collide. For the current telemedicine competitors, it is clear that the current environment creates a unique opportunity to position virtual healthcare businesses to be a meaningful part of the overall healthcare market. This is likely to leverage deals that consolidate core competencies and expand into new capabilities as the market demands.

References

  1. Teladoc Health Quarterly Results: https://ir.teladoc.com/financial-info/quarterly-results/default.aspx
  2. Teladoc's virtual visits grow 200% in Q2, revenue reaches $241M as COVID-19 resurges - Jul 30, 2020: https://www.fiercehealthcare.com/tech/teladoc-s-virtual-visits-grow-200-q2-revenue-reaches-241m-as-covid-19-resurges
  3. Teladoc (NYSE: TDOC) CEO Jason Gorevic: “Pandemic Accelerated Widespread Adoption of Virtual Care” - August 6, 2020: https://www.wallstreetreporter.com/2020/08/teladoc-health-inc-nyse-tdoc-q2-2020-earnings-call-highlights/
  4. Amwell files to go public with $100M boost from Google - Aug 24, 2020: https://www.fiercehealthcare.com/tech/amwell-files-to-go-public-boosted-by-100m-investment-from-google
  5. Amwell Files Registration Statement for Proposed Initial Public Offering - August 24, 2020: https://business.amwell.com/press-release/amwell-files-registration-statement-for-proposed-initial-public-offering/
  6. Telehealth Company MDLive Plans To Go Public Early Next Year, CEO Says - August 14, 2020: https://www.benzinga.com/news/20/08/17082073/telehealth-company-mdlive-plans-to-go-public-early-next-year-ceo-says
  7. Acute care telemedicine company SOC Telemed set to go public as part of SPAC deal - Jul 30, 2020: https://www.fiercehealthcare.com/tech/boosted-by-telehealth-boom-soc-telemed-goes-public-through-spac-deal
  8. Telehealth: Fad or the Future - AUGUST 18, 2020AUGUST 19, 2020: https://www.ehrn.org/telehealth-fad-or-the-future/
  9. Telehealth grew wildly popular amid Covid-19. Now visits are plunging, forcing providers to recalibrateelemedicine Market Worth $155.1 Billion By 2027 | CAGR: 15.1% - SEPTEMBER 1, 2020: https://www.statnews.com/2020/09/01/telehealth-visits-decline-covid19-hospitals/
  10. R.6074 - Coronavirus Preparedness and Response Supplemental Appropriations Act, 2020 – March 6, 2020 > https://www.congress.gov/bill/116th-congress/house-bill/6074
  11. Proclamation on Declaring a National Emergency Concerning the Novel Coronavirus Disease (COVID-19) Outbreak - March 13, 2020 > https://www.whitehouse.gov/presidential-actions/proclamation-declaring-national-emergency-concerning-novel-coronavirus-disease-covid-19-outbreak/
  12. Notification of Enforcement Discretion for Telehealth Remote Communications During the COVID-19 Nationwide Public Health Emergency – March 17, 2020 > https://www.hhs.gov/hipaa/for-professionals/special-topics/emergency-preparedness/notification-enforcement-discretion-telehealth/index.html
  13. Hundreds of industry groups call on Congress to advance permanent telehealth reform - June 30, 2020: https://www.healthcareitnews.com/news/hundreds-industry-groups-call-congress-advance-permanent-telehealth-reform
  14. American Telemedicine Association Applauds Bipartisan House Telehealth Caucus Champions for Introducing the Protecting Access to Post-COVID-19 Telehealth Act to Permanently Expand Use of Telehealth - JULY 16, 2020: https://www.americantelemed.org/press-releases/ata-applauds-bipartisan-house-telehealth-caucus-champions-for-introducing-the-protecting-access-to-post-covid-19-telehealth-act-to-permanently-expand-use-of-telehealth/
  15. Trump Administration Proposes to Expand Telehealth Benefits Permanently for Medicare Beneficiaries Beyond the COVID-19 Public Health Emergency and Advances Access to Care in Rural Areas - Aug 03, 2020: https://www.cms.gov/newsroom/press-releases/trump-administration-proposes-expand-telehealth-benefits-permanently-medicare-beneficiaries-beyond
  16. Making Telehealth Flexibilities Permanent: Legislation or Regulation? – June 2020: https://www.aha.org/system/files/media/file/2020/06/fact-sheet-making-telehealth-flexibilities-permanent-legislation-or-regulation.pdf
  17. How to make telemedicine permanent in the wake of the COVID-19 pandemic - June 1, 2020: https://www.aei.org/health-care/how-to-make-telemedicine-permanent-in-the-wake-of-the-covid-19-pandemic/
  18. BlueCross Making In-Network Telehealth Services Permanent - May 14, 2020: https://bcbstnews.com/pressreleases/bluecross-making-in-network-telehealth-services-permanent/
  19. Healthcare Executives’ COVID-19 Experience - Insights on Technology Challenges & Solutions – August 27, 2020: https://klasresearch.com/archcollaborative/report/healthcare-executives-covid-19-experience/339
  20. Healthcare execs say telehealth is their No. 1 pandemic tech problem - September 01, 2020: https://www.healthcareitnews.com/news/healthcare-execs-say-telehealth-their-no-1-pandemic-tech-problem
  21. Teladoc Health and Livongo Merge to Create New Standard in Global Healthcare Delivery, Access and Experience - AUGUST 5, 2020: https://teladochealth.com/newsroom/press/release/livongo-merger/
  22. UnitedHealth, an insurance giant, just scooped up patient monitoring start-up Vivify Health - OCT 30 2019: https://www.cnbc.com/2019/10/30/unitedhealthcare-acquires-vivify-health-patient-monitoring-start-up.html
  23. Top Medical Uses of the New Apple Watch - July 2, 2019: https://www.docwirenews.com/docwire-pick/top-medical-uses-of-the-new-apple-watch/
  24. Amazon unveils Halo to battle Apple Watch and Fitbit — tracks activity, body fat, emotions - AUG 27 2020: https://www.cnbc.com/2020/08/27/amazon-hal-wearable-tracks-activity-body-fat-emotions.html
  25. Amazon adds wearables to voice-controlled Alexa collection – October 1, 2019: https://www.dezeen.com/2019/10/01/amazon-wearables-echo-products-alexa.
  26. Amazon Smart Speaker Market Share Falls to 53% in 2019 with Google The Biggest Beneficiary Rising to 31% - April 28, 2020: https://voicebot.ai/2020/04/28/amazon-smart-speaker-market-share-falls-to-53-in-2019-with-google-the-biggest-beneficiary-rising-to-31-sonos-also-moves-up/
  27. Google to buy a 6.6% stake in ADT in home security push - AUG 3 2020: https://www.cnbc.com/2020/08/03/google-to-invest-450-million-to-acquire-a-6point6percent-stake-in-adt.html
  28. Amazon launches Amazon Care, a telemedicine-driven care offering for Seattle employees - September 24, 2019: https://www.mobihealthnews.com/news/north-america/amazon-launches-amazon-care-telemedicine-driven-care-offering-seattle-employees
  29. Amazon Care Pilot Program Offers Virtual Primary Care to Seattle Employees; Features Both Telehealth and In-home Care Services That Include Clinical Laboratory Testing – Jan 31, 2020: https://www.darkdaily.com/amazon-care-pilot-program-offers-virtual-primary-care-to-seattle-employees-features-both-telehealth-and-in-home-care-services-that-include-clinical-laboratory-testing/
  30. Google is investing $100 million in telehealth provider Amwell - AUG 24 2020: https://www.cnbc.com/2020/08/24/google-to-invest-100-million-in-amwell-at-ipo-in-cloud-deal.html

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