The Virtual Visit Dam Has Broken
If you’ve needed to see a doctor in the past four months for a non-emergency visit, there’s a good chance you did so virtually from the comfort of your own home—thanks in part to recently relaxed healthcare regulations and reimbursement policy changes. According to a new survey, nearly half of physicians are now using telehealth to treat patients, up from only 18% two years ago (1).
This data echoes what we are hearing anecdotally from clients and other contacts within our network. Telehealth company leaders have seen a surge in visit volume since the start of the pandemic—with some reporting 30 to 50% growth month-over-month and forecasting up to 100% growth in visit volume this fall when kids return to school. As patients and doctors become more accustomed to the convenience and safety of virtual visits, we anticipate these numbers will continue to rise.
Existing Technology, New Adoption
The technology used to conduct these visits isn’t necessarily new, but adoption has long lagged behind technological capabilities. COVID-19 accelerated the acceptance of telehealth, on the part of both doctors and patients, partly because there was no alternative to administer and receive routine care.
The ubiquity of simple video conferencing platforms allowed countless medical visits to take place at the start of the pandemic—our regards to Zoom and FaceTime for opening the door to increased telehealth adoption when patients and doctors needed a quick solution. Long-term, however, more robust, HIPAA-compliant, and EMR integrated platforms will be preferred. These will allow doctors to annotate visits and add providers for better care coordination while also limiting provider liability as additional cyber threat protection and privacy controls are introduced.
The increase in virtual visits has made healthcare altogether more tech-enabled, even beyond the platforms used for video conferencing itself. With the growing adoption of technology, second-order opportunities around other parts of the patient experience (scheduling, patient intake, post-visit, billing, etc.) will prevail. Additionally, without the ability to assess patients while physically in a room, telehealth allows and encourages doctors to bring an arsenal of data with them to a visit. They can apply aggregated healthcare information and machine learning to real-time consultations, delivering data-driven treatment decisions and best practices in the virtual clinical environment.
Companies are also better leveraging artificial intelligence to analyze patient data across a broad spectrum of medical specialties, including wound care, musculoskeletal pain management, dermatology, behavioral health, and remote monitoring of vitals and biometrics to predict the rapid onset of drastic declines in patient stability. We now have the tools in place to predict when a patient is approaching the need for urgent care.
Historically, these existing tech-enabled treatment applications were underutilized because, from a provider and practice perspective, tolerance for behavior change, including technology adoption, was historically extremely low. Technology use during in-person, routine visits tended to be limited to entering data into EMR systems. With the pandemic as a catalyst, the migration to a virtual platform has broken the stale paradigm and given doctors the impetus needed to incorporate additional tech tools to bolster outcomes.
For example, we spoke with a physician who injured his eye in March. His optometrist took a close-up photograph of his eye through a Zoom call and used existing software to analyze the photo to determine whether he needed to go to the emergency room. That technology has been around for years, but the optometrist wasn’t regularly using it until telehealth visits increased.
Short-Term Regulatory Changes Will Prompt Long-Term Shifts
Regulations were rapidly relaxed in the face of the challenges COVID-19 presented to the healthcare industry. Before the pandemic began, providers were required to be licensed in the state where the patient was located in order to administer medical care. As the virus progressed, several states instituted temporary exemptions to these regulations or provided rapid licensure capabilities to expand the availability of care to patients in need.
Despite the uncertainty surrounding the duration of these exceptions, and even if portions of these waivers are rolled back, there will likely be ongoing provisions to allow physicians to practice virtually within regional areas instead of using state lines as hard and fast markers. Additionally, the adoption of the Federation of State Medical Boards’ physician licensure compact will probably increase—meaning doctors could gain licensure in multiple states simultaneously.
Lawmakers introduced a Senate bill in June proposing a reduction in “legal barriers that deter health care professionals from providing telehealth services, such as by utilizing state emergency health care professional credentialing verification systems, encouraging states to establish and implement mechanisms to improve interstate medical licensure cooperation, facilitating the exchange of information among states regarding investigations and adverse actions, and encouraging states to waive the application of licensing requirements during a public health emergency.” This legislation is intended to facilitate the administration of telehealth as an element of emergency preparedness and response, but it signals regulators’ acknowledgment of the power of telehealth long-term.
As telehealth quickly becomes the new normal, permanent regulations will need to follow suit, including adjustments to rules about prescribing controlled substances without an in-person visit. According to research from McKinsey & Company, the current dynamics of telehealth are likely to persist until a COVID-19 vaccine is widely available—at least over the next 12 to 18 months (2). This timeframe would cement telehealth as a critical part of the new healthcare delivery system, prompting long-lasting changes to best practices and regulations.
Physician’s Ecosystem Changing, Including Payors
As much as telehealth has improved the accessibility of care for patients, it has also flipped doctors’ worlds upside down. A day-in-the-life of a physician prior to COVID-19 looked drastically different than it does today.
Some report the increase in telehealth has created efficiencies—one doctor told us they went from 350 patients per month to 430—mostly because patient expectations for virtual visits are different. Conversations are more direct, pleasantries are reduced, and they can get to the reason for the visit faster.
Others have lamented about the IT challenges telehealth presents, which can put doctors in the position of troubleshooting technology on a patient’s behalf before the visit can even begin, thus reducing their efficiency and extending the duration of visits.
Despite the hiccups, the uptick in telehealth visits has prompted a major shift in clinical care. On both the provider and patient side, a lightbulb has gone off. Patients have realized the convenience of a 30-minute consult, pending the technology works the way it should. Patients don’t need to commute, adjust work schedules, or find childcare to make time for an appointment. For vulnerable populations, including seniors, the safety and protection from exposure to other sick patients is also a tremendous benefit. As a result, doctors are reporting fewer cancellations and no-shows.
This new model will lead to increased at-home testing and more refined methodologies for determining when in-office care is actually necessary. Artificial intelligence will allow doctors to better understand when a face-to-face visit is needed, while also helping them adjust staffing levels and increase scheduling efficiency.
With better use of the physicians’ time, they can increase visit volume and reduce reliance on nurse practitioners, whose patient visits are billed at lower rates. Physician hiring has increased during this time, even for part-time positions. Teladoc, for instance, said it onboarded thousands of physicians in a matter of days compared to the several months it would have taken before the pandemic.
Physicians are crossing their fingers that insurance companies will continue to allow them to bill visits using technologies like Zoom as full-price visits. Insurance companies are pleading with patients to keep up with preventative visits, hedging against a future increase in more serious conditions that have gone undetected while patients sit on the sidelines in fear of COVID exposure at an in-person doctor’s appointment.
It is, of course, in the health plan’s best financial interest to encourage preventative care, but there has historically been an activation barrier. A robust telehealth offering is likely to become an essential component of the health benefit offering going forward, as they are incentivized to get patients treated sooner rather than later.
The payor landscape is shifting, but not all of that is good for physicians. During the pandemic, Medicare is waiving copays, meaning doctors are taking a 20% haircut on fees they would have normally collected for an in-person visit (3). The lack of clear reimbursement guidelines has resulted in inconsistent payments and unpredictable revenues as various payors work out their telehealth payment ecosystems.
Promising Trends
Despite the potential bumps in the road ahead and regulatory obstacles to overcome, we see promising trends in the telehealth landscape. In our next report, we’ll take a look at specialties that are winning big as a result of telehealth developments—and how this impacts the outlook for healthcare business owners and investors.
Our team is available as a resource should you wish to discuss these or other healthcare industry topics. Please do not hesitate to reach out using our contact information below.
Kevin Cable
Managing Director
kcable@cascadiacapital.com
(206) 696-7922
Adam Stormoen
Managing Director
astormoen@cascadiacapital.com
(612) 720-8136
Vitaliy Marchenko
Vice President
vmarchenko@cascadiacapital.com
(253) 314-3143
Novan Le
Vice President
nle@cascadiacapital.com
(206) 436-2510
(1) Fierce Healthcare, https://www.fiercehealthcare.com/practices/half-physicians-now-using-telehealth-as-covid-changes-practice-operations
(2) https://www.healthcaredive.com/news/250b-of-all-healthcare-spend-could-be-digitized-mckinsey-estimates/579212/
(3) https://www.policymed.com/2020/04/covid-19-recent-changes-to-telehealth-regulations-and-reimbursement.html