The Future of Telehealth is Being Decided Now

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Telehealth usage has exploded since the start of the pandemic…

But now that we’re nearing the “end” of the pandemic, the emergency telehealth wavers that made this recent boom happen are set to expire at the end of 2021.

And in a shocking demonstration of bipartisanship, we’re seeing a massive push right now to make the shift towards telehealth permanent.

According to Senator Brian Schatz (D-Hawaii)…

“Especially on health care, Democrats and Republicans have not seen eye-to-eye on anything at all for more than a decade. The single shining exception to that is telehealth.”

He’s right.  There’s been a decades-long build-up to this and it hasn’t always been pretty.  But new legislation looks to have support on both sides.

It’s called The Connect for Health Act

And if it passes, it would do three big things:

  1. Permanently remove geographic restrictions on telehealth…
  2. Allow patients to do visits from their homes, and…
  3. Grant the Health and Human Services secretary the permanent authority to waive telehealth restrictions.

(Not to mention, give investors more clarity around the future prospects of telehealth companies looking to make a difference.)

However, even if new regulatory frameworks do go into effect to make telehealth a permanent feature, there are still five major problems we must overcome to actually tackle the Chronic Disease Crisis here in America…

And more importantly, identify companies that have a shot at becoming this decade’s big winners.

Here they are…

Challenge #1: Improving Adherence Rates and Reducing Re-admission

One of the largest drivers of healthcare costs is hospital re-admissions.

What drives re-admission rates? According to the American Council on Science and Health…

  • Discharge too early before the patient is adequately stable.
  • Discharge to a location, e.g., home, visiting nurse, skilled nursing facility or nursing home, that cannot support recovery.
  • Recurrence or worsening of the original disease because of poor patient compliance, inadequate supervision or follow-up, or just bad luck.

At first glance, it’s easy to blame the hospital or care facility for the problem. However, the truth is always more nuanced.

The more chronic conditions a patient has, the more prescription medicines they have. With more costly – and more complex – treatment plans, it becomes harder and harder to adhere to “doctors’ orders.”

According to the Network for Excellence in Health Innovation…

A recent systematic review of peer-reviewed adherence studies finds a median estimate of the cost burden of poor adherence to chronic disease medications is approximately $17,000 per person, per year, (in 2015 dollars).

Updated estimates of the overall burden of suboptimal medication use exceed $500 billion per year in the U.S.

To make matters worse, many patients with chronic conditions have physical challenges that make it hard to get out of bed, let alone travel for regular doctor visits.

This can lead to a vicious cycle of hospitalization, readmission, and additional treatments… both at a great cost to the patients’ health and finances.

Challenge #2: Poor Data Collection

The other major challenge for patients with chronic illness is what’s known as continuity of care: do all of the physicians treating the patient know what each of the physicians are recommending or prescribing?

If they don’t, it means the patient could potentially receive conflicting advice from each of their healthcare professionals, and are potentially at risk of being over-prescribed medication they may or may not need.

This problem is only made worse in rural areas where doctor and nurse turnover rates are the highest, and medical records aren’t kept up to date across all physicians.

Primary care providers are often forced to make treatment and medication decisions based only on a very small sample of imperfect data points.

Think about it…

If a patient only visits her primary care provider three times a year to have her blood pressure, the patient’s daily medication regimen will be based on those numbers (and usually those numbers alone).

That could create a number of potential issues.

First, those numbers are often incorrect as a result of something called White Coat Syndrome: patients’ naturally elevated blood pressure when they go to a doctor’s office.

And second, those numbers represent just a small snapshot in time that is not necessarily representative of a patient’s daily life.

When seniors – especially those with chronic conditions – are treated only for acute issues and are deprived of meaningful, preventive treatment… health outcomes are worse and healthcare costs are dramatically higher.

As patients become more aware of – and engaged in – their own health, they are actively seeking ways to track their most important biomarkers.

However, the real challenge lies in what’s known as clinical integrity: What happens to the data? How is it acted upon? Who is handling the data? How are escalations and interventions handled?

Challenge #3: Adoption Rate in “High Risk” Demographics, Especially in Rural Areas

RPM technology has been available for several years now.

However, the paradox of these technologies is this: The population that actually needs telehealth and remote patient monitoring services the most usually have the least access to the technology.

For the majority of Americans, telehealth is a way to get healthcare in a significantly more intimate, quick, and convenient manner.

In practice, this typically means the primary focus of many telehealth services is approaching larger companies and getting them to offer these devices to patients as a benefit of employment…

And generally speaking, this means younger, healthy people with financial means.

As a result, many “digital health” companies are usually more transactionally focused, with the goal of optimizing for volume — not to create a longer term, relationship driven, preventive care solution for the management of chronic conditions…

Many of whom are located in rural areas with limited access to this technology.

Further, the challenges with getting rural adoption comes from a sad and unavoidable economic truth:

  • Rural areas are often more than 100 miles away from a major medical facility that have this technology already in place.

However, for the majority of physician-owned medical practices, bearing the financial burden for upgrading their systems is difficult.

Challenge #4: Adoption from Physicians and Primary Care Providers

Running a successful remote patient monitoring (RPM) program requires the average medical practice to change the way its clinicians and staff deliver patient care. It requires a substantial expansion of responsibilities, such as constant monitoring, support, and monthly reviews of the data.

As a result, the overwhelming majority of primary care providers (PCPs) do not offer RPM as an option to patients.

If patients want to use RPM technologies to take a more active role in their health, their PCP or specialist must already be participating in an RPM program, which is rare.

According to an interview with Roy Schoenberg, CEO of telehealth company Amwell…

“When it comes down to smaller and smaller physician organizations and groups, these technologies … become cost prohibitive.”

In short, there is a tremendous access problem for the patients – and in turn, physicians’ offices – who could benefit most.

This is only exacerbated in the case of the most vulnerable patient populations, who may be unable to leave their homes on a regular basis, and those patients located in rural areas or areas without dense networks of healthcare providers.

This burden is only magnified by a simple fact about Medicare…

In order for physicians to be reimbursed for providing preventive care, they need new “billing codes” to submit to Medicare. And therein lies more problems…

  • First: Until recently, physicians could not be reimbursed for telemedicine visits (except under certain and narrow conditions).
  • Second: With regards to Medicare Fee-for-Service, billing codes are, by-and-large, not tied to success-based outcomes.

Most doctors are paid the same, regardless of whether you’re sick or healthy. It’s all determined by the billable codes.

Until more meaningful billing codes can be established – especially billing codes that are time based versus flat fee – the risk is often times too great for practices in rural areas to adopt the technology.

This problem is only made worse by the true technological barrier that stands in the way of mass adoption…

Challenge #5: Scalability

According to Jackson Williams, the director of regulatory affairs at Dialysis Patient Citizens, and former health services researcher in the AARP Public Policy Institute…

The biggest problem confronting Medicare was the inability of its fee-for-service program to address chronic disease care.

Williams suggests that in order to scale up care coordination for chronic diseases, an old paradigm of thinking must be re-examined: The primary care provider as quarterback.

You see, the current predominant payment model is based on the idea of the primary care physician as “quarterback” of a case management team.

This means the patient’s access to care coordination is dependent on who is “in network.”

This is the opposite of patient-centered. It is 100 percent physician-centric.

That’s why in order to make a real and substantial impact on the chronic disease crisis in America, we have to re-imagine the way we deliver preventive care…

And that means increasing technologies that make it easier to access the medical services so many individuals need.

As investors, this means looking past the marketing hype to look for companies who are focused on solving the real problems that are preventing this shift to preventative care from being truly permanent…

And more importantly, having proper expectations for how hard these problems are to solve… how long it might take to truly solve them… and what that means for investor returns in the short term and long term.

Sincerely,

Jake Hoffberg

Jake Hoffberg – Publisher
Equifund

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