As the pandemic shifts from an acute phase to one where we learn to live with COVID-19 as an endemic presence, some entrepreneurs and investors may fear what’s next for virtual medicine.
Nearly half of US states have ended emergency legal exemptions introduced during the pandemic that allowed patients to be seen by doctors working elsewhere. For some, the end of these exemptions could portend frightening headwinds for telemedicine: a return to old regulations that snuff out the promise of new technologies.
However, there is another thesis – driven not by fear but by strategic vision – in which the return of regulations could mean something far more beneficial to telemedicine startups and those who have invested in their success: a moat.
Telemedicine companies that research and understand the varied patchwork of state and federal regulations, analyze them to identify patterns and build scalable business models, will survive and thrive in the environment to come. Those who don’t prioritize that work and shoot from the hip will not do as well because patients and law enforcement will intervene. This could mean a classic concussion.
Even with the return of regulation, the opportunity in digital health will expand. While state laws may change, the macroeconomic rule of supply and demand remains, and patient demand for health care far outstrips the supply of available doctors. This imbalance only accelerated during the pandemic, as doctors and nurses reduced productivity, shifted to less stressful roles, or abandoned the field altogether.
On the demand side of the equation, there are more patients who need care. Due to the aging Baby Boomers, Affordable Care Act insurance plans, and the proliferation of affordable retail health care options, more people have access to care today than a decade ago.
On the supply side, telemedicine creates efficiency and access. While the rise of telemedicine could benefit doctors and nurses struggling with burnout — a reduced need for in-person visits can lead to less stress, the thinking goes — that doesn’t change the denominator of the equation. The growing demand for entry has and will continue to overwhelm the number of new doctors graduating each year.
Telemedicine companies that research and understand the varied patchwork of state and federal regulations, analyze them to identify patterns and build scalable business models, will survive and thrive in the environment to come.
This dynamic virtually guarantees that telemedicine startups that offer a quality user experience, more nuanced services/medical specialties, and a wider variety of virtual hotspots will remain in high demand.
Telemedicine was previously reserved for academic medicine or Medicare beneficiaries who lived in rural areas, with broad restrictions on who could receive services and which providers could be paid to provide them. While less than 1% of medical services were provided by telemedicine in January 2020, this number is estimated to be now 38 times above the pre-pandemic baseline. In fact, some startups were conceived, launched and funded entirely during the era of COVID-19 exemptions.
Startups that gained traction at a time when the rules were relaxed will now have to up their game. Regulators expect this and patients deserve it.
Pressure for some form of regulatory clarity is likely to increase. Along with the number of digital health startups transitioning to virtual provider pools and online clinics, there are giant players accelerating their digital transformation, reducing the footprint physical locations and increasing virtual attendance, including primary care alternatives.
No market participant should be induced into inaction by temporary extensions of crisis exemptions. Smart founders (and their investors) will waste no time launching or modifying a business that can flourish in an environment where regulations revert to pre-COVID standards.
It is a development that will allow telemedicine to mature from being a convenient substitute in a crisis to earning its own place at the table in the healthcare sector as an essential player in the continuum of care.