What’s Real in Virtual Health?
I’m an absolute fan (read: geek) of Star Trek, Star Wars and Doctor Who, so the topic of virtual health is one that truly thrills me. While we haven’t invented the Millennium Falcon’s hyperdrive, the TARDIS or a Star Trek–styled transporter, these franchises have a remarkable record of inspiring and predicting future technologies. The Star Trek universe anticipated cell phones (Captain Kirk’s communicator) and virtual displays like Google Glass. Doctor Who’s sonic screwdriver and Dr McCoy’s medical tricorder are today’s hand-held medical diagnostic devices.
This is a reflective way of saying that what may seem like science fiction today can be reality in the near future. But all of the buzz in the marketplace on virtual health and the overabundance of technologies make it hard to separate fact from fiction. Below, I share Sg2’s position on virtual health, describe what’s real and what isn’t, and take stock of key market trends.
Sg2 is bullish on virtual health’s value proposition as both an access channel and a care delivery platform. We define virtual health as electronically enabled care services, including clinician-to-clinician, provider-to-patient and consumer-driven interactions. This definition encompasses a range of terminologies including telemedicine, telehealth, e-health and mobile health. We think virtual health will revolutionize care delivery just as ATMs and online account management revolutionized banking. And, while there are highly valued niche players in this space, we don’t see it as a stand-alone business unto itself, but really as an enabling capability that is part of a broader strategy.
So what isn’t real? Is there too much hype in the marketplace? Yes. Take the consumer wearables segment. In a recent Accenture survey, consumers said wearable health monitors are too complicated to use (24%), did not set up properly (22%), or did not work as advertised (21%). The takeaway: too many consumers still have trouble using these devices. Getting the consumer-facing side of this technology right is one hurdle. Wearable data collection and integration with an EHR represent another. But the most difficult step becomes how to translate wearable data into actionable information. Do most physicians really want another EHR alert? Probably not. There’s already enough alarm fatigue out there today.
But there is more reality than not when it comes to virtual health. We should all be past the notion that clinician-to-clinician platforms, such as eICU and telestroke, don’t make sense. There are compelling clinical and financial cases supporting these platforms. And opportunity is ripe for the next wave of telespecialty programs in areas such as behavioral health, pediatrics and dermatology. The provider-to-patient models—think virtual urgent care and remote patient monitoring—are less mature in terms of business model design, but we can confidently say these models are here to stay. So if you’re not already deep into your virtual health planning process, you’re late to this game and playing catch up.
Still not a believer, or think that virtual health won’t become real in your market? Consider that Walgreens just partnered with MDLive—backed by Sentara Healthcare and Sutter Health—to provide Walgreens customers access to physicians via video chat on a smartphone, tablet or computer. What does this signal to us? It means national competition in which the barriers to entry are becoming higher and higher.
This type of expansion is happening in many other places as well. The US Department of Veterans Affairs, which boasts one of the largest telehealth offerings in the nation, is expanding a program that had already provided more than 2 million virtual appointments during fiscal year 2014. CHI Franciscan Health in Tacoma, WA, which we highlighted during last year’s Executive Summit, is expanding the geographic reach of its virtual urgent care program as well.
But what might be more fascinating is that virtual urgent care platforms are becoming a substitute product. That is, the evaluation and management (E&M) visits that reside in today’s retail clinics and urgent care centers could take place virtually. Consider this: in Northwest Chicagoland, Sg2 estimates that 36% of today’s retail clinic volume is at risk of going virtual over the next decade. Some of our most innovative clients are introducing direct-to-consumer virtual care platforms to compete with traditional bricks-and-mortar convenient care providers.
We’ve tracked this space since 2008 when we first began forecasting “e-visits.” Today, our forecast model shows that 15% of all US E&M visits will occur virtually by 2024. Despite current market expansion and our forecasted long-term growth, reimbursement remains as the single largest barrier to widespread adoption of virtual health. Just about all of our client inquiries in this space revolve around revenue. For the first time ever, CMS now pays for virtual chronic care services. Beginning in January 2015, physicians receive $46.20 per patient per month for 20 minutes of non–face-to-face chronic care management. What does this mean? Yes, reimbursement models lag (as they always do), but this was a bold step forward in the widespread adoption of virtual care. One more point: leading adopters of virtual health view their programs as less about revenue enhancement and more about cost avoidance and closing gaps in care.
Medical workforce attitudes also remain a challenge to adoption. In the case of virtual E&M visits, we still hear concerns from clinicians that they need to physically examine a patient. Some state medical boards, including those in Georgia and Texas, require a clinician to have examined a patient in-person before providing telemedicine services. However, studies continue to demonstrate that care delivered virtually is as good as or better than in-person care in terms of quality and patient satisfaction.
One study published in The Journal of Family Practice found that costs for patients with chronic pain who used telemedicine consults were lower than the comparative in-person group (median cost $133 vs $433, respectively). And more patients reported they were highly satisfied with telemedicine consults (56%) vs in-person consults (24%). The evidence base supporting virtual health is growing, which will influence clinician and professional association attitudes over time.
We hear other valid concerns from our clients, including licensing and credentialing across state lines and additional time commitments from clinicians (eg, taking virtual urgent care visits on weekends and after-hours). Last year, the Federation of State Medical Boards introduced a framework for expediting licenses allowing physicians to practice in multiple states. Through this interstate agreement, physicians who are board certified and have no previous disciplinary actions can apply for rapid multistate licensure.
So the early barriers to diffusion—reimbursement, regulations and clinician culture—are being overcome and replaced by new ones, namely competitive forces. More importantly, virtual health can play an important role in your organizational strategy, from enhancing care delivery models (eg, chronic disease management, medication adherence) to expanding access channels.
If last year was about virtual health strategy discovery and technology, then 2015 will be about operationalizing and scaling your virtual health programs. We’ve dedicated a meaningful portion of our 2015 research agenda to help you do this, including a deep dive into how the rest of the world is using these technologies. If you’re late to this game, get in touch with the Sg2 Consulting team to assess your options.