Telehealth: Are Startups Disrupting Our Health or Gambling With it?

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The regulations around telehealth — technology that does not mandate in-person doctor visits — are rapidly loosening: Last year, close to 80% of US states changed their telehealth laws, making it easier for insurance companies to justify paying for remote doctor and pharmacy visits. This has created a massive market for disruptive telehealth companies such as Hims, which prescribes medicines for baldness and ED; Lemonaid Health, which prescribes birth control and emergency contraceptives online; and Oscar, which offers unlimited phone prescriptions and consultations with its in-network doctors.

We’ve written before about increased automation in healthcare, and what this means for the future of healthcare professionals (HCPs). In general, HCPs tend to view adoption of automated, consumer-friendly technologies with some hesitance given the healthcare industry’s paper-based processes and outdated IT legacy systems. Will telehealth provide a solution that is appealing to both consumers, doctors, and insurers?

To find out, NewtonX compiled a panel of twelve experts sourced from a top five health insurer, a New York City hospital, and an ivy league medical school. The statistics and conclusions drawn in this article are a reflection of the insights provided to NewtonX.

Expiring Patents and an On-Demand Generation are Responsible

Telehealth’s recent surge can in part be explained by patents that are expiring on branded drugs, allowing them to be sold in generic form. This enables direct-to-consumer companies to dramatically lower the prices on these drugs — according to one panel member, once a drug becomes available in its generic form, its price typically drops by 60%.

For instance, Hims, the disruptive telehealth company that recently raised $40M in funding took advantage of Pfizer’s patent on Viagra expiring at the end of 2017, to launch their men’s wellness platform, which offers a generic ED medicine and hair loss prevention medicine — all without the need for an in-person doctor visit. The company launched in late 2017, and has already generated $10M in sales.

But the availability of generic forms of drugs is not the only force driving telehealth. Increased digitization and accessibility of “on-demand” products makes brands like Hims highly appealing to Millennials (many of whom don’t have healthcare insurance). In fact, a recent survey found that 1 in 5 adults under the age of 36 cannot afford routine health-care expenses, and many of them are uninsured as a result. For this population, Ruby Project, Lemonaid Health, and other telehealth providers offer birth control, emergency contraception, and UTI medication for a fraction of the price that getting it from an in-person doctor without healthcare (anywhere between $280 and $400, according to the NewtonX panel of healthcare professionals, as compared to the average cost of a telehealth visit at $65).

To boot, this digital native generation is accustomed to having access to routine needs through the Internet. As the director of one of the disruptive telehealth companies put it, “If I can order a dog walker within 5 minutes, get a package delivered within 24 hours, get weekly grocery deliveries, and order beer through the Internet, why can’t I order the same birth control I’ve been on for years directly to my house?”

Is Telehealth the Future of Prescription? The Data Speaks for Itself

While telehealth clearly benefits the consumer, it has its drawbacks. For instance, one panel member noted that as telehealth becomes more ubiquitous, it opens the door for black market drugs that may or may not be harmful to one’s health. According to this person, 50% of the drugs for sale on the Internet are fake — and that number goes up when you control for sites that don’t require a phone consultation with a doctor.

Even sites that do require doctor consultations often don’t provide proof of the doctor’s credentials. This leaves the door open for scammers and malicious providers (birth control and viagra are both politicized forms of medication, which makes them vulnerable to such attacks). Counterfeit medication typically impacts the very populations that telehealth attempts to help: those who do not have the means for healthcare.

Fake drugs notwithstanding, telehealth is not poised to replace doctors. According to the NewtonX panel, only 12% of doctor visits can be replaced through telehealth. These visits typically consist of the doctor asking evaluative questions to determine a prescription (a process that can easily be done over the phone). The other 88% of visits, though, cannot even conceivably be conducted via the phone: they require reading patient signals, doing lab work, and physical examinations. To replace such visits with telemedicine would be catastrophic for the healthcare industry’s ability to accurately diagnose patients.

Finally, the integration of Telehealth technology with doctors’ offices and hospitals’ IT infrastructure poses a challenge in of itself. According to the panel, over 70% of facilities in the US healthcare sector run on outdated IT systems which makes it difficult for breakthrough Telehealth technology to integrate with existing systems.

Telehealth Expands HCP Reach, But Doesn’t Replace Traditional Care

The average annual spend on prescription drugs in the U.S. is $144 per person, and telehealth has the propensity to address this market opportunity. The NewtonX panel unanimously agreed that one of the greatest impacts of telehealth is that it allows people to seek care who otherwise wouldn’t. While the industry is not replacing a huge percentage of in-person doctor visits, it is widening the net of people who can access medicine. Someone who may not have sought out birth control — due to high costs, long waiting room periods, or other barriers can now simply order it online.

Telehealth is a win-win in that sense for consumers and HCPs. The customer market increases, and the population of people receiving affordable care also increases. As long as regulations are put in place to identify and prevent black market telehealth, the industry is likely to continue to thrive. Hims is certainly not the last telehealth company that will receive millions in funding, and according to the NewtonX panel, consumer adoption of telehealth is likely to triple in size by 2022.



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