Report: Telehealth is changing the way health care is organized and financed

Telemedicine has become ubiquitous over the past two years, and the pandemic has catalyzed improved access to health care. But the adoption of new technologies means new challenges for owners, funders and suppliers.

A new white paper Co-author Jonathan Henderson, shareholder of Dallas-based Polsinelli, president of the National Corporate and Transactional Practice Group and co-lead of the firm’s Health Care M + A Practice, aims to help answer some of these questions.

Telehealth and telemedicine do not require a physical presence, reducing the costs of delivering health care while maintaining efficiency and quality. With lower costs, the rate of return on telehealth investment increases. The practice also eliminates the need to travel, which means a lower carbon footprint and improved environmental, social and governance factors. These characteristics make the industry attractive to startups, tech companies, existing vendors, and private equity.

And the proof is in the pudding. Direct venture capital investments for telehealth and telemedicine reached $ 788 million in the first quarter of 2020, and there are many other sources of funding for these providers as well. In October, telehealth mammoth Teladoc acquired Livongo, a remote diabetes monitoring company. The $ 18.5 billion cash and stock transaction was one of the biggest acquisitions of the year. Other investments are tied to some of the biggest names in the business world. Amazon, Microsoft, Cigna, Aetna, and Walgreens all invest in telehealth platforms, and San Francisco-based venture capital firm Rock Health invested $ 9.4 billion in digital health startups last year. “These investments represent the tip of the iceberg as Wall Street and private equity sponsors concentrate more resources in the nascent industry,” the newspaper read.

Local businesses are also attractive targets. Last year, the local telehealth company Access Physicians was acquired by SOC Telemed. The company is now run by the founder of Access and is the largest provider of remote specialist consultations in the country. Also attractive is TimelyMD, a Fort Worth-based telehealth company that partners with colleges and universities to provide services. “It would be a logical acquisition target for a handful of different companies, but one of them would be Teladoc or another tech company that is interested in organic growth in a new vertical.”

As investments continue, the models go beyond emergency care and provide behavioral health, oncology and patient monitoring. The impact of consumerism is in effect. These additional services extend the capabilities of traditional healthcare and increase convenience for patients. The technology also allows flexibility for suppliers. “On the supplier side, there is the concept of the sharing economy that is playing out,” says Henderson. “A large portion of the telemedicine physician workforce are physicians with capability in their day, so the workforce is developed like Airbnb for providers to expand their use. These additional benefits open up new ownership and investment models that have never been seen in the industry before.

Telehealth is also changing the way we pay for health care, acting as a catalyst for the way we pay for health care. Fee-for-service models encourage unnecessary or expensive care, contributing to rising health care costs, which approach 20% of national GDP. Telehealth has turned this model upside down because providers cannot run a different lab or test that may not be needed and approximate the model to a value-based model of care.

The law is also changing. During the pandemic, many states passed parity laws that reimbursed providers for both a telehealth visit and an office visit without any procedures. While these laws have not been made permanent, the pervasive adoption of technology makes it likely.

Telehealth is the present and the future, but it’s not just a lucrative investment. It expands access, reduces barriers for patients and providers, and improves continuity of care. “If I am a health system and fully integrated, there is now a need to offer telehealth services as another component,” says Henderson.

Read all the paper here.

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