For all the hype about telehealth in recent years, it still constitutes less than 1% of ambulatory visits in the United States, notes Jeffrey Kosowsky, MD, PhD, Senior Vice President of Corporate Development and Business Development at American Well. But with changes in regulation, new technologies, and increasing consumer and provider acceptance, telehealth is poised to expand. Its real promise is in returning health care to the home, which in turn can lower overall costs of care dramatically. Catalyst Editorial Director Edward Prewitt talked with Kosowsky to discuss keys to success, how to scale, and how entrants in health care can thrive.
Edward Prewitt: What drivers in the health care marketplace are creating needs and opportunities for new players?
Jeffrey Kosowsky: There are five general drivers in the broader marketplace…and all affect telehealth. The first is the looming non-viability of the payment model. … For telehealth, the first adopters were payers, then employers, because telehealth visits head-to-head are cheaper.
The second driver is new technologies enabling new workflows. … You could say that telehealth existed as far back as Morse code, but it didn’t enter into viability until real-time video…and mobile broadband.
The third driver is new modalities for health care. … One of the early objections [to telehealth] was that you can’t touch it. But biometrics can help that, and telehealth just by its nature encourages interactivity. …
Fourth, there are important legal and regulatory changes. … When our company started out just about ten years ago, telehealth wasn’t legal, at least from a prescribing perspective, in any state. Now, it’s legal both with consults and prescriptions in every state but Texas and Arkansas, and even that barrier is soon to fall. … So we’ve had a dramatic change. We show maps that go from almost total red to total green over the course of a couple of years. …
We’re seeing a similar thing now evolving in reimbursement, with more than 30 states now having legislation mandating various levels of coverage in reimbursement for telehealth. That’s still a work in progress, because there’s a difference between mandating coverage versus mandating reimbursement versus mandating reimbursement at parity, and then the final hurdle, which is to get everybody, including the payers, to interpret the law the same.
The final driver is consumerization of health care. … There’s probably nothing that more epitomizes that than telehealth, which is really about the consumer having convenience, choice, cost, and trust available at their fingertips. Consumers can choose the type and brand of clinical service they are seeking. They can pick their doctor in real time. They can choose their pharmacy, and of course, they can choose to have the visit anywhere and anytime.
Prewitt: What are the biggest challenges preventing scale in your operations?
Kosowsky: I think the biggest challenge to scale is really that we’re in the role of innovator and trailblazer in telehealth. We’re at the forefront of driving both consumer and physician adoption of these new technologies and workplaces, and if you think of consumers as demand for service and physicians as supply of service, you really need both pieces.
So consumers have to be willing to accept and seek care via telehealth, and physicians have to be willing to provide such care via telehealth. Now, the good news is that when we survey people, more than two-thirds of consumers are open and willing to see a doctor via video. And that’s even with only about 1% of the population that has probably ever even had a video telehealth visit. That’s very promising compared to technologies like ATMs that took a lot longer to adopt and had a lot more resistance, even though in retrospect it seems almost foolish that people would have preferred to wait in line at a bank rather than get immediate cash, 24/7, from their ATM.
What is even more surprising to me is that physicians are similarly very open to telehealth. A survey by Quantia said that about 57% of physicians were willing to see patients via telehealth technologies. About another third weren’t sure, and only 15–20% said they weren’t willing.
Prewitt: Given the changing health care landscape, what are you most optimistic about?
Kosowsky: First of all, most fundamentally, we believe that care is moving to the home. This is driven by consumerization, new technologies, and the overall cost and efficiency savings potential. Indeed, most public observers predict that telehealth will capture 50–70% or more of ambulatory visits. So from a savings potential and for an impact on health care delivery, the opportunity is boundless.
But even beyond the metric of measuring the success of telehealth by its penetration, we are optimistic about … driving an entire new cycle of care that will actually be better served in the home than traditional clinical settings. For example, new sensors, monitoring technologies, and analytics means that more biometrics can be monitored continuously using affordable, consumer-grade technology. So right from the home, you have all the data points better than one can get in an ambulatory setting.
Prewitt: That’s going to require a shift in the way that telehealth is currently perceived. You’ll have to integrate with biometrics, for instance.
Kosowsky: Absolutely. We talk about telehealth 1.0 versus telehealth 2.0. Telehealth 1.0 is urgent care, where not only do you not need to integrate with a lot of the sensors, but you also don’t really need to integrate with medical records or your existing PCP. If it’s urgent care, it’s just like an urgent care center. Yes, your medical history is somewhat important, but basically you’re seeing a new doctor for the first time with a new presentation.
Telehealth 2.0 for us is about chronic care, and that’s all about integration. … It’s integration with sources of biometrics, sensors, remote patient monitoring, and it’s integration with the normal processes and workflows of health care — because it’s one thing to have a doctor who may only practice telehealth urgent care, but when one is involved in primary care and chronic care, and particularly chronic disease management, continuity of care is important. So you need to be interwoven with the workflows of your regular doctor, and just like we don’t have tele-lawyers and regular lawyers — where you have to see a different lawyer when you call by phone, and it’s different when we come visit — we shouldn’t be having tele-doctors. Your doctor will say, “Next time you can see me via telehealth, and the time after that I’d like you to come in because I need to do a test, or there’s a reason I need you to have my presence.” So telehealth will not be an arbitrary option, but it’ll be woven directly into the care plans as appropriate. We believe both from a cost and convenience perspective that it’ll be increasingly favored.
Prewitt: What are three critical success factors that new organizations need to thrive in the current marketplace?
Kosowsky: First of all, the generic factor is people. Having good talent is critical to entrepreneurial, fast-paced organizations. … I think one can’t be successful without emphasizing the best people. We’re blessed by being located in Boston, which is a hub of both of technology and medicine. Given that we sit at the intersection of those two, we truly have access to some of the best talent in the country.
Moving on to more specific success factors, the second is being at the center of a really robust ecosystem. Health care is complex. There are consumers who constitute demand, there are providers who are the ones who supply the service, both as effecters of health care and also the stores of clinical content and clinical knowledge, and then there are the payers who finance the system. We sit in the center of that ecosystem. … We work very closely with people that we call demand generators, who bring lots of consumers. That’s anywhere from the carriers and the handset manufacturers to the web-based players that bring tens if not hundreds of millions of consumers and expose them to telehealth. They’re very important, because adoption starts with that first interaction, and with making the offer to the consumer that telehealth is not only available but convenient.
The third factor is having a business model that is not only profitable but that’s agile. The end game is clear: all the prognosticators say telehealth is going to be big. A marketplace that’s big means there’s profit to be made, but we can’t predict the speed of regulatory or reimbursement changes or the pace and trajectory of consumer and provider adoption. So the model itself needs to be robust and adaptive to move with the marketplace. Our goal is not to make the most money today; our goal is to make sure that not only are we one of the few that will be left standing — because in most similar technology businesses, there are a couple of winners, a couple of survivors — but we also want to emerge as one of the winners.
Prewitt: How long before the marketplace matures in telemedicine?
Kosowsky: That is literally the billion-dollar question. We already have seen competitors come and go. They are ones who were basically giving away the service for free. You can get enough investment to last you a little time, but at some point you run out of free money.
I’m not sure I want to hazard a guess. I think this is one of these exponential curves — as we look back, we will see exponential growth, and as we look forward, we’ll continue to see additional exponential growth. So no matter how far we come, I think that hockey stick is still ahead of us. …
For the last 7 or 8 years, we’ve more than doubled our business just about every year. And yet the whole market for telehealth, for ambulatory video visits, is less than 1% of ambulatory visits. So from a company perspective, we’re doing great – we’re the envy of any start-up out there to grow at such a sustained pace — but from an opportunity perspective, both us and other similar companies are not even 1% of the total volume of ambulatory care.
Prewitt: What’s the most important policy change that federal or state governments can make to better position organizations like yours for success?
Kosowsky: I’ll come back to reimbursement, with both parity of coverage and payment. Because without financing, every model breaks down. Not only is there no money to pay the platform players — the technology players like ourselves — but even more critically, there’s no money to pay the providers. … So we really see reimbursement as that ultimate key.
When that becomes universal or near universal, I think that will be the final catalyst that very quickly unleashes a torrent of adoption. In particular, the billion-dollar, the multi-billion dollar question is around Medicare reimbursement. It’s the largest market for care, but … Medicare and CMS leadership have been conservative, because their biggest concern — and we’ve heard this directly — is that if they open up legitimate opportunities for telehealth, there will be abusers who will drive a truck through those openings and create Medicare liabilities that they’re not prepared to reimburse for.
But at the end of the day, you have to go back to … how many dollars there are in health care and the percentage of our GDP. It doesn’t take that large a percentage of those health care dollars to shift to telehealth to dramatically change the growth and economics of the business.
This Q&A originally appeared in NEJM Catalyst on October 6, 2016.