Covid-19 was good for very few things. One of them is telehealth.
Telehealth or telemedicine—two interchangeable terms for interacting with a healthcare professional remotely—increased 54% in the US in 2020 compared to 2019, according to the Centers for Disease Control and Prevention. In the early months of the pandemic the increases peaked at 150%, and three out of every four emergency visits were conducted via telehealth.
In the span of a few months, some of the largest providers of Johns Hopkins Medicine’s network of clinics in Baltimore went from delivering less than 70 telemedicine visits per month to up to 90,000 a month.
The global telehealth market recorded $61 billion in annual sales in 2019, according to Fortune Business Insight, a market analysis company. By 2027, it’s projected to reach $560 billion.
What happened, of course, was that the biggest health crisis to hit the world in a century also forced people to shun in-person interactions. With recommendations to avoid unnecessary contact, a hesitancy to frequent doctors’ offices, and even the outright interruption of outpatient services, telehealth became the go-to for anything that could be taken care of without the need for physical examination.
In the US alone, there are hundreds of telehealth companies of various sizes and scope, including two that are publicly traded and a third, MDLive, that was expected to go public but was instead acquired by Cigna. Some companies partner with traditional hospitals, while others provide their own doctors. Still others specialize in addressing niche medical needs, filling gaps where physical practices fall short.
Venture capitalists are betting hard there will continue to be a lot more growth. In the US, investments in telehealth in 2020 reached $4.3 billion, up from $1.8 billion in 2019.
Telehealth is booming globally, too, to the point that newly appointed Italian prime minister Mario Draghi, in his first parliamentary address, highlighted the importance of promoting telemedicine as a key ingredient of the future of healthcare.
It might be that patients initially approached it as a compromise, a suboptimal way of getting care. Telehealth, after all, had been included in many employee benefits packages for years, but had remained untouched by most patients, even as they grew more comfortable with the use of digital technology in medicine.
But as it turns out, when they used it, they actually liked it. Patients awarded telehealth 860 on a 1000-point scale in satisfaction, according to a survey published in October 2020 by market research company J D Power.
Much of the medical community, too, which might have resisted the development, realized that a lot can be done through virtual care in a way that is efficient and clinically sound.
Telemedicine “isn’t a replacement for all care, but it’s another tool in the toolbox,” says Brian Hasselfeld, a pediatrician and internist at Johns Hopkins Community Physicians, and the organization’s director of telemedicine. “There is a perception that telemedicine can be less personal, but in many ways, it’s just another way to meet the patient’s need.”
In a survey, primary care physicians in Johns Hopkins’ network were asked to compare their patient-provider relationships via telemedicine with in-person visits; 92% found it as good, better, or much better.
This isn’t news to telehealth companies. Though its adoption was much lower prior to the pandemic, the satisfaction with telemedicine has consistently been high, particularly among those who used the service in absence of an in-person alternative, such as uninsured patients or those living in remote areas.
But it’s too soon to say whether telehealth is the sea change it seems today, and if it will effectively compete—for quality and results—with in-person care in the future.
Telehealth’s continued growth in the US depends on a range of factors, from the loosening of federal regulations, to the expansion of broadband access in rural areas, to whether patients will continue to view it as enthusiastically once the pandemic will be over. It also will depend on the continued flow of venture capital investing in new technologies and products.
And one big question looms over everything: When Covid-19 is behind us, will users continue to reach for their phone to see a doctor, or will they fall back to their old habits and preferences?
Table of contents
A brief history | The best service for the worst situation | Rethinking healthcare | New technologies and specializations | The promise of verticalization | How far can telehealth go? | Will it stick?
A brief history
It’s easy to think of telehealth as a new phenomenon—what with smartwatches checking your pulse, or video calls to your doctor from the comfort of your apartment—but that’s not quite the case.
Telemedicine has been around for decades, with the first experiments occurring as early as the 1960s. The American Telemedicine Association (ATA) is as old as the internet, and it was in the early 1990s that the field started taking shape.
Initially, a lot of telehealth was asynchronous, allowing doctors to share information and tests with each other and collaborate on diagnoses, and the visits happened in clinical settings, not at home. The primary issue telehealth sought to address was access to care. In rural areas in the US, the average distance to the nearest hospital is 10.5 miles, twice that of urban areas, and in remote communities, or those facing particularly harsh conditions in winter, lack of time or transportation can lead to delayed or lack of care.
Adding telemedicine allowed individuals and communities otherwise cut out of medical services to be seen by a clinician. Prior to the ubiquity of smartphones and video calls, the system was typically set up to facilitate remote healthcare interactions in local clinical settings—a pharmacy, for instance, or the office of a local nurse practitioner, where the patient could have follow-up visits that didn’t require in-person examinations.
It wasn’t until the 2000s, and the establishment of the companies that are now leaders in the sector—Teladoc, Amwell (formerly American Well), and MDLive—that telemedicine started looking more like the kind of service we’ve become familiar with. So while the world might just have woken up to the convenience of remote medicine, hundreds of companies have been working in the field for years already.
“Our experience with Covid has shown us that telehealth is desirable. I think everyone got pushed in the pool—telehealth has been at the edge of healthcare for a while—then we all jumped in, and turns out the water is pretty nice,” says Matthew Wetschler, the co-founder and CEO of Plume, a telehealth company focused on gender-affirming care for the transgender community.
Healthcare professionals, too, were pulled in.
“All staff members had to learn how to be basic IT support. Well, that’s not why we all went to school. It became a newly important piece about our day jobs in the same way that it was always my job to understand how to get parking validated and parking reimbursement and what the vouchers were for taxis and public transportation,” says Hasselfeld.
“There is likely to be a very wide range of physicians’ comfort with providing telehealth,” says Scott Shipman, the director of clinical innovation at the Association of American Medical Colleges (AAMC). “But I think all physicians do need to have a basic skill set to provide care via telehealth,” he says, adding that the AAMC has developed a basic training and a set of guidelines for doctors to follow.
Given how quickly the demand for remote services ballooned during the first months of the pandemic, many doctors went from not offering telehealth to conducting a majority of their work remotely. While it is unlikely to stay that way, doctors have generally welcomed telehealth, and 70% of them say they will use more of it after trying it out during the pandemic.
The best service for the worst situation
In a way, telehealth is to healthcare what e-commerce is to brick-and-mortar stores, or what fintech is to traditional banks: a digital-age upgrade. Yet it took telehealth far longer to become established, and that too only after its use was made necessary during Covid-19.
The barriers to adoption were multiple. Some were on the operational side, including the cost of services, issues with insurance reimbursement, and lack of connectivity. But others were more substantial—patients, as well as the medical community, worried about the level of care that could be administered remotely rather than in person.
Telehealth isn’t a panacea, and even its strongest advocates will highlight that it can’t replace all in-person care. It is also a newly popular field, so the feedback and observations available on it, while overwhelmingly positive, are necessarily limited, says professor David Nash, the founding dean emeritus and professor of health policy at Thomas Jefferson University.
The lack of outcome evaluation, says Nash, makes it difficult to assess the gains and pitfalls of telehealth. “Everything else is conjecture until we have the data,” he says.
Without transparent, publicly available, agreed-upon standards on telehealth practices, he says, there is no way to quantify and address some of the potential risks connected with telehealth. “You can only improve that which you measure,” he says, noting that some of the more sensitive areas that require evaluation are the quality of care delivered, the protection of privacy, and even the effects on patients, who might delay in-person care or routine screenings after receiving telehealth visits.
Still, organizations such as the American Medical Association and the National Medical Association have welcomed the expansion of telehealth, too. Initial ethical and professional guidelines have been published, covering privacy and the necessity of reducing digital divides. The overall success of telemedicine has prompted them to support the requests that the government expands access to Medicare and Medicaid reimbursement for telehealth.
Yet although research pointed to many successful uses of telehealth, until recently the perception remained that its value was in providing healthcare for patients who otherwise would have none, rather than an alternative to in-person medicine. Though it’s conceivable that some of these doubts will return once the pandemic is over, those working in the sector feel that the progress made in the past year won’t be reversed. People no longer need to be convinced to try telehealth—by and large, they have tried it already.
“In the 15 years that preceded 2020, where we were trying to convince people that you can actually deliver safe health care over technology. And the reality of the last year has brought us to the point that we don’t need to convince anybody anymore,” says Roy Schoenberg, president and CEO of Amwell, a telemedicine company that went public in 2020, reaping all the benefits of the surge of telehealth usage.
The rise of telehealth is a global phenomenon, but nowhere is the field comparable, by size and range of activity, to the US. This is in part due to the size and wealth of the country, but even more to the fact that healthcare is an industry in the US in a way it isn’t in other rich countries, where the bulk of medical care is publicly funded.
There are many ways to break down the telehealth sector and group the hundreds of companies operating in it—both the longstanding players and new ones that are finally attracting the interest of venture capital.
You could look at the technology they use. Some telehealth platforms, such as K-Health, start with a chat with AI, then escalate the interaction to a health worker as needed. Others, such as XR Health, are experimenting with augmented reality; others still, like Tytocare, include at-home testing kits that allow the patient to monitor basic functions such as blood pressure or heart rate, under the direction of a connected physician.
There is the workforce—whether hired directly by the telehealth providers, or part of an existing institution, such as a hospital, that adopts the telehealth infrastructure—and the payment structure—whether it’s out of pocket (through fee for service, or a subscription), insurance-based, or a mix of both.
But perhaps the best way to understand the sector is to separate the platforms that essentially mimic a visit to the doctor in real life from those that change it significantly.
The companies replicating clinical visits offer a menu of medical services—consultations, visits, prescriptions, even some testing—from the same local health practitioners you would see in person. These companies, like Teladoc or Amwell, partner with existing healthcare providers and networks, providing them with the necessary infrastructure to make their services accessible remotely.
Although the patient is the ultimate customer, these products are primarily marketed to providers, on the supply side, and to insurance and benefits providers on the demand one.
New technologies and specializations
The second group of products comprises services that break away from existing services to focus on a specific need, often marketing directly to the patient.
The offers range in scope. There are prescription-focused ones, like GoodRx, which has added a telehealth offering to its long-standing discount drugs service.
Services like Hims, Hers, Curology, and Roman, walk the line between wellness and healthcare, primarily offering easy access to doctors who write prescriptions addressing common concerns, such as baldness, acne, erectile dysfunction, and the need for hormonal birth control.
There are products developed around specific communities, such as Plume, which is focused on transgender healthcare, and Folx, which targets the broader queer community. And there are solutions developed around certain conditions, such as Livongo (now part of Teladoc), which helps manage chronic conditions such as diabetes and high blood pressure, or dermatology-specific sites, like FirstDerm and Apostrophe.
Mental health care via telehealth is arguably the biggest breakout star of this group.
The practice faced initial skepticism from patients and practitioners, who worried about the effectiveness of mental health support without meeting in person, and general concerns about privacy. But telemental health is now generally embraced by both patients and clinicians, primarily because it fills a gap in available care.
Rural Americans particularly stand to benefit. In rural areas, nearly 19% of the population has some mental health issues, and, despite higher rates of death by suicide, 60% of patients lack access to any mental health care. So do many who don’t feel comfortable going to a therapist’s office, or don’t have the flexibility to do so.
The telemental health sector, which is now worth $3.5 billion in the US, has been growing steadily since 2012, and is expected to reach $15.5 billion by 2026. Platforms offering mental health support have been mushrooming, and grew through the pandemic, standing ready to absorb the increased demand for mental health support stemming from Covid-19.
“Mental health is an area that we’ve seen perhaps the greatest growth over the last year,” says Dan Trencher, a product and strategy leader at Teladoc. “In addition to consumers not feeling comfortable going in person, there’s also access challenges in general with mental health, particularly around psychiatry.”
Services like Talkspace, Moodfit, Betterhelp, all offer a mix of services—from messaging with a therapist to ad-hoc counseling to ongoing therapy and even prescription of medications—tailored on individuals, couples, or teenagers.
The healthcare providers—including doctors, nurse practitioners, social workers—working for these platforms are all licensed, and are typically contractors who in some cases operate their own practices, too, offering in-person appointments alongside telehealth visits. Patients are matched with their providers, or choose one, based on their needs and the reviews they received from other patients.
The platforms provide the infrastructure for the appointments or other therapy exchanges, akin to what a clinic would do, with the difference that in brick-and-mortar clinics the risk that personal information, let alone the entire content of a therapy session, might leak is likely much lower than it is on digital platforms.
A cautionary tale is Talkspace, which while still a big player in the remote therapy space, was subject to criticism for its policies that prevented therapists from knowing much about the patients, which made it impossible, for instance, to report dangerous behavior. The company was also at the center of a scandal a few months ago, when it emerged the company did not take the necessary care to protect patients’ privacy, and encouraged employees to write fake reviews to boost its ratings.
The promise of verticalization
What all these different strands of telehealth services have in common—from the subscription to anti-wrinkle retinoids to the video call with a therapist—is a model that relies on verticalization. Traditionally, healthcare is very regional. A clinic serves the population that can physically access it, so the providers that focus on specialized care are typically located in cities, where they can reach the critical mass necessary to their business.
But telemedicine removes that link to location, and providers are able to reach a nation-wide audience, provided they are licensed in a given state. It allows specialized practitioners to reach patients far and wide—not unlike a specialized store selling its goods online.
“What is game-changing is that it opens up the possibility to provide a national service, so that gives you the possibility to focus on a vertical or a specialty because your market size has opened up,” says Melody Koh, a partner at venture capital firm NextView Ventures, who has been researching and investing in telehealth startups, including Monument, an addiction treatment program, and Form Health, which focuses on treating obesity
A clear example is Plume, which was founded by Matthew Wetschler and Jerrica Kirkley in 2019 and is almost exclusively run by a transgender staff to provide the transgender community with dedicated care. Plume, say the company’s founders, is available in most states, reaching about 96% transgender individuals in the US, and has registered 4,000 patients within its first year of operation, quickly becoming the largest provider of gender-affirming care in the world.
“We built this not as an alternative but as a better way to deliver care. Is it a panacea for everybody and everything? Absolutely not, but there are clearly very defined care scenarios and communities where this is actually a better paradigm of care,” says Kirkley.
How far can telehealth go?
Let’s jump forward a few years. If the many organizations betting on specialized health services and products are successful, is the average patient going to sign up for a list of small providers, each focused on a different condition or need?
Let’s push the envelope a little more. If the evolution of telehealth follows, say, that of e-commerce, will the client of a global telehealth company have access to a global team of doctors? Will the best diabetes care from Denmark and the most sought-after dermatology care from South Korea be just a virtual appointment away?
Both these scenarios are unlikely for two reasons: fragmentation, and geographical limitations.
While telehealth offers an opportunity for small-scale providers to succeed, it’s also likely that most of the small players will be absorbed by bigger ones, if nothing else for a matter of convenience for those accessing care.
In the US, most patients are used to dealing with one insurance provider, and half the population receives healthcare benefits through their employer. For them, having a menu of small providers as part of their healthcare would require their employer’s benefits provider—who often lacks medical training and detailed knowledge—to pick which services to offer.
“I’ve been in the industry long enough to see that with the explosion of all the different [and] very narrow physical health solutions, it’s overwhelming to benefits administrators and employers,” says Teladoc’s Trencher. “They’re looking for broader solutions and more integrated solutions.”
Indeed, the field it’s already moving toward some consolidation. In October, Teladoc acquired Livongo for over $18 billion, bringing the company’s market valuation to $37 billion. In 2018, Amwell acquired Avizia, a Boston-based telehealth player, for $150 million; the company’s current market cap is $6.5 billion, with its shares up 55% from its IPO in September.
Large organizations, too, are creating specialized vertical divisions, with the added advantage that multiple conditions can receive dedicated care through the same platform, and sometimes even concurrently.
There is also a limit to how much telehealth will divorce itself from geographical limitations, even within the US. As Doug Hirsch, the CEO of GoodRx, puts it, “we have 50 different states with 50 different pharmacies, boards, medical licenses.” While a large enough organization can get around all that, it still has to partner with local providers because of insurance requirements.
Will it stick?
Arguably the biggest determinant of the growth of telehealth is how insurance—commercial, and more importantly public—will adjust.
Early on in the Covid-19 pandemic, and for the duration of the medical emergency, the Centers of Medicare and Medicaid lifted its strict requirements for telehealth reimbursement, which for instance demanded the visit be held in a clinician’s office to be reimbursed. This is a change the American Telemedicine Association (ATA) has been lobbying for since its founding in 1993.
Once Medicare and Medicaid started covering telehealth visits, says Kyle Zebley, the ATAs director for public policy, telemedicine use jumped to 50% of Medicare users, from under 1% in 2019. Covid-19 was, of course, a catalyst, but Medicare and especially Medicaid patients are among the groups that stand to benefit more from access to telehealth, as they are overrepresented in rural areas and might face some of the issues with time and transportation that telehealth helps solve.
Regulations, says Zebley, need to move away from the pre-Covid-19 landscape, where telehealth was only a rarity, and capture the reality in which a significant portion of care is administered remotely.
“Policymakers don’t need to put in artificial barriers to progress,” he says, adding that the effort to prolong the pandemic regulations is ongoing.
“We have to trust our clinicians and our practitioners to understand what their patients need,” he says. “We think the safeguard here is the wisdom of medical practitioners.”
But not everyone agrees that the judgment of doctors is a sufficient protection against telemedicine-related malpractice. It’s unrealistic to think that all the thousands of doctors involved in telehealth have good ethics and skills, says Nash. Based on the bell curve of performance, he says, out of every 10,000 doctors there will be 1,000 outstanding ones and 1,000 dangerous ones who shouldn’t be practicing, and might encounter, in telehealth, fewer checks and balances than they would in a brick-and-mortar clinic.
“The industry needs to police itself and continue to inform the public about the outcomes,” says Nash.
Without insurance reimbursing telehealth visits, patients will be forced to go to their brick-and-mortar clinics, and only the smaller companies that rely exclusively on out-of-pocket subscriptions will be able to survive. And even they might eventually suffer. Lily Bernicker, an investor at venture capital firm Collaborative Fund, notes consumers tend to place more trust in a telehealth organization that accepts insurance, because they consider it a mark of reliable service.
Even with the insurance and payment piece of it taken care of, the question of how much telehealth will remain after the end of Covid-19 isn’t so easy to answer. The leaders of large companies are optimistic about the future, but they are expecting an adjustment, as patients resume seeing doctors in person.
“I do think a lot of people, especially older Americans, are anxious to go back to the pharmacy and back to their doctor because they really are part of their social life,” Hirsch says.
But the more specialized services, whether in independent companies or part of large ones, might have a better chance to stick. This is especially true of the long-term care needed by patients with chronic illness. Physicians, he says, are beginning to understand that a lot of that years-long sustained care can be delivered seamlessly through telehealth. “This isn’t the telehealth where you log in and try to find someone to take care of you. This is telehealth that happens between clinicians and their existing established patients,” says Schoenberg.
This kind of care will stick post Covid-19, and only become more common, he says, to the point that it’s likely to become the main driver of the industry and its technological development.