With our mobility continuing to be constrained by COVID-19, telehealth has increasingly come into focus this year. Put simply, telehealth (or telemedicine) allows for health services and information to be administered by a provider remotely (no office visit required) using telecommunication and related technologies. On the surface, it sounds like a great idea. I can receive advice, monitoring, updates, new information, check-ups, and more from my healthcare provider directly through my computer or Smartphone and without leaving home. Sign me up! But is this really such a great idea, or do the risks outweigh the rewards?
I recently participated in a healthcare roundtable focused on telehealth, co-hosted by CohnReznick, Cross Keys Capital, and McDermott, Will & Emery. It’s a very hot topic and, based on our discussion, a topic that may still be a bit too hot to touch without a lot of open questions being answered.
Our roundtable discussion was centered in two key areas of telehealth
- What is the overall impact on the delivery of healthcare in the physician practice management (PPM) environment?
- What are the most effective telehealth technology platforms and how will they differentiate themselves in an overcrowded and commoditized market?
- Early in the pandemic, telehealth utilization grew exponentially as many healthcare providers were forced to close their offices. As these offices have now begun to reopen, telehealth visits have been leveling off significantly and are tracking at about 50% of their peak. This leveling off is happening despite numerous concessions made by state and local governments to enable telehealth visits that cross state boundaries and enter areas that are highly regulated.
- Numerous parties within the healthcare ecosystem are lobbying for better reimbursement in the longer term. This will drive physicians to utilize telehealth services appropriately, and where these services will enhance the patient experience as opposed to creating patient/provider relationships driven by economics.
- To enable long-term success, virtual care must become an integrated component of the overall care continuum. This will require member engagement, a self-insured focus, maintaining dedicated care teams, and balancing baseline health risks with patient needs. Payors are currently concerned that reimbursement for their telehealth services may be duplicative which reinforces the need for a fully integrated care continuum.
- From a technology standpoint, and as the pandemic finally settles down, investor interest in the engines behind telehealth is trending upward, and back to pre-Covid levels. We are seeing serious investor interest in platforms and systems that will enable the long-term success of telehealth. However, the engines driving the telehealth platform must be able to integrate all relevant patient information to deliver care effectively. Those engines will be the winners in what will undoubtedly become a crowded marketplace.
- Barriers to entry for telehealth technology providers remain high – the significant legal, regulatory, and compliance issues they face must be addressed and these can prove costly. On top of this, the healthcare industry needs a platform that will work seamlessly across all U.S. states. This is especially true for the rural areas within each state where telehealth is expected to have much more of an impact. Getting doctors to practice within these areas is becoming impossible while the need to service patients in rural locations continues to grow.
- For telehealth platforms unable to step up, we should expect to see consolidation across “like specialties.” But this may offer opportunities for investors, especially since large retailers like Amazon, Walmart, and Target are making a push into the industry. This will create better prospects for exit strategies as well as good returns.
Coronavirus Resource Center
InsightMiddle Market Deal SourceSign up to request an invitation to our next Middle Market Deal Source event
InsightNever underestimate the role of tax due diligence in independent sponsor transactionsClaudine Cohen, Avi BobkerA clear picture of the potential tax risks and exposures in a transaction can impact factors such as negotiations, purchase price, and insurance. Read more.
Press ReleaseCohnReznick named Top Transaction Advisory Firm by Global M&A NetworkCohnReznick LLP, one of the leading advisory, assurance, and tax firms in the United States, today announced that CohnReznick has been named the Transaction Advisory Firm winner in Global M&A Network’s 12th Annual Atlas Awards.
InsightGoing public as a SPAC target company: What to consider and how to prepareBeing bought by a Special Purpose Acquisition Company (SPAC) and then becoming a public company can be tricky. Read what to know and how to prepare.
InsightPost-SPAC transaction: Challenges and benefits of operating as a public companyGoing public brings new visibility and growth potential, but also new obligations related to IT, governance, reporting, and more. Learn what to plan for.