Remote Healthcare Delivery
In 2020, SARS-CoV-2 (hereon referred to as "COVID" or "coronavirus") swept across the globe, emerging as one of the defining pandemics of our times. COVID has extracted a costly toll and, in many cases, highlighted major gaps in healthcare systems around the globe, both in coverage and in quality of service. Correspondingly, it has shone a light on the value of remote healthcare delivery as a tool for bridging those gaps for patients as well as for other key stakeholders in the healthcare ecosystem, including governments, employers, insurers, and hospitals.
Current State of US Healthcare
In the US, the existing healthcare system is overburdened and delivers uneven quality of care. Studies suggest that the average time to schedule an appointment with a physician is 24 days and the average time required for a doctor visit is two hours (between traveling to the clinic, sitting in the waiting room and seeing the physician) (Rege). This will likely only get worse as the strain on the existing primary care delivery system increases. We note that there are currently ~528,000 primary care physicians ("PCP") serving the 330 million people in the US, or 160 PCPs to every 100,000 population, a ratio that is expected to get worse as the proportion of medical students seeking specialization in higher-paying fields increases (United Health Foundation). The Association of American Medical Colleges (AAMC) estimates that there could be a shortfall of 14,800 – 49,300 PCPs by 20303. Moreover, coverage through existing brick-and-mortar networks is uneven, with one in four Americans lacking any access to a PCP (Heath). The system – from a resources and coverage perspective – is wholly unprepared to accommodate a surge in healthcare demand like that arising from COVID-19. The same can be said of many other countries, where the existing healthcare infrastructure is under even more strain.
Opportunity for Remote Healthcare Delivery
These gaps and inefficiencies have created a number of opportunities for health tech businesses, including our own portfolio company, US-based telemedicine provider Doctor On Demand CEO Hill Ferguson says, "to address the large and growing PCP shortage we need to better utilize technology and new business models". True to his word, during this pandemic many patients have resorted to teleconsultation for the first time – McKinsey reports consumer adoption rising from 11% to 46% in their COVID consumer survey, implying that for each existing user prior to COVID, there are now three additional new users of telemedicine1 . These customers have overwhelmingly realized the superior experience of receiving care on-demand – the same study reports that 74% of users reported high satisfaction and 76% were likely to use telehealth going forward (McKinsey & Company).
While consumer uptake across all forms of remote healthcare delivery, including telehealth, pill delivery, and remote patient monitoring / diagnostics has been encouraging, what has really moved the needle and led to a re-rating of the industry is the widespread adoption by enterprises and governments for their health plans. In many countries, the government has ramped up their policy support for telehealth to address coverage and resource constraints by increasing the utilization rates and distribution range of doctors and medical services across the nation. As an example, the US federal government moved in early March to expand telehealth services for Medicare and Medicaid beneficiaries, allowing both programs to reimburse telemedicine consultations. This is significant not only because the federal government is far and away the largest healthcare spender in the US, but also because it opens up a market of ~110 million patients for telemedicine providers (Medicaid). It also provides a roadmap for other governments around the world to follow.
Telehealth – Gateway to Healthcare Ecosystem
Looking towards the future, we believe that telehealth will be pioneered by pure play service providers (e.g. Teladoc, Doctor On Demand) as well as white-label solutions providers (e.g. Amwell) for hospitals and brick-and-mortar clinics. Most major private health plans already offer telehealth services for urgent care, but with COVID driving up usage and forming new consumer habits, many are looking to also offer digital primary care and behavioral health. Some of the largest nationwide plans, including United Healthcare and Humana, are piloting virtual primary healthcare plans that are in effect digitalizing the PCP experience. "With telehealth extending to primary care, telemedicine can now serve as the gateway into the entire healthcare ecosystem", says Ferguson. Providers that employ their own physicians (as opposed to relying on part-time contractors, i.e. the "Uber" model) will have a leg up on this digital transformation, as they will be able to enforce higher standards of care and enable continuity of PCP relationships with patients. In the future, we will also see increasing adoption of remote monitoring hardware that will allow doctors to monitor a patient’s temperature and blood pressure, look into their eyes and noses, and even do a remote ECG to improve diagnoses, extend longitudinal care, and increase the number of conditions addressed by telemedicine.
About Princeville Capital
Princeville Capital is an investment firm focused on backing rapidly growing technology-related companies around the world. The firm looks to support entrepreneurs seeking not only capital, but a value-added partner who can help them fulfill their aspirations to create companies of global scale. The firm has a worldwide network of relationships built over decades of experience investing in and advising rapidly growing companies in the technology sector. Princeville Capital has offices in San Francisco, Berlin, and Hong Kong.
- McKinsey & Company. "COVID-19 US Consumer Pulse Survey." McKinsey & Company, 5 June 2020.
- Rege, Alyssa. "Patient Wait Times in America: 9 Things to Know." Becker’s Hospital Review, 9 June 2017, www. beckershospitalreview.com/hospital-physician-relationships/patient-wait-times-in-america-9-things-to-know.html
- "Public Health Impact: Primary Care Physicians." America’s Health Rankings, United Health Foundation, 23 Sept. 2019, www.americashealthrankings.org/explore/annual/measure/PCP/state/ALL.
- Heath, Sara. "Primary Care Access Drops 2%, Prompting Calls for Policy Change." PatientEngagementHIT, Xtelligent Healthcare Media, 19 Dec. 2019, patientengagementhit.com/news/primary-care-access-drops-2-prompting-calls-forpolicy-change.
- "April 2020 Medicaid & CHIP Enrollment Data Highlights." Medicaid.gov, Medicaid, Apr. 2020, www.medicaid.gov/ medicaid/program-information/medicaid-and-chip-enrollment-data/report-highlights/index.html.