Today, I think it is fair to say, we are all responding a bit differently to a rogue cough or sneeze, than we may have months ago. Therefore, if you are showing symptoms of a common cold, you may want a second opinion to rule out anything more serious. Leveraging a telehealth platform to consult with a doctor quickly is a compelling proposition. There are more serious examples of the attractiveness of telehealth, such as patients suffering from cancer who need to go to hospital during the COVID-19 pandemic yet may be delaying important care out of fear of coming into contact with the virus. Whether it’s wanting a second opinion or ensuring continuous care for existing conditions, the popularity of telehealth over the past several years has increased massively, with exponential acceleration of adoption fueled by the pandemic.

What is Telehealth?

Telehealth is defined by the Oxford English Dictionary as the provision of healthcare remotely by means of telecommunication technology.[1] This is a broad definition of telehealth and, in reality, there is a wide range of solutions ranging from simple video platforms to those that provide patient remote monitoring, all of which could be classified as telehealth. For simplicity’s sake, we have defined telehealth according to four different categories:

· Synchronous, Digital Consultations – Platforms that offer a live, bi-directional typically video-based encounter between the provider and patient for consultations, health exams, prescriptions, education, etc.

· Data Storage/Sharing – Platforms that assist in the transmission of information such as clinical results, health records, etc. This also includes platforms for clinical consultations and electronic health record management systems (only as this relates to data sharing)

· Remote Monitoring/Diagnoses – Platforms that collect and analyze vital signs and health progress data from patients. This also includes wearables and other technologies that assist in the monitoring and transmission of patient data

· Mobile Health/Wellness – Solutions that leverage mobile devices and other mechanisms to promote healthier living and nutrition.

Market Opportunity

Given that healthcare is a universal need, there have been numerous success stories of telehealth across Europe and North America as major players have emerged to dominate the market. According to Arizton, the telehealth market in the US alone is expected to reach $10 billion by the end of 2020 due to YOY growth of 80 percent.[2] Looking internationally, the global telehealth market size is projected to reach over $260 billion by 2026, experiencing a compound annual growth rate (CAGR) of 23.4 percent through 2026.[3]

In the US, telehealth took off fast, as Health Insurance Portability and Accountability Act (HIPAA) privacy laws were relaxed and Medicare restrictions lifted, and now allowed the use of smartphones, video conferencing and messaging services for a variety of procedures.[4] Similar trends also played out in Europe. In April 2020 in the UK, visits to ambulatory practices declined by 60 percent while telemedicine increased rapidly that same month.[5] Across Europe, countries that have established telehealth ecosystems (e.g. public reimbursement, mature regulatory landscape and governance, etc.) are more likely to maintain this uptake permanently after the COVID-19 pandemic.

Recent Developments

· Insurers expand telehealth coverage (at least, temporarily) – Earlier this year, Medicare expanded its coverage to protect a broad range of services, including telehealth. Some of the largest insurers in the US such as UnitedHealthcare and Anthem haven’t revealed whether they will extend their policies to cover virtual appointments in lieu of in-person meetings beyond the early fall. Insurers such as Cigna and Blue Cross in NC will cover telehealth through the end of the year.

· Government favors telehealth solutions – In the US, there has been bi-partisan support for a telehealth bill with both Democrats and Republicans introducing their own versions. On August 3, 2020, President Trump signed an executive order to expand access to telehealth services across the US and further invest in rural communities.[6] In Europe, there is general support for telehealth solutions, with different governments having various policies in place to support the regulatory environment.

· Further Industry Consolidation – In 2018, the telehealth market saw some consolidation, as American Well entered into a definitive agreement to “acquire Avizia as part of a move to create an enterprise telehealth platform” for an undisclosed amount. InTouch Health also said it would acquire “Reach Health to expand its market share.”[7] On August 5, 2020, Teladoc (NYSE: TDOC) announced that they would merge with Livongo in a $18.5 billion merger.[8]

· Investments of Large Tech Companies – Companies such as Google, Apple, and Amazon are investing in telehealth applications, even offering them already. Amazon moved further into the healthcare value chain and launched Amazon Care, a telehealth-driven care offering for their Seattle employees. Recently, Apple filed a patent that builds upon its “telemedicine capabilities within its HealthKit platform.”[9] Google already enables telehealth through its Google Meet video conferencing and markets to healthcare workers actively.[10]

Investment Thesis

When you factor in all of the above information, it leads us to conclude that the global telehealth space is a large market opportunity that is crowded in terms of competition, yet has global application and is a space where we believe multiple players can succeed. Since telehealth is a solution that knows no borders, a few dominant players could eventually develop a large geographic footprint.

Particularly interesting impact areas of the market that we are watching are:

· Data Storage/Sharing – The opportunity to improve treatment, customer experience and transparency, and lower overhead costs

· Remote Monitoring/Diagnoses – Large market opportunity where preventative care may lead to lower insurance costs, less re-admittance and overall better health

· Mobile Health/Wellness – Effective and efficient use of hardware and/or software solutions to drive healthier lifestyles and better medical outcomes.

There are risk areas to consider:

· If a successful COVID-19 vaccine is developed in the next few months, will patients go back to meeting in person with their doctor?

· If healthcare facilities become more decentralized, thereby reducing the need to go to an emergency room or hospital treating sick patients, will patients regain comfort in visiting their medical professional?

· How will telehealth impact insurance/Medicare-related fraud?

· What will be the impact on medical malpractice claims and litigation?

We are excited to continue to watch this space closely as we consider a variety of impactful investments that embed transformative technologies into our everyday experiences to improve the overall financial services industry.

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Special thanks to @TylerCrown for his contributions to this research.

[1] Telehealth Definition. Oxford English Dictionary. https://www.lexico.com/en/definition/telehealth

[2] “The Telehealth Market in US to Reach Revenues of Over $25 Billion During the Period 2020–2025 – Market Research by Arizton.” PRNewswire. https://www.prnewswire.com/news-releases/the-telehealth-market-in-us-to-reach-revenues-of-over-25-billion-during-the-period-2020-2025—market-research-by-arizton-301040962.html

[3] “Telehealth Market 2020 Size, Share, Growth, Trends | Market to Reach $266.8 Billion by 2026.” GlobalNewsWire. https://www.globenewswire.com/news-release/2020/05/14/2033299/0/en/Telehealth-Market-2020-Size-Share-Growth-Trends-Market-to-Reach-266-8-Billion-by-2026.html

[4] “In pandemic, many seeing upsides to telemedicine.” Center for Infectious Disease Research and Policy https://www.cidrap.umn.edu/news-perspective/2020/05/pandemic-many-seeing-upsides-telemedicine

[5] “The Impact of the COVID-19 Pandemic on Outpatient Visits: A Rebound Emerges.” The Commonwealth Fund. https://www.commonwealthfund.org/publications/2020/apr/impact-covid-19-outpatient-visits

[6] “President Donald J. Trump Is Expanding Access to Telehealth Services and Ensuring Continued Access to Healthcare for Rural Americans.” The White House. https://www.whitehouse.gov/briefings-statements/president-donald-j-trump-expanding-access-telehealth-services-ensuring-continued-access-healthcare-rural-americans/

[7] “Consolidation in the telehealth market may create ‘all-purpose’ virtual care vendors, KLAS says.” Becker’s Health IT. https://www.beckershospitalreview.com/healthcare-information-technology/consolidation-in-the-telehealth-market-may-create-all-purpose-virtual-care-vendors-klas-says.html

[8] “In sign of digital health’s rise, Livongo and Teladoc Health agree to $18.5 billion merger.” TechCrunch. https://techcrunch.com/2020/08/05/in-a-sign-of-digital-healths-rise-livongo-and-teladoc-health-agree-to-18-5-billion-merger/

[9] “Apple patent application hints at telemedicine capabilities.” Becker’s Health IT. https://www.beckershospitalreview.com/healthcare-information-technology/apple-patent-application-hints-at-telemedicine-capabilities.html

[10] https://gsuite.google.com/industries/healthcare/