‘If you are either a healthcare service provider, private insurer or a healthcare related technology company, now is a good time to ramp up your tele-health related services’.
In late 2014, a US based company, Teledoc closed a $50m series F fundraising round, bringing its total funding to roughly $100m. After slow growth in the beginning, (the company was founded in 2002), the company began seeing its revenue grow by 100% in 2013. Since then, the investments have been flowing. So what does Teledoc do? It offers telemedicine services and Telemedicine is growing big!
The scenario earlier: Telemedicine or Tele-health is not a new concept. The idea of virtualizing appointments with physicians has been explored since the early 2000s. However, certain barriers resulted in a slow uptake of tele-health services; lack of medical reimbursements being the most prominent one. For instance, the lack of payments resulted in physicians preferring physical patient visits, resulting in un-necessary cost escalations. In addition, software licensing and cost of technology also made insurance service providers scoff at tele-health.
Paradigm shift due to new regulations: The scenario has changed considerably since. The introduction of ‘Affordable Care Act’ (also known as Obama-care) has put pressure on service providers across the value chain, to reduce medical costs. In addition, the advent of mobile devices and high speed internet has ensured a smooth user experience from both the physician and patient perspective. A 2013 report from IHS, a market research and analytics firm, predicted that tele-health services in the US, would grow from $240m, to$1.9b by 2018, growing at a 56% CAGR. Estimates show that tele-health services and technology can potentially bring down the cost of a doctor visit from $1,223 (as per a study published in 2013 in the journal PLoS ONE) to approximately $50, a whopping 96% reduction!
These factors have resulted in a change of attitude of regulatory bodies, as well as healthcare insurers, towards tele-health services. The number of states approving Medicare and Medicaid reimbursements related to tele-health is growing steadily.
In addition, a number of private health insurers have started extending tele-health solutions as a part of their health insurance package. Major insurance providers in the US such as Humana, Aetna, Cigna and Anthem Insurance have already started offering varied levels of tele-health services to the end user. A few of them have collaborated with niche firms such as Teledoc and MDLive to extend these services to mobile platforms. Right now, Kaiser Permanente is experimenting with a service called ‘House-calls’, to extend physician care to ailing patients at his/ her home via telemedicine.
This clearly points to an adoption rate which is going to see a significant rise very soon.
A snapshot of current level of tele-health service offerings:
Opportunity for technology companies: Backed by the growing demand from independent policy holders as well as employers, more and more insurance companies are going to join the tele-health bandwagon, creating opportunities for technology service providers. Technology providers will play a critical role in building the ecosystem for tele-health services.
A number of companies are already doing exciting work in this area.
- GE health and Intel have collaborated to set-up a company called Care Innovations. The company provides end-to-end tele-health solutions including remote tele-monitoring and data analytics.
- Cisco has a well-established portfolio of telehealth service offerings.
- One technology company has recently experimented with a product, which allows elderly patients to communicate with physicians and clinical staff through audio/ video conferencing using their televisions. The technology implemented was originally built by Microsoft for gaming.
It is clear that technologies such as Cloud based data storage, IoT, e-Health record management systems and healthcare data analytics are going to see an increase in demand following the tele-health boom.
So, if you are an organization, aspiring to have a significant presence in the future healthcare market, now is the right time to start building tele-health capabilities, so that you can make ‘as much hay, while the sun shines’.