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The Problem: A Multitude of Telehealth Vendors Drives Market Confusion
Approximately 260 telehealth companies exist at this time driven by irrational exuberance by investors who apparently don’t understand there is no significant differentiating technology factors between all of these products. Many of the telehealth vendors focus on third party patient engagement or care management solutions to create a more robust package of functions and features that demonstrate competitive differentiation. One vendor, Teladoc, acquired Livongo to add care management features for chronic illnesses for $18.5 billion which caused significant speculation in the market around the viability of the combined businesses. One investment bank had a per share target price of $207 for Teladoc in November of 2021. The current stock price is approximately $70 as of 1-24-22 and the EBITDA is negative $410 million. Hedge funds are starting to ditch Teladoc.
Teladoc is not the only public telehealth company to struggle in the emerging market. American Well Corporation had secondary Class A stock offering priced at $27.50/share on January 20, 2021 and is trading at approximately $3.75/share as 1-24-22 and a negative $167 million EBITDA. Even a Google investment in Amwell is not helping the stock.
SOC Telemed is another example of a public telehealth company that is struggling. SOC focuses on acute care telehealth. SOC went public via a SPAC. The initial offering of Class A stock was $6/share. The share price of approximately $0.60/share with an EBITDA of negative $52 million as of 1-24-22.
As public telehealth companies struggle, what will become of the smaller emerging telehealth companies?
The Solution: EHR Vendor Integrations likely Determines Telehealth Winners
A recent press release by Zoom discussing their integration with the Cerner EHR provides perspectives on how the winners in the telehealth market may emerge. Zoom has also integrated its telehealth solution with Epic. Microsoft Teams has also integrated its telehealth solution into both Cerner and Epic. In fact, Epic has over 16 telehealth applications in the App Orchard that is has approved for integration into its EHR. Choose wisely.
Teladoc and Amwell also have integrations with major EHR vendors. Teladoc has integrations with both Cerner and Epic, and Amwell has an integration with Cerner.
EHR vendors appear to be establishing a neutral position in integrating third party telehealth solutions into their application workflows. Providers should scrutinize the depth and breadth of the telehealth integrations with EHRs. Launch points for activating telehealth services with patients from EHR workflows are very important for enabling physician adoption and use. If appropriately designed the physicians will be able to easily activate patient telehealth sessions as warranted. The telehealth integrations should also enable easy access to patient medical records and facilitate the capture of timely remote patient monitoring data to support the telehealth encounter. Patient access functions for scheduling and connecting with the telehealth session must be well designed for intuitive patient use. Secure texting to deliver dial-in patient notifications as well as links to patient education should also be considered. Telehealth encounter billing should be integrated with the provider’s RCM.
The Justification: Telehealth Is a Key Component for Provider Viability
The pandemic has driven the realization that we now have the technology to deliver virtual healthcare with high quality and low cost. Telehealth, remote patient monitoring, and digital patient engagement solutions are creating an environment that all providers will need to adopt to survive in the value-based care reimbursement world. McKinsey states that approximately $250 billion will be invested in virtual care and that telehealth encounters are 38 times higher than they were pre-pandemic. Virtual care workflows will require providers to review and modify current EHR and population health application workflows to integrate virtual care components. A well-designed virtual care environment will support the Quadruple Aim.
The Players: Well Capitalized Vendors Likely to Survive
While public telehealth companies are struggling financially now, they have access to capital resources that should maintain their viability over the next few years. Many of the public and smaller private companies will also be subject to merger and acquisition events. Key vendors to watch in the U.S. are Zoom, Microsoft Teams, Teladoc, SOC Telemed, and Amwell. Keep an eye on Amazon as well.
Success Factors:
Summary
Telehealth will become a necessary service capability as we progress past the pandemic. Findings relative to ease of use, stable technologies, and patient satisfaction will continue to drive the need to use telehealth to better support high risk patients in value-based care reimbursement programs. Key success factors for vendors of telehealth products will be their ability to effectively integrate with EHRs and other digital patient services. EHR integration will be more complex as it will require well designed EHR application workflow integrations to ensure providers can easily launch telehealth services with patients while also having access to the most current medical data from the EHR as well as remote patient monitoring devices. Patient engagement will be enhanced by integrating scheduling, registration, and billing services. The ability to provide patient education material will also improve satisfaction for all parties.
Some providers may continue to use more than one telehealth application depending on the focus of the telehealth service (e.g., medical, behavioral, obstetrics, etc.). Selecting solutions that can support multiple service areas may reduce telehealth failure risks.
Photo Credit: Yurii Maslak, Adobe Stock
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