Key takeaways

  • Telehealth provides a convenient and infection-safe alternative to face-to-face consultations, supporting the management of long-term conditions, enabling the provision of cost efficient care and facilitating better collaboration between clinicians and healthcare organisations.

  • COVID-19 has dramatically accelerated the already growing demand for telehealth, driving widespread adoption of new technologies, and regulations are quickly changing in several countries. It is probable that many of these changes will endure long after COVID-19 has past.

  • Telehealth provider operating models have six key characteristics: geography, patient type, business model, breadth of services, delivery model and infrastructure.

  • Other influential factors that impact a provider’s ability to develop a strong market position are: regulation, funding of services, market entry strategy and data protection.

  • As with any burgeoning market, the global telehealth sector has its challenges. To scale up and address growing demand and unmet needs, players need to navigate country-specific circumstances, access necessary levels of funding, and design the right business model for this increasingly competitive environment


 

Food poisoning, dermatitis, tennis elbow, allergies, anxiety, depression, eating disorders, diabetes and rehabilitation. Some of the many conditions that can be supported with telehealth. Offering fast, convenient care for patients and cost-effective business models for care providers and payers, the sector, which was already expanding rapidly before the COVID-19 crisis, has gained significant further traction since the outbreak.

Telehealth provides a convenient and infection-safe alternative to traditional face-to-face consultations, creating opportunities to support the management of long-term conditions such as asthma and cancer, promote wellness and preventive care, and also monitor patients’ recovery following discharge from hospital.

The basic premise of telehealth is care at a distance. Using technologies ranging from a simple phone call through to mobile apps, video calls, wearables and even artificial intelligence (AI) (e.g. for pre-consultation triage), patients can receive advice, diagnosis, treatment, prescription medications and support without meeting with a physician in person.

In addition to enhanced convenience for patients, telehealth can enable the provision of cost efficient care by shifting it “downstream” (see Figure 1) and enables better collaboration across clinicians and healthcare organisations. For instance, AI systems such as IBM’s Watson for Oncology enable clinicians in general hospitals in Asia to leverage the expertise and care protocols of top oncologists at the renowned New York Memorial Sloan Kettering hospital. The market leading AI- based personal health assistant Ada is one of several mobile app-based services that allow consumers to self-assess their symptoms and can also provide care management advice.

Even before the COVID-19 outbreak, there was already strong evidence that telehealth was an idea whose time had come:

  • Ada, mentioned above with its symptom assessment app, reported 18 million completed assessments and availability in 140 counties worldwide.
  • Teladoc — a leading U.S. provider that operates in Australia, Brazil, Canada, Chile, France, Hungary, Portugal, Spain, and the U.K. — recorded 4 million virtual visits in 2019, nearly double the number of 2018.
  • In China, Ping An Good Doctor carried out half a million tele-consultations per day before COVID-19.
  • The Swedish based start-up KRY had established itself as a key European digital provider with over 1.4m patient video consultations by the end of 2019.
  • Babylon, based in the UK and another key European digital provider, completed 1.2m digital consultations in 2019 and expanded into 17 countries, including the U.S.
  • Doctolib, based in France, provides patient booking solutions to physicians and achieved a €1bn valuation in its March 2019 funding round on the back of 75k physicians and 1.4k providers using its service.

Since COVID-19, treatment at a distance has grown dramatically. The imposed social distancing measures and the fear of infection during regular face-to-face doctor visits (also from a practitioner‘s perspective) is driving widespread patient and provider adoption of the new technologies, and regulations are quickly changing in several countries (see below for more detail). It is probable that many of these changes will endure long after COVID-19 has past.

Many solution providers have integrated Coronavirus symptom checking and triage (e.g. Ada, Babylon), and software vendors like EMIS and TPP in the U.K. are taking the opportunity to expand their reach in GP practices with temporary free access to their video consultation modules. In the U.S. alone, Atrium Health System has reported a 500% increase in telehealth usage, Teladoc reported a 50% surge, and Amwell saw a 600% increase in Washington state, where the outbreak originated. Even traditionally technology-conservative practitioners are adapting to new ways of working. For example, Physitrack, which links physiotherapists with their patients via apps and video workouts, reported 80x growth due to Coronavirus, amounting to 16,000 new customers in 11 days, more than a full years‘ growth in less than two weeks.

We are also already seeing growth in adjacent services, including more frequent online prescribing, mail order pharmacies and drug delivery services, as well as emerging diagnostic testing kits for home use.

Operating Models

Telehealth provider operating models have six key characteristics (see Figure 2):

  1. Geography. Though some telehealth providers such as Teladoc, Medgate and Ada are expanding internationally, many business models are still very local, such as MyDoc, which serves some parts of Sweden, and Ping An Good Doctor, which operates mainly in China (although has begun an Asia expansion, notably in Indonesia).
     
  2. Patient type. Another key factor is patient type. Medgate — the Swiss provider that has been active in launching and supporting partner services in a number of countries, including UAE, the Philippines and India — and Teladoc will treat any patient in need of primary care. By contrast, Physitrack, a company initially launched in the U.K. but now active globally, focuses on physiotherapy, offering more than 3,700 on-demand videos and an app that 30,000 physiotherapists use to interact with their patients. Other providers, such as CBT Clinics, a U.K. psychological assessment and treatment provider with a digital offering, provides fast access to care and comprehensive treatment solutions via video consultations.
     
  3. Business model. The ultimate customer of the telehealth company is whoever pays the bill. That can be a patient, a patient’s employer, a healthcare provider, a health insurance company or the public sector. Teladoc, for example, markets its services to employers and payers, while Physitrack’s customers are the physiotherapists who use its app to reach their patients. Medgate’s consultations are often paid for by payers, who in turn can offer incentives to their members for using telehealth.  Companies like InTouch Health and Zipnosis, providers of telehealth services in the U.S., primarily sell their offerings to healthcare systems. Babylon serves both NHS patients through its “GP at hand” partnership and U.K. patients paying out of pocket. In addition to telehealth providers, technology focused vendors are supporting the adoption of video consultations by physicians. In the U.K., EMIS and TPP have complemented their GP practice management software solutions with video consultation modules. In France, Doctolib started to support video consultations in 2019.
     
  4. Breadth of services. Providers’ offerings can be distinguished by the services they provide and the types of customer they aim to reach. Content can range from prevention and wellness coaching, such as the self-improvement app from Happify (a U.S.-based mental health and wellbeing company), through to primary care diagnosis, prescribing and treatment, such as that provided by Teladoc and Medgate. Teladoc, through the acquisition of Best Doctors in 2017, now also provides telemedical specialist care and second opinion services (e.g., in cancer treatment). Like other telehealth providers, Babylon has expanded its range of services. In addition to its core video consultation offering, it now also offers an AI based symptom checker for triage, a digital health check service to assess users’ health status and a monitoring service to track this over time.
     
  5. The delivery model. Delivery models vary widely. Medgate is centralised with its own medical staff, while Teladoc links qualified medical practitioners with patients. Babylon Health uses apps and video consultations, while other providers, such as CBT Clinics, mix face-to-face consultations with care at a distance. Better AI algorithms are enabling fully automated players (without actual clinicians), such as Ada, to emerge.
     
  6. Infrastructure. Many of today’s leaders in telehealth started off using telephone services and, despite the other technologies available, telephone remains the medium preferred by many primary care customers. Nevertheless, both established telehealth providers and emerging players offer a growing range of engagement options (e.g., apps, text messaging, video chat, image upload). Wearables and sensors are becoming increasingly popular, albeit their utility for general medical applications is still emerging. Qantas’s Assure — a health and life insurance company launched by the Australian airline — uses wearables to monitor exercise and sleeping, for which the company offers frequent traveller points. Tytocare, a startup, has developed a device that enables GPs to provide routine primary care examinations to patients in their homes. It is commercialising in the U.S. via partnerships with traditional providers and established telehealth companies.

Key considerations for global setup and expansion

In addition to selecting the right business model, there are a number of other influential factors that impact a provider’s ability to develop a strong market position.

Regulation

Regulation is key and can differ significantly from country to country. Successful global groups usually launch from countries where regulations favour treatment at a distance, often using their experience to adapt to local restrictions in other markets or adding a local partner.

For example, restrictions in Brazil mean that, to date, Teladoc only gives advice, and does not provide the full diagnosis, treatment and prescription services offered by its doctors in the U.S. Medgate used a local partner — Telstra, the incumbent telecoms company — to launch their ReadyCare JV in Australia.

The COVID-19 crisis is leading regulators across the globe to facilitate adoption of telehealth. In the U.S., the Medicare health insurance programme will temporarily reimburse video consultations at the same rate as face to face visits. The FDA and CDC have also taken steps to ease the adoption of telehealth by providers and patients. In France, the government has introduced measures to ease reimbursement rules for patients using video consultations and something similar was done in Australia, where public Medicare funding is now available and effectively makes the consultations free in many cases (they were previously funded from private out of pocket payments). In Germany, a provider limit on the share of video consultations vs. in person visits has been lifted, and in China policies were strengthened to encourage online consultations, drug delivery, and medical reimbursement for online services.

Payment/funding of services

Best-practice telehealth providers have successfully obtained services payment from payers, employers or providers due to a compelling business case of lower costs and added patient convenience. For instance, U.K. based Doctor Care Anywhere has partnered with a leading private insurer to share the benefits of enhanced clinician and technology-supported triage that optimises clinically appropriate specialist outpatient appointments and hospital admissions for the insurer’s members. However, these approaches are mostly local and must be evaluated again for every new country due to the differences in healthcare systems and stakeholders. Sometimes it even makes sense to start at a more local level if nationwide contracts are difficult.

Historically, countries where providers operate under capitated payment models, such as GPs in the U.K., or under value based care frameworks, such as the U.S., have proved easier for telehealth adoption. More widespread public funding arrangements across the globe are now a reality since the COVID-19 outbreak. It remains unclear whether public funding sources will continue to be available when the crisis finishes, but it is considered likely on the basis of greater evidence that treatment at a distance is safe and effective. It is worth pointing out that private sector funding has also increased significantly, especially in those areas where providers are driven to online work because of the COVID-19 infection risk and are willing to pay for these solutions themselves.

Market entry strategy

Telehealth players must understand local market dynamics to decide which channels are most viable for entry into a new market, and whether success requires partnership with traditional local providers, payers or technology vendors.  These considerations influence the best approach for gaining access to patients.

In several countries, GPs and other healthcare providers were vocal in their criticisms of telehealth — in Brazil, this disapproval resulted in the Federal Medical Council backtracking on its promise to open regulations earlier in 2019. Best-practice providers therefore engage physician associations and other important stakeholders in new countries or when launching new services. It can also be helpful to engage the offline community. Physitrack has done this by providing as much value to physiotherapists as to patients, and the face-to-face channel effectively markets the digital channel.

Concerns about data protection and compliance with privacy laws can have a significant impact on reputation. Funding or technical issues may force telehealth providers to share certain data with third parties, and this can cause a backlash if exposed. These factors need careful consideration and navigation when setting up a new telehealth service or expanding into other countries.

What next?

In an environment of increasing demand for healthcare services and tightening public spending, telehealth offers new options for treatment, as well as tangible benefits to providers, payers and patients. These drivers and the experience gained during the COVID-19 crisis strongly support the case for continued growth in adoption of telehealth by patients and physicians.

The patient base is large and growing rapidly, with leading provider Teladoc’s membership now exceeding 56 million individuals in the U.S. alone. Changes in regulation and reimbursement, driven by the COVID-19 outbreak and all the benefits described above, will further support the expansion of telehealth services in many more developed and developing markets.

As with any burgeoning market, the global telehealth sector has its challenges. Some players are scaling up rapidly and those tempted to follow have an opportunity to address growing demand and unmet needs. To do so they will need to navigate country-specific circumstances, access necessary levels of funding, and design a business model that will win in this increasingly competitive environment.

Telemedicine Operating Model Characteristics
Telemedicine Operating Model Characteristics
Telemedicine — care at a distance — can have a profound impact for providers, payers and patients. But, as Klaus Boehncke points out, pulling it off depends on how you look at these six considerations.

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