Connected Health in Action
With the continued spread of COVID-19, many are asking themselves how we can be better prepared for such a catastrophic event in the future. There are myriad technologies that are currently underutilized which could see accelerated adoption in a world rapidly shaped by this global pandemic. On the front lines of an emerging outbreak, telemedicine is spurring a new way to care for patients.
As COVID-19 upends global supply chains, consumer confidence and the stock market, we believe there are connected health companies that will ultimately become stronger because of it. Telemedicine has been in existence for several years, but is coming to the forefront as a feasible solution as social distancing is enforced and as healthcare systems become stretched. This public crisis could bring a slew of new patients to adopt the valuable experience of a virtual examination. We think patient behavior is set to change and the telemedicine industry will penetrate deeper into the market for routine doctor office visits.
While telemedicine has been a critical alternative thus far, only a small percentage of the addressable population is utilizing it. Of the patients who have tried it, 84% said they were able to completely resolve their medical concerns in the visit. In our ever-connected world, consumers are discovering they don't have to wait in a doctor's office to receive care.
Despite the convenience and efficacy, we have observed that a low utilization trend. One hurdle is the confusing nature of healthcare insurance and costs so patients often feel more comfortable going to a doctor's office despite the inconvenience. A JD Power survey estimates that utilization stands anywhere from 6-11% and, in some cases, is as low as 2% amongst large employers. More problematic is that nearly 75% of Americans lack awareness or access to telemedicine. 40% say their healthcare system or insurance provider does not offer telehealth services, while 35% said they are unaware of any service offered. Almost 50% believe that the quality of care received would be lower than a doctor's office visit, which contradicts the above statistic of 84% being happy with their telemedicine visit.1 We believe all of this feedback indicates that telemedicine utilization is low, consumers aren't aware of the offering, and even if they are aware, they don't believe the quality of care is high.
Enter COVID-19—as doctor's offices and hospitals become filled and consumers become wary of human contact, we believe that telemedicine adoption will rise and could potentially permanently persist once consumers try the service and are satisfied with the care provided. Recently, we have seen healthcare insurance companies actively market the service to their members aggressively since the beginning of the viral outbreak. One provider has announced that for the next 90 days, they will offer zero co-pay telemedicine visits for any reason. Another insurance company is waiving out-of-pocket costs associated with COVID-19 testing and increasing the availability of telemedicine options to reduce additional exposure, and another major provider will now reimburse telehealth visits at the same level as in person visits. This is the catalyst consumers need to start using telemedicine - not only will it be free to use, but they do not have to put themselves or loved ones at risk by going to a doctor's office or hospital, where there are potentially other sick patients that could have the virus. Once this behavior of seeing a doctor electronically becomes normalized, consumer preference could permanently shift. They will start to appreciate the positive aspects of telemedicine: they can see a doctor from the comfort of their own home instead of taking time off work to drive to a doctor's office, they can use apps to wirelessly manage their prescriptions and refills. Importantly, they can see a doctor on demand instead of waiting weeks for an appointment.
Our long-term thesis has been that the rise of consumerism will increase demand for less expensive medical care options like telemedicine. The potentially unexploited opportunity is made up of the entire insured US population of approximately 320 million patients, a fraction of which (approximately 120 million) have access, though penetration in these instances is extremely low. We even see expansion internationally where there is a 1.1 billion patient potential. We also see expansion beyond primary and urgent care into specialty services and other areas within the continuum of care.
While the spread of another global virus is devastating, we see it validating telemedicine, an emerging technology that can transform future healthcare delivery with its continued modernization.
1Telehealth: Best Consumer Healthcare Experience You've Never Tried, Says J.D. Power Study. J.D. Power 2019 U.S. Telehealth Satisfaction Study. Accessed at: https://www.jdpower.com/business/press-releases/2019-us-telehealth-satisfaction-study Press Release.
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