Technological change is engulfing more and more components of everyday life. For Silicon Valley’s visionaries, the inefficiencies in today’s health care system make it a perfect candidate for a connectivity revolution. Telemedicine is one of the fastest-growing segments of medicine today—and, some say, has the potential to create greater access and affordability. But despite early optimism, health care industry incumbents have proven stubbornly resistant to change.

Case in point: earlier this month, the Texas Medical Board ruled to severely restrict telemedicine in the state. The decision cited said telemedicine undermines traditional “patient-physician relationship[s].” Dissenting opinions, including that from Dallas-based Teladoc, argue that their teleconferencing service only supplements patient-physician relationships with “safe, high-quality, timely care.” Teladoc has obvious advantages in reaching rural populations. But established providers say unfettered telemedicine compromises quality in unacceptable ways.

While incumbents and entrants participate in an economic turf war, we find it useful to frame the questions around telemedicine less orthogonally. Telemedicine covers a broad range of direct-to-patient and ancillary products and services, from highly complex interactions like remote surgery (using da Vinci’s surgical robot), to basic 24/7 rash or fever consultations (like Teladoc). Basically, telemedicine is just a trade-off: you give up the face-to-face interaction for audiovisual communication across distances. Most existing arguments focus on the value of this substitution.

The Question of Proximity

For detractors, telemedicine is defined by what it is lacks – a physically proximal, face-to-face interaction. In evaluating the legitimacy of their concerns, then, the critical question becomes this: How important is physical proximity in performing the functions of a physician? In other words:

Can a doctor effectively do her job without being able to speak with, diagnose, and treat patients in a proximate way?

To answer this question, let’s step back and look at the traditional primary care checkup. The tools of the doctor’s trade include components both dependent on and independent of physical proximity. The stethoscope, the scale, the blood pressure cuff, the uncomfortable “drop-and-cough” are all examples of evaluations that, in the traditional model, must be done in person. These are tools in a model that relies heavily on proximate information gathering. On the other hand, taking a medical history or issuing prescriptions via videoconference is roughly equivalent to chatting face-to-face. In cases where treatment falls entirely into either category – independent of or dependent on physical proximity – it is easy to say whether telemedicine can or cannot work.

But most medicine is practiced in the grey area that couples proximate and communicative techniques. Say, for example, a doctor is examining a skin sore. A remote camera could do a much better job than nothing, but it might not capture everything the doctor is looking for, including a biopsy. In such cases, the debate devolves into an argument about tradeoffs.

The Future of Telemedicine

Framed this way, detractors are correct in suggesting that telemedicine in its present form cannot perform all of the functions of a most traditional consultations. The problem with detractors’ arguments, however, is the assumption that medicine will stay the same. Two currently unfolding events can foreseeably enable telemedicine by gradually undermining the present need for physical proximity between physician and patient:

First, many of the diagnostic tools that used to require a practitioner’s presence are being packaged into technologies that patients own (think wearables). Even diagnostics the physician outsources, like blood tests and biopsy, could be disrupted by patient-accessible services like Theranos. At the low-end, these remote tools will foreseeably replace many in-person tools and allow doctors to treat patients remotely. Second, current tools largely evaluate symptoms and empirical evidence, which the doctor interprets. But the diagnostics of the future will increasingly evaluate molecular causes (like genetics). When this happens, even the touch and intuition of physicians will be superseded by precision medicine, especially compared to an isolated, in-person primary care checkup.

Neither of these events, however, is sufficient. What telemedicine likely needs is a new value network. A value network is the context within which a firm operates, including partners, supporting technologies, and the distribution channels necessary to be profitable. Starbucks would never exist without cheap coffee bean production and highway transportation. Our hypothesis is that telemedicine will not thrive without cheap, reliable remote diagnostic tools and other value network factors, such as interoperable EHRs.

In coming posts, we will stress test this assumption, using Teladoc and other companies as case examples. We’ll also discuss what the future telemedicine value network should look like. If you’ve experienced firsthand the challenges and opportunities around telemedicine or have valuable insights from other industries, we want to hear from you. Please comment below or reach out via email.


  • Michael Devonas
    Michael Devonas