Following a telehealth boom in 2020 propelled by the COVID-19 pandemic, virtual visits have started to stabilize but at elevated levels compared to pre-pandemic demand.
Telehealth use overall has leveled off at levels 38 times higher than before the COVID-19 pandemic, ranging from 13% to 17% of visits across all specialties, according to an analysis from McKinsey released in July.
Data from Teladoc's quarterly earnings reports also indicate that membership has plateaued at around 52 million members for the past three quarters. And, while telehealth visits continue to grow (see graph below), the growth has slowed considerably from the 65% jump seen in the first quarter of 2020 to 10% growth in visits in the second quarter of 2021.
Fair Health, which tracks telehealth visits as a percentage of all medical claim lines, also reported telehealth visits represented 4.2% of medical claims in July, down from 4.5% in June and down significantly from 13% at the peak of the pandemic in April 2020, according to Fair Health's Monthly Telehealth Regional Tracker.
But that's still much higher than January 2020, when telehealth utilization represented only 0.24% of medical claims.
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Consumers have now adopted virtual care at a fast pace and around 40% say that they believe they will continue to use telehealth going forward—up from 11% of consumers using telehealth prior to COVID-19, McKinsey reported.
For the major incumbent telehealth players—Teladoc, Amwell, Grand Rounds Health and Doctor On Demand and MDLive—the current state of play represents both opportunities and challenges. New entrants have now rushed to the market with more specialized virtual care platforms, fueled by a boom in venture capital dollars. Globally, telehealth companies raised $4.2 billion in the first half of 2021, according to Mercom Capital Group, a global communications and research firm.
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"Ten years ago, Doctor On Demand, MDLive and Amwell had the market onto themselves. Largely, in part, due to pandemic, but also with reimbursement policy changes and innovation and an emerging tech side of the market, this has all driven new entrants to what you think of as the classic telehealth space," Jeff Becker, principal healthcare analyst at CB Insights, told Fierce Healthcare.
The competition is "coming from everywhere," Becker said, noting that the incumbent telehealth players traditionally generated revenue from one-off urgent care, low-acuity care and primary care visits handled virtually.
"Now you have Heal and DispatchHealth sending clinicians to your house or workplace to compete for that same urgent care book of business. You have Forward and One Medical with direct primary care and they, with a lot of venture backing, are competing for that one-off primary care, urgent care telehealth book of business," he said.
There are also startups providing remote patient monitoring and virtual chronic disease management with a focus on specialty conditions, such as Monogram Health for chronic kidney disease patients and Hinge Health, which focuses on musculoskeletal pain. And there are digital health companies like Hims & Hers and Ro that offer prescription drug delivery and telehealth visits.
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Retail giant Amazon is getting into the telehealth market with Amazon Care. According to a recent media report, Amazon plans to expand its virtual care services as well as in-home care to more than 20 major U.S. cities this year and in 2022.
"We’re seeing telehealth maturing into service line-level capabilities. There are lots of new changes happening that threaten the traditional book of business for the incumbent players," Becker said.
But with the idea that a rising tide lifts all boats, the overall rise in virtual care visits and changes in telehealth reimbursement spell good news for companies in the market.
"This much more financially viable market should come as a positive sign to the incumbent players, despite all the new competitors," Becker said. "There's a massive increase in the total number of telehealth visits, and there's an incremental improvement on reimbursement. The economics of the space can sustain more players."
Research from analytics company Trilliant Health paints a slightly different picture and concludes that only about 13% of Americans used telehealth during the pandemic. Trilliant Health's analysis found that during the pandemic, telehealth was primarily used for behavioral health, especially by commercially insured women between the ages of 20 and 49.
“The increase in capital investments in tele-based companies and the expansion of more providers into telehealth, like Amazon, that we saw during COVID-19 is catering to very small consumer segments of corresponding demand," Sanjula Jain, Ph.D., senior vice president of market strategy and chief research officer at Trilliant Health, told Fierce Healthcare back in June.
Given these trends, Jain said telehealth is becoming a commodity-type service and cautions that traditional providers—notably hospitals and health systems—will be hard-pressed to compete with new market entrants that have longstanding relationships with consumers.
A shifting digital-first landscape
Similar to other industries like retail and banking, healthcare will shift to a model where digital will be a patient's first point of contact with a provider, industry experts say.
"Organizations are putting more effort into building out a full network of telehealth and in-person. It will stop being telehealth versus in-person, and it will be telehealth before in-person as a triage point," Becker said.
Moving ahead, Becker expects the big telehealth players to build out specialized virtual clinics for high-cost conditions like kidney disease, MSK pain or migraines to keep up with startups flooding the market. Vendors also will ramp up capabilities to offer digital pharmacies and diagnostics services where connected devices can be mailed to consumers' homes.
"I expect to see Amazon move to down the path of LetsGetChecked with a telehealth platform to assess symptoms and mail-away diagnostic tests combined with same-day delivery of drugs to treat conditions. More of that primary care value channel will be moving into digital channels," he said.
The incumbent telehealth players also will double down on targeting large employers, Becker said. "That will pay dividends as large employers are left holding the bill for a lot of our medical spend."