Last month’s congressional budget deal was a significant step forward for telemedicine, but we’re still in the early innings for adoption.
That market immaturity was made clear in the survey findings from a new Sage Growth Partners report, Defining Telemedicine's Role: The View From the C-Suite, aimed at gauging healthcare executive’s adoption of and perspectives on telemedicine.
Two-thirds of respondents report budgets of only $250,000 or less – far under the amount normally committed to other strategic technologies, like EHRs. While healthcare executives are interested in telemedicine – 86% say it’s a priority – their caution in committing significant budget to it is likely due to the complex regulatory environment and reimbursement challenges. Tim Wright, VP of Strategy at InTouch Health, a telemedicine solution provider, gave me his perspective: “Payment is a critical issue and a barrier to adoption. Most telemedicine is still not reimbursed under traditional payment plans. Although there can be work-arounds, this barrier creates a headwind for any provider considering telehealth-based services. We’re hopeful that the recently passed legislation will help open more doors for widespread reimbursement for telehealth.”
Indeed, the vast majority of healthcare executives (79%) believe telemedicine will contribute to less than 15% of their total revenue in three years. It’s clear that we’ll need reform above and beyond what we saw in February in order for telemedicine to take off in the near-term.
Here are five key takeaways from the research:
1. Though budgets are modest, more than half have adopted telemedicine. Despite low budgetary commitments, 56% percent have already implemented telemedicine in their organization; 27% have built or are building their own solution, while 29% are already working with one or more vendors. Of the 44% who have not yet adopted telemedicine, 86% say it’s a medium to high priority. However, most organizations are likely not adopting telemedicine across all settings of care at once. A stepwise approach, implementing telemedicine for one use case, specialty, or setting of care at a time, would be a smart strategy.
2. There’s friction across care settings. The caveat with a stepwise implementation is that one vendor may not be able to appropriately serve all settings of care. Thirty-six percent say consumer-based technologies (Skype, Vidyo, iPhone, etc.) are appropriate for telemedicine in acute care settings; though 20% express concern regarding these solutions’ HIPAA compliance. A majority (64%) say these DTC solutions are not appropriate for, or would be dangerous in an acute care setting. It’s clear that telemedicine applications may not fit into a "one size fits all” solution.
3. There’s a low tolerance for more than 1-2 vendors. More than half of respondents said they would tolerate only 1-2 telemedicine vendors at most – they’re seeking an enterprise buy. Only 15% believe three or more vendors are acceptable. Because of the needs of different care settings and use cases, healthcare executives selecting a single telemedicine solution should ensure that the vendor can truly meet their needs across the care spectrum.
4. Connectivity is a priority, yet failure is high. Connectivity was reported as a critical factor for respondents, with 70% asserting that extremely reliable connectivity is a must-have. Despite this, nearly half report their connection fails up to 15% of the time. This disconnect is another indicator that the telemedicine market is in its early stages. It’s alarming to think of the acute use cases in which providers may be experiencing and tolerating connection failures. Organizations considering applying telemedicine to acute care use should ensure their solution’s connectivity, security, video quality, etc. all meet the needs of the use case.
5. Telemedicine will supplement, but not replace, current care delivery methods. As I mentioned earlier, the majority of healthcare executives believe telemedicine will contribute to less than 15% of their total revenue in three years. This is echoed by the fact that only nine percent believe that a quarter or more of their patient encounters will be virtual in three years. While reimbursement reform has the power to change this outlook, the current low expectations for telemedicine’s use and ROI indicates that it isn’t yet part of organization-wide strategies.
Most providers aren’t really thinking about telemedicine as a total cost of care solution yet, but that’s where things are headed. “The winning players in the telehealth sector are going to be the ones that recognize the integral marriage between chronic care management, behavioral health, and social determinants,” said Grant Chamberlain, Managing Director at Ziegler Healthcare Investment Banking, which works with telemedicine companies. “We anticipate an increasing pace of consolidation over the next 12 months as parties strive to build more fully integrated platform solutions along multiple disease states as opposed to point solutions.”
This insight is supported by the data I referred to above, especially organizations’ intolerance of multiple solutions platforms and the friction of using one solution across care settings. Consolidation may hasten telemedicine adoption, but in the end it will come down to how the provider is getting paid, especially under fee for service. In a value-based care model, organizations must ask – is there enough risk for it to be worth it? Is there a business case for telemedicine?
Leaders that approach this as just another technology buy they think they may need will likely lead to sub-par results. It is more important to first understand the organization’s patient care model and business strategy, and then identify how telemedicine can support its overall objectives. Without this strategic approach, telemedicine will fall short of its clinical and financial promises.
The views, opinions and positions expressed within these guest posts are those of the author alone and do not represent those of Becker's Hospital Review/Becker's Healthcare. The accuracy, completeness and validity of any statements made within this article are not guaranteed. We accept no liability for any errors, omissions or representations. The copyright of this content belongs to the author and any liability with regards to infringement of intellectual property rights remains with them.