$2 Billion Telehealth Market
The business of treating patients via telehealth in the U.S. will dramatically increase to nearly $2 billion in revenue within five years due to a confluence of events in the health care industry from doctor shortages to provider payment changes under the Affordable Care Act.
A new report from information and analytics firm IHS IHS +0% says revenue expansion of the teleheath space — which allows doctors and other providers to monitor patients remotely via various devices, computers and related digital technology – will grow to $1.9 billion in 2018 in the U.S. from $240 million this year.
The trend toward telehealth will be driven by employers, private insurers and the Affordable Care Act, which makes doctors and hospitals more accountable by moving medical care providers away from fee-for-service medicine where they are paid based on volume of services to reimbursement based on the value of care they provide. This trend often uses doctors as a quarterback of sorts in concert with nurses and other allied health professionals to keep patients out of the hospital where care is more expensive.
“The majority of these patients are diagnosed with cardiovascular diseases, pulmonary diseases and diabetes and most of them are enrolled in post-discharge services of an average of 30-90 days,” said Roeen Roashan, IHS analyst for consumer medical devices and digital health.
This will increase the patient volume toward these services to more than 3.2 million patients in 2018 from less than 250,000 this year. Meanwhile, the value of the U.S. telehealth market will reach $1.9 billion in 2018 compared to about $230 million today, IHS’ Roashan said. That’s a cumulative annual growth rate of more than 56 percent.
Companies that stand to benefit from this market include: Genetral Electric (GE), Intel INTC +0.04% (INTC), Honeywell (HON), McKesson MCK +0.78% (MCK) and Medtronic MDT +0.18% (MDT).
“Telehealth has been limited in its growth potential in the past due to low reimbursement, lack of physician support, and poor cases of implementation,” Roashan said. “However, we are witnessing changes in the regulatory environment that will increase reimbursement and also more physicians are supporting the idea behind telehealth. In doing so, there are many examples of best practice implementations.”
Health insurance companies as well as state Medicaid insurance programs for the poor and the federal Medicare health insurance program for the elderly are contracting with doctors and hospitals, bundling payments and reimbursing them in ways that encourage quality care and a push for better outcomes through entities like accountable care organizations (ACOs).
If the ACO — which contracts through provider groups with the insurer — reduces costs while improving quality, the providers keep some of the savings. That is different than payment today that encourages excessive treatment by paying by procedure.
“Telehealth is about increasing the quality of healthcare, in an efficient way,” Roashan said. “Telehealth is proven to decrease readmission rates significantly, while increasing the patient’s perception of quality by keeping the patient at home.”