The telehealth bubble has burst. It's time to figure out what's next
Telehealth took off during the pandemic, but 2021 is a brutal awakening. The healthcare industry is still figuring out how to fit into the bigger picture.
As the U.S. races to lock down the country in the face of a rapidly spreading new disease, telehealth has provided a lifeline. Using technologies such as video calling, healthcare organizations are able to screen individuals for COVID-19 before any testing infrastructure is established. But now in the later stages of the pandemic, Americans are getting out of their homes and back to doctors' offices. Shares of major telehealth companies fell.
While telehealth remains an important tool for doctors, it no longer appears that the vast majority of healthcare will happen online, as Andrew Dudam, CEO of online pharmacy Hims, once assumed. Going into 2022, it looks like an even more exciting development will be on-the-ground healthcare.
Shares of Peladoc, a major telehealth platform focused on chronic care, hit a high of $293.66 per share in February 2021. It has since returned to reality at $89 a share. Shares of telehealthcompany Amwell, which traded at $35 a share in February, are now hovering around $5 a share. Shares of Himsrose to $23.99 a share at the start of the year and are now below $6 a share. Even Zoom is down from its 2020 peak (investors are unhappy with its slowing growth, a problem for other companies on this list).
At the same time, funding for healthcare startups has surged, but funding has not been focused on telehealth. Healthcare funding reached $97.1 billion in the third quarter of 2021, accounting for 22% of the full-year funding, according to CB Insights. Much of this funding goes to biotech companies and novel drug development. An exception to this trend is Prettyblock Health, which raised $400 million this year at a $5 billion valuation and provides care to Medicaid recipients.
What brought the telehealth market back to reality? At the height of the pandemic, the value proposition of telecare was clear. But right now, everyone is trying to figure out where telemedicine fits in the overall healthcare landscape.
“Telehealth has always been in the spotlight,” said Adam Gale, CEO and co-founder of Klas, an organization that rates health IT companies, on a podcast Healthcare Is Hard hosted by venture capital firm LvVHealth. "Everybody had a solution or two, and they went into COVID with five, six or seven solutions."
Now, companies are trying to reconfigure their long-term telehealth strategies, he said. That could mean ditching all the products these companies bought during the pandemic because they no longer fit. According to McKinsey, in April 2020, healthcare mostly happened online, and now about 13%-17% of healthcare happens online, with psychiatry being the majority.
Christina Farr, a venture capitalist at O Ventures, said: “The bigger macro trend here is that telehealth is seeing some decline from its peak during the pandemic, when we had no choice but to watch it virtually. to our suppliers." former Fast Company writer). "In the behavioral health space, we don't think these declines are as severe -- I expect that's why we're seeing record inflows into the space." She also said there's been a surge in interest in telemedicine that's specifically targeted at specific populations, such as LGBTQ patients. The platform is very interested.
Farr added that there is an opportunity to be a core technology in an evolving health care system: "Digital health appears to be more mature now and is writing a playbook." Next year -- possibly the next decade -- will be about how best to deploy , integration and use of telemedicine.
Reimbursement is the key
Some of this will depend on what the Centers for Medicaid and Medicare Services (CMS) and a wide range of insurance companies will reimburse patients for. According to a recent survey by The Primary Care Collaborative and The Larry A. Green, about 40% of primary clinicians said they would not be able to support telehealth if CMS went back to pre-pandemic rules and stopped reimbursement for telehealth and telehealth visits center. In its 2022 updated guidance, CMS agreed to cover audio-only behavioral health services, remote addiction treatment and home health visits. This means companies have the opportunity to provide healthcare both remotely and at home.
Telehealth companies must go offline to adequately meet patient needs.
Some people are already moving in this direction. For example, earlier this year, remote pharmacy Ro acquired a company called Workpath, which does home blood draws and is running a small home vaccination pilot for seniors. It's unclear whether couch-side phlebotomy will become a necessity, but it involves telehealth companies needing to go offline to adequately meet patient needs.
In addition to at-home services, there is an increasing number of at-home testing. Rapid COVID-19 tests are sold over the counter in pharmacies and online (though they are hard to find these days), and there are plenty of home tests for fertility, urinary tract infections and kidney disease. There's also a growing list of home devices, such as smart thermometers, pads to detect diabetic foot complications, and pulse oximeters -- basically anything that can help doctors continue their care after regular visits. We can expect, in the future, that more care will take place in the home. But perhaps more interesting is the way digital health startups are entering retail clinics.
on the ground
Smart companies are realizing that telehealth is only one part of a larger whole. Carbon Health, an early virtual care provider, now has brick-and-mortar locations in 17 locations across the country and is entering clinical trials. Amazon Care launched its virtual care platform in 2019 and opened 17 in-person clinics for Amazon employees at Crossover Health. Companies such as Rezilient Health are also considering how to repurpose spaces such as parking lots for medical clinics.
The movement is part of an upcoming wave of retail health clinics. This year, Walgreens agreed to invest $5.2 billion in VillageMD to place 1,000 of its primary care offices next to Walgreens pharmacies. CVS is making a similar investment. At a recent investor day, CVS Health CEO Karen S. Lynch said the company will expand its services to include in-person and virtual primary care. Even Dollar General markets itself as a healthcare destination.
The overall surge in retail clinics is tied to healthcare companies experimenting with the patient experience. Care needs to be convenient and easy. Initially, many believed that virtual care might be the easiest patient experience. But it seems like people do want to see a doctor in person, so the big companies are now experimenting with that. That's why you'll see pharmacies co-located with primary care offices.
As for the fate of telemedicine, a comparison I often hear is that its current state is like e-commerce in the early 1990s. “Digitally delivered care is similar to retail on the internet; the pandemic has accelerated the use of technology in healthcare,” said Khosla Ventures investor Alex Morgan. Now, healthcare companies must figure out how to use what they have tools to create the ultimate patient experience, just like Amazon has done in e-commerce. Telehealthisn’t broke, Morgan says — it’s just in its infancy.
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