Two decades ago, few people would have accepted the idea that the upstart online bookseller Amazon.com would ultimately undermine the profitability and survival of brick and mortar retail chains.
Now, telemedicine platforms are poised to create the same type of dramatic disruption in the delivery of healthcare services. And, I increasingly find that healthcare executives are in denial. Many healthcare industry leaders steadfastly believe that the benefits of their physical presence will provide a permanent bulwark against competition originating in the digital realm. Sadly, they are mistaken.
As detailed in this article, executives at health systems, as well as doctors across a range of specialties, ignore the coming transformation at their peril. The single most important lesson of the past two decades is that a physical presence is, ultimately, a weak barrier to virtual competition.
The healthcare industry is about to face the same disruptive competition that has created havoc across an extraordinary range of local brick and mortar businesses, local services and local media. With increasing ferocity, telemedicine platforms, enabled by connected devices, will similarly reshape the landscape of U.S. healthcare services.
The Ongoing Evolution of Telemedicine Services
Telemedicine in the United States is entering a new phase of accelerating growth. This rapidly evolving ecosystem includes, FDA approved remote diagnostic devices; sophisticated monitoring facilities that bring new services to rural hospitals; convenient 24 x 7, 365 day access to high quality physicians for non-acute illnesses; A growing list of telemedicine platforms with such diverse objectives as managing chronic conditions, achieving specific patient outcomes via goal-oriented programs, and providing time-sensitive expert advice to treat life-threatening conditions such as strokes; Insurer funding of telemedicine programs that demonstrate clinically proven outcomes; And a range of experiments for improving the treatment of multiple illnesses such as Parkinson’s and MS.
Telemedicine Platforms are Digital Health Platforms
Telemedicine programs are really a short hand way of describing digital health platforms. The face-to-face encounters of next generation telemedicine services are really the front-end of coordinated care programs that combine, in different configurations, expert treatment programs based on specific protocols that can be customized to meet patient needs, advances in remote monitoring with diagnostic devices; ongoing analyses of patient-specific data, and healthcare analytics that examine patient results; while providing feedback for continuous improvements in health outcomes.
Lessons from the Evolution of Internet Services
Since the 1990’s, I have been an active participant in the evolving development of Internet services. During this period, my activities have included developing innovative corporate programs, writing several books on related business and public policy issues, consulting to numerous companies, and creating solopreneur businesses. From the perspective of these year’s in the trenches, today’s healthcare landscape bears an extraordinary resemblance to the earlier days of Internet business development: A landscape that is now littered with companies that were at the cusp of the whirlwind of digital disruption, but failed to appreciate the strength of the approaching tornado.
The growth of Internet service businesses is governed by certain clear dynamics, that provide valuable lessons for assessing how telemedicine platforms will transform the delivery of healthcare services. Here are seven guiding principles:
1.) The need to focus on what will be. Although there are exceptions, the majority of healthcare industry executives I encounter are focused on existing technologies and services; or inevitable small advances in the enabling technologies. In short, they are focused on what is, rather than what will be. They look at virtual services as they exist today, conclude (correctly or incorrectly) these services don’t match the quality of in-person treatments, and fail to recognize that advances in digital capabilities and technologies will, in all likelihood, rapidly shift this balance: Like a force of nature, digital technologies enable a process of continuous improvements, which is often hard for brick and mortar industry participants to grasp. This static view of digital capabilities is a frequent reason digital disruption often takes existing industry participants by surprise.
Moreover, existing industry participants often have an all or nothing view of their activities, which avoids a critical nuance of digital disruption. Amazon.com did not eliminate local retailers. Similarly, telemedicine coordinated care platforms will not eliminate the need for local specialists. However, Amazon.com did shift a large portion of product sales from the physical to the digital realm. Telemedicine platforms will have a similar impact. Where fee-for-service doctors may now diagnose and treat patients. In the future, treatments will, in many cases, shift to virtual platforms while diagnoses may, for example, remain with local providers. In the same way that local retailers continue to exist, the need for local doctors and healthcare services will not be eliminated. Rather, an entirely new balance between physical and virtual services will evolve.
2.) By addressing the problem of doctor shortages, many new telemedicine services fulfill an existing customer need. Telemedicine is often cited as a means of addressing physician shortages, particularly for rural care. And doctor shortages are no longer confined to rural areas. A study by the Commonwealth Fund found that 51% of U.S. adults struggle to find non-emergency access to healthcare at night and on weekends, while a recent Merritt Hawkins survey concluded that the average wait for an appointment with a new Family Medicine physician, in 15 major metros, is now 29.3 days.
Telemedicine, as it exists today, is beginning to address this issue. The Veterans Administration has a large and active program in rural areas. In addition, an estimated 90% of large employers now provide their employees with some type of telemedicine benefit; which offers convenient 24 x 7, 365 day, access to high quality doctors for non-acute illnesses. Early configurations of these plans led to limited use, and in the first half of 2016 an estimated 3% of employees with access to these employer provided plans actually used them. But, innovative approaches by newer industry participants, in configuring and implementing these plans, have demonstrated that latent, high consumer demand exists. First Stop Health (FSH), for example, has an average usage rate, across all of its members, of 50%. (Full disclosure, I am Vice President of Marketing at FSH). Moreover, demand is expected to surge as digitally native millennials, who have little patience for long waits to see physicians, increasingly access these services. Inevitably, successful telemedicine providers, like all digital services, will refine and optimize their current offerings, while evolving to offer additional services. And, the inevitable shift to digital healthcare services, from physical offerings, will accelerate.
In addition, as doctor shortages increase over the next several years, telemedicine platforms oriented toward specific treatment objectives will become increasingly important: These platforms involve embedded expertise, via treatment protocols, which require less day-to-day interactions with physicians. At the same time, they combine a coordinated care effort, involving different aspects of virtual communications, records management, automation, monitoring, connected diagnostic tools, artificial intelligence, and care teams including trusted, trained health coaches to provide health outcomes that are better than traditional fee-for-service in office visits.
In the early days of the Internet, I wrote an article for the Stanford Social Innovation Review, titled, The Web is your lever. The article described, in part, how emerging Web tools, would provide services that magnified the impact of users, and would enable nonprofits to realize Archimedes famous statement, “Give me a lever and a fulcrum and I will move the world.” Similarly, emerging telemedicine platforms will serve as a lever and fulcrum for physicians and patients, and move the healthcare world.
Every routinized process begins with an unstructured set of creative activities. Over time, these activities are refined and routinized. In the operating room, they become the set procedures for new types of surgeries. Ultimately, when the sequence of specific activities can be modified and shifted to the virtual world they will be converted into a high leverage digital healthcare platform.
The takeaway here is that telemedicine platforms which leverage the expertise of doctors already have an eager set of customers in areas which now suffer from physician shortages. As a consequence, these platforms will gain experience, generate revenues, and grow in sophistication before expanding into more competitive arenas; where they will compete head-to-head with local specialists.
3.) As telemedicine platforms grow more sophisticated, they will move up-market and start to compete with local providers in major metropolitan areas.
The history of Web platforms is notable for the way they evolve over time: Services originally developed for small businesses typically grow more sophisticated with experience, optimize their ability to deliver cost-effective results, and move up-market to compete for the business of ever larger firms. The appropriate analogy in healthcare is that telemedicine care platforms designed to serve the need needs of rural hospitals will evolve to serve the needs of ever larger, more sophisticated hospitals in major metro areas.
Today, a range of platforms have emerged, such as St. Louis-based Mercy Virtual Care’s Health’s SafeWatch ICU monitoring and management service and physician nighttime coverage services, that focus on mitigating shortages in rural areas. Other telmedicine and digital health services leverage technology to provide enhanced services in all areas of the nation. They include a set of telemedicine services that focus on providing treatments, in particular chronic diseases, and desired health outcomes such as rehabilitation, and reduced hospital readmission. Finally, other entities, such as Sherpaa and Chicago-based One Medical, are combining innovative uses of digital technologies and payment models in an effort to reinvent the practice, and patient experience, of primary care medicine.
Over time, telemedicine platforms of all types will evolve, enhance their capabilities, and grow more effective. As detailed below, they will deliver increasingly better health outcomes at lower costs and gain the trust of consumers. As a result, telemedicine platforms will move up-market in the same way increasingly sophisticated Internet services moved from small businesses to large companies. Ultimately, telemedicine platforms providing convenient virtual services will replace a large swath of the activities that now take place physically in local healthcare facilities of all types.
4.) Successful telemedicine platforms will incorporate continuous feedback loops that through monitoring, measurement, and scale, will enable them to provide better health outcomes at lower cost. A Successful telemedicine platform never sleeps. It continuously evolves its protocols and services. The data derived from successes (and unfortunate failures) create a feedback loop that persistently adds to the expertise embedded in each platform’s treatment system. In contrast, local providers typically lack the same scale or determined focus on measurement and connected care to provide similarly effective, optimized results.
Indeed, the Web services that achieved lasting success were those that focused on the hard job of continuously evolving. Today, Google, Facebook, and LinkedIn are all far different from their early launch-era services. Similarly, telemedicine platforms will succeed, by continuously evolving, with a constant focus on learning, optimizing their services, and enhancing their capabilities.
As telemedicine platforms evolve, patients (better known as consumers) will become aware that an online diabetes management service such as Virta offers better health outcomes than classic fee for service providers. Today, a diabetes expert may diagnose a patient, prescribe a treatment regime, and schedule a follow-up visit three months after this initial diagnosis. In this fee-for-service world, the patient is, by and large, left by the doctor to manage his or her condition between widely-spaced office visits.
In contrast, goal-oriented online platforms which combine frequent virtual contact with trusted health coaches and a carefully monitored treatment regime will offer consumers superior health results and a greater sense of trusted guidance. In short, consumers who receive a physical diagnosis form a local doctor will quickly become aware that, in many cases, virtual treatment programs offer a better ongoing care experience.
The above scenario highlights the approaching, inevitable, conflict. The wishes of patients (who want better health outcomes and perhaps greater ongoing guidance) may be at odds with the business goals of carriers (who actually earn more from self-funded employers by processing larger claims), the advice of local doctors (who seek to retain patients for ongoing care; which is a core piece of their revenues), and the efforts of local hospitals (who will also seek to retain the revenues associated with in-person treatments. Indeed, it’s precisely this shift in revenues, and potential for the “hollowing-out” of hospitals and the practices of local specialists, that’s at the core of the coming disruption.
However, I would argue that the winners will be the lower cost, better outcome, optimized telemedicine platforms. Word-of-mouth will ultimately overcome the resistance of local experts and facilities. Moreover, the ongoing shift toward high deductible insurance plans for employees, will lead to greater patient consideration of lower cost, more convenient, telemedicine platforms.
The losers will be the physical centers and doctors which formerly provided treatment. Local providers will still provide initial diagnoses and the treatment of complex conditions. But, just as Amazon.com is now the first place many people shop, sophisticated variations of routine care will become the domain of telemedicine platforms.
5.) This shift will also reflect the accelerating development of, new specialized telemedicine platforms: An extraordinary range of telemedicine services are quickly emerging. From rapid stroke response in ambulances to the treatment of neurological disorders, to pediatric applications, the number of telemedicine uses, which will become optimized platforms, is increasing dramatically. And, the industry is still in its early stages.
Here, the evolution of Internet services provides an additional guide: For the Internet, a simple rule is that each success leads to ever more sophisticated applications. With each success, developers gain additional knowledge of how platforms can incorporate new algorithms, better analyze data, become more customized, and incorporate new technologies. As a result, I feel confident in suggesting that today’s telemedicine platforms are simply the start of a process that will lead to a growing number of increasingly sophisticated services. Moreover, technologies on the horizon, such as improved artificial intelligence and virtual reality will also play a role in powering the development of entirely new platforms.
6.) Centers of excellence and centers of expertise will increase in size; and expertise for specific treatment will become increasingly centralized: Many telemedicine platforms are based on the expertise and capabilities of leading academic medical centers. As these platforms increase in their scale, the centers offering these services will similarly grow. Platforms that treat specific activities (such as hospital discharges) and other conditions, which are not affiliated with medical centers, will similarly employ larger numbers of experts. In many cases, the entities providing the platforms will become the leading areas of treatment expertise in these services.
A recognized phenomenon in the Internet is the tendency of Web users to declare a single service as “the best,” and adopt it broadly. Similarly, it’s easy to imagine that specialization and the concentration of expertise will lead to fewer centers of expertise for specific illnesses. Physicians and care experts will gravitate to the sources of the winning platforms: Both because these platforms will, ultimately, need more medical professionals to provide these leveraged services; and because these centers, through continuous learning, will become the largest repositories of expertise and data for treatment in these areas of focus.
Most likely, greater consumerism in healthcare and increases in value-based healthcare reimbursements will accelerate this concentration. As platforms evolve they will optimize their efforts to deliver the best care with the least inefficiency at the lowest cost. As a result, consumers and third-party payers will balk at paying for higher-priced care (for the same conditions) with less efficient (and less effective) fee-for-service delivery systems.
While I am hypothesizing the likelihood of such concentration, I am not addressing the inherent trade-offs it may represent. The benefits versus the potential problems that may be associated with this type of concentration are beyond the scope of this essay.
7.) Trust and patient experience will be a key determinant of platform success: Internet services only succeeded when they were trusted by users. This dynamic will be even more important in the adoption of telemedicine platforms.
Inherently, the growth of leveraged platforms means patients will have less contact with doctors. Hence, a central element in the success of consumer oriented platforms will be the patient experience and the trust it creates. Platforms that ensure front-line patient contact is handled by knowledgeable, empathetic individuals will achieve the greatest success. People receiving treatment for serious illnesses will have questions, seek reassurance, and look for services that meet these very human needs.
The dream of telemedicine is far more than a new, more convenient means of visiting the doctor. It’s the gateway to a system of digitally enabled, coordinated care platforms: Services that leverage expertise combined with advances in technology. As these platforms become more sophisticated, while delivering better health outcomes at lower costs, they will fundamentally reshape the delivery of U.S. healthcare.
A general phenomenon associated with Internet services is that they break activities into their component parts, and then reconnect them in a digital chain. It’s the difference between walking down the hall to ask a colleague to undertake the next task in a project, and an automated system that routes the next task to a separate entity at a different location. Now, established hospitals and healthcare systems will confront a similar deconstruction, and new set of competitive dynamics.
Hospitals, health systems and doctors will thrive in this new world by recognizing both strategic opportunities and threats. Leading healthcare systems must now decide where and how they want to compete, on a nationwide basis, for patients and services. A Tsunami of technology enabled change is rapidly approaching, and denial is not an option.