Consumers Want Telehealth: Market Lags Behind

Undeniable Promise

Telehealth holds undeniable promise for expanding the reach and efficiency of medical care in the United States.

From wearable devices that stream health data to providers and insurers, to high definition video calling that can put patients face-to-face with a doctor hundreds of miles away, telehealth solutions figure to revolutionize healthcare delivery, costs, and outcomes.

Yet, despite strong consumer demand, we have yet to witness widespread implementation of telehealth solutions. In this article, we discuss the growing demand for telehealth services, the factors that currently limit their supply, and the outlook for telehealth as market barriers fall.

Strong Demand For Telehealth's Obvious Benefits

Telehealth holds the promise of saving billions annually by creating efficiencies in patient transportation and scheduling, reducing overcrowding in hospital emergency departments, and decreasing overhead costs for medical providers, among other benefits.

If you were to look only at the demand side of the equation, you could understandably (albeit mistakenly) assume that telehealth already constitutes a massive segment of the American healthcare services economy. According to research published in 2016 by SalesForce (as reported on Medium.com), "over 60 percent of patients support the use of telehealth, while over 71 percent want their physicians to adopt mobile health applications."

Millennials, who are already accustomed to screen-based interaction, comprise a large segment of the consumers clamoring for telehealth services, but they are by no means the only market segment that would benefit from its growth. Telehealth has the potential to deliver much-needed healthcare services to the demographic bubble of aging, yet technologically savvy, Baby Boomers. It can also fill a market void in rural areas ravaged by hospital closings and a tight medical labor market that makes recruiting talent difficult.

Not to mention the potentially massive cost savings. Telehealth holds the promise of saving billions annually by creating efficiencies in patient transportation and scheduling, reducing overcrowding in hospital emergency departments, and decreasing overhead costs for medical providers, among other benefits. According to Medium, the average cost of a telehealth appointment in 2018 was $40-$50, far lower than a comparable in-person visit. 

Barriers to Growth

With all of these clear benefits, it is little wonder experts predict telehealth will explode over the next ten years. Yet, we're also left to wonder: why isn't telehealth booming already? The answer is that technological innovation has outpaced public policy, which isn't unusual these days. Here are some of the temporary roadblocks that has caused. 

Laws and Regulations Still Catching Up

According to the nonprofit Center for Connected Health Care Policy (CCHP), the biggest drag on the growth of telehealth, for the time being, is a body of laws and regulations that has yet to catch up to rapid technological change. Most significant are the regulations governing Medicare and Medicaid, which as of February 2019 have yet to include a reimbursement policy for telehealth services that matches the demand.

This mismatch between Medicare/Medicaid regulations and what consumers want has temporarily slowed down telehealth implementation. That's not surprising, considering that the two federal programs account for nearly 40% (almost $1.3 trillion) of U.S. health spending, according to data from the federal government's Centers for Medicare and Medicaid Services. But, change is afoot. CCHP notes some states have begun to mandate that private insurers reimburse telehealth services, signaling broad recognition of telehealth's benefits. We expect Medicare/Medicaid regulations to catch up soon enough. When they do, they'll help bring much-needed uniformity to the marketplace as states fall into line, eliminating the inconsistent patchwork of laws currently in place. 

Another regulatory barrier that needs to catch up with technology has to do with physician and provider licensing. Currently, who gets to practice medicine where is the exclusive province of state medical licensing boards, meaning doctors can't cross a state line to deliver services without being licensed in both states. For telehealth to reach its full potential, however, patients need to be able to access healthcare services remotely no matter where their provider is located. 

Some Providers Resist Change

It may seem incongruous, but another barrier to the growth of telehealth has been hesitation from parts of the medical professional community. Some doctors hold firm to the belief that there is no substitute to seeing a patient in-person. Similarly, CCHP reports other providers worry that telehealth could increase malpractice claims and, in turn, increase the (already-high) cost of malpractice insurance premiums.

These, too, are the sorts of growing pains any industry contending with technological change has to face. As tech-savvy millenials join the healthcare workforce, and as insurance carriers develop data on telehealth outcomes, we expect those pains to fade. The growth of the wearable health technology market will help by playing a role in giving providers comfort with providing services remotely. We expect these devices to provide ever-more accurate, real-time streams of health data that give doctors comfort in their ability to diagnose and treat conditions from afar. The same devices will generate data helpful to insurers in modeling risk and setting affordable rates. 

Concerns Over Data Security, Privacy, and Cost

Regulators, providers, and patients also have understandable worries about privacy and data security in an era of telehealth. If there's one place where even those who to share their entire lives with the world on social media want privacy, it's in their doctor's office.  

Securing streams of video and wearable device data between patients and doctors will undoubtedly impose a cost on providers, but we don't see this as a lasting problem. Telehealth is hardly the only industry in which cybersecurity is important. As the market for providing digital security solutions matures, costs will drop. Policymakers will also have to contend with setting minimum security requirements, but again, the relevant issues are not confined to the healthcare realm. 

Prescribing Challenges

Finally, the system by which providers prescribe medications will also have to adapt to the telehealth environment. For example, federal law currently places restrictions on prescribing controlled substances without the prescribing doctor treating the patient in-person. State laws, in addition, govern prescriptions of all other drugs, for the time being subjecting telehealth to current the cross-border inconsistencies and uncertainties noted above. 

Closing In On The Telehealth Boom

If there is one thing the past decade (or century, for that matter) has taught us, it is that technological innovation drives public policy more often than the inverse. Given the exceedingly strong and growing demand – some might say, necessity – for telehealth services in the United States, it is a safe bet the barriers noted above will fall, perhaps sooner than we might expect. For millions of Americans in dire need of affordable, accessible healthcare services, the regulatory and structural logjams can't break soon enough.