Covid-19, “The Perfect Storm” accelerating telemedicine adoption

Covid-19 has been the foremost reason driving digitisation across all industries, especially telemedicine. Telemedicine is the use of electronic communication, such as videoconferencing or phone calls, for the delivery of remote clinical care via virtual consultations. Early in the COVID-19 pandemic, telemedicine usage surged as consumers and providers sought ways to safely access and deliver healthcare.

In April 2020, overall telemedicine utilization for office visits and outpatient care was 78 times higher than in February 2020 (based on US medical claims processing data). This trend is clearly visible on closer examination of telemedicine claims volumes compared to pre-covid levels (February 2020). The trend has then dropped down to 38 times and has stabilized at those levels.

Courtesy: McKinsey (https://www.mckinsey.com/industries/healthcare-systems-and-services/our-insights/telehealth-a-quarter-trillion-dollar-post-covid-19-reality)

Apart from the adoption of video consultations we are also seeing a uptrend in the launch of virtual care devices post covid-19. We will be seeing a massive 257 telemedicine vitaul care devices entering the market in 2023 compared to 71 in 2021.

Although these trends show a rapid adoption of telemedicine, will this trend last? What are the factors affecting the transition of patients availing virtual care from doctor visits?

On a closer look at the data we have arrived at the following conlcusions:

  • Consumer and provider attributes towards telemedicine adoptions has improved post covid and has paved way for hybrid consultation models and new business models in digital healthcare.
  • Investments into digital health products have been put into high gear, accelerating the marketplace’s current and future capacity to design and deliver digital health solutions.

We’ll deep dive into each of the findings and discuss in detail.

Telemedicine Utilisation

Telemedicine adoption increased to an initial spike of more than 32 percent of office and outpatient visits occurring via telemedicine in April 2020. This stabilised to over 13 to 17 percent across all specialities post covid.

Patient encounters for the year 2020 was categorised into COVID-19–related or not COVID-19–related based on signs and symptoms in the “reason for visit” section and also by the covid related ICD-10 codes. It was found that during the early pandemic period in 2020, the percentage of telemedicine visits for persons aged 18–49 years increased slightly, from 68% during the first week of January 2020 to 73% during the last week of March. During January–March 2020, most telemedicine patients (93%) sought care for conditions other than COVID-19. This is a clear indication that patients moved towards a digital mode of healthcare delivery faster.

Eventhough the pace of tranfer can be attributed to stringent covid social distancing protocols, there was increased acceptance of telemedicine as a mode of healthcare. This can be tracked by looking at the social mentions on Twitter regarding telemedicine beginning of the pandemic (March 15, 2020–April 20, 2020) and one year later (March 12, 2021–April 19, 2021).

In examining the data collected one year after the World Health Organization announced the COVID-19 pandemic, online discourse shifted significantly toward a focus on telemedicine news and telemedicine services for patients and healthcare providers. This suggests the widespread interest and system adoption of telemedicine services and a transition from telemedicine from being a niche feature of some domains in the healthcare system to being widely utilized ¹ .

Consumer and Provider adoption

Consumer adoption of telemedicine has increased the requirement of a “digital front door” or “low-cost-digital-first-visit”. This has forced a lot of medical practitioners and physicians to adopt new business models for digital health care. On the healthcare provider side, 58 percent of physicians continue to view telemedicine more favorably now than they did before COVID-19².

Data showing split of patient visits across telephone, telemedicine and In-Person. Courtesy: McKinsey (https://www.mckinsey.com/industries/healthcare-systems-and-services/our-insights/telehealth-a-quarter-trillion-dollar-post-covid-19-reality)

We are observing that this adoption of telemedicine on the consumer and providers side has paved way for new business models in digital heathcare and virtual care.

  • Virtual office visits: this model enables clinicians to better manage patients with chronic conditions, with the support of remote patient monitoring, digital therapeutics, and digital coaching, in addition to virtual visits.
  • Near-virtual office visits: this extends the opportunity for patients to conveniently access care outside a provider’s office, by combining virtual access to physician consults with “near home” sites for testing and immunizations, such as worksite clinics or retail clinics.
  • Virtual home health services: leverages virtual visits, remote monitoring, and digital patient engagement tools to enable some of these services to be delivered remotely, such as a portion of an evaluation, patient and care giver education, physical therapy, occupational therapy, and speech therapy.
  • Tech-enabled home medication administration: allows patients to shift receiving some infusible and injectable drugs from the clinic to the home.

Digital health investments and Deal sizes

This increase in innovative business models and increased adoption on consumer and provider side has increased the investment opportunities in digital health care. The first half of 2021 closed with $14.7B invested across 372 US digital health deals with a $39.6M average deal size. Fifty-nine percent of that funding came from 48 mega deals ($100M+), including one of the largest single rounds of investment in digital health history: Noom’s $540M Series F round.

Chart showing average deal sizes and total venture investment. Courtesy Rock Health (https://rockhealth.com/insights/h1-2021-digital-health-funding-another-blockbuster-year-in-six-months/)

Conlusion

Overall, the acceleration towards adoption of telemedicine and virtual care will continue to increase as more and more funding and change in consumer and provider behavior fuels it. This will lead to a greater healthcare inclusion at a lower cost and also drive a $3 billion revenue market to grow to a $250 billion market.

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