Telehealth is taking off. Stakeholder alignment can ensure it lasts.

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Aug 11, 2020

For years we’ve talked about the disruptive potential of telehealth. By enabling health professionals to diagnose and treat their patients remotely via video and audio, telehealth stands to greatly increase access to healthcare, and as a result, reduce costs through preventative screenings. 

Since the onset of COVID-19, telehealth has skyrocketed as stay-at-home measures have forced more providers to connect with patients from home. While some people may have shown initial reluctance to use the service, many providers and patients now appreciate the convenience it enables, and hope telehealth will become a permanent fixture in the healthcare industry. In a study of 1,000 patients—most of whom used telehealth for the first time during the pandemic—75% expressed satisfaction with virtual care. 

But the future success of telehealth does not solely depend on patient satisfaction, nor does it hinge on telehealth becoming easier to use for less tech-savvy patients (though this is an important hurdle it must overcome, as discussed in a previous blog). To ensure its viability following the COVID-19 crisis, all participants in the telehealth system, from patients to providers to payors, need to be aligned towards a common goal. 

Telehealth’s value network

Telehealth, like all other businesses and services, exists within a value network. A value network is the broader system of suppliers, partners, and distributors in which a business operates. And in order for a service with disruptive potential like telehealth to thrive, it needs a value network in which all of those parties benefit from its success—otherwise they may be motivated to stamp out the innovation in favor of incumbent solutions.

For example, angioplasty, a procedure that restores blood flow through the artery, took off because the early makers of the procedure understood which stakeholders to include in its value network. Because it was less effective and less lucrative than bypass surgery, surgeons likely would have resisted the procedure. Instead, angioplasty’s inventors appealed to cardiologists. Cardiologists made more money performing angioplasties than they made in their traditional practices, and patients could receive treatment before their conditions worsened. As a result, cardiologists became eager adopters and proponents of the new technology. Angioplasty’s innovators greatly increased the procedure’s odds of success by creating a value network of economically-aligned partners.

Telehealth’s value network encompasses the providers, insurers, and government agencies that are involved in its delivery and payment. To that end, one of the largest drivers of the financial viability of telehealth is provider reimbursement—providers not only need their work to be effective, but profitable. The Center for Medicare and Medicaid Services (CMS) plays a significant role in what is and is not reimbursed not only by the government, but also by insurance companies. As a result, CMS will help determine the sustainability of telehealth as the COVID-19 crisis recedes.

Pre-COVID regulations

Before COVID-19, regulatory barriers prevented alignment by not incentivizing providers to offer telehealth services. Providers only received Medicare reimbursement for telehealth if patients fulfilled two conditions: they lived in an area that was rural or with a health professional shortage, and they used telehealth services while in a doctor’s office or other qualifying medical facility (effectively negating the convenience telehealth enables). Reimbursement only covered a limited set of services, at a lower rate than in-person healthcare. Private insurers typically followed CMS’ lead in coverage, reimbursing telehealth at a lower rate and for fewer services than in-person care.

These limitations made it difficult and financially impractical for providers to implement a telehealth plan into their practices. The full value network in which a doctor’s office operates—from operations to reimbursement—was not aligned to support a telehealth-forward system.

COVID-based alignment

The system put in place during COVID-19 is a fantastic example of how alignment within the telehealth value network enables its success. For instance, CMS eased the transition to telehealth by reimbursing providers at the same rate for remote and in-person appointments, and enabled providers to use telehealth to connect to patients regardless of the patient’s location. Regulators also expanded the number of reimbursable telehealth services, instead of only reimbursing a limited set of services. Private insurers as well helped make telehealth access easier, many foregoing any copay necessary for telehealth services.

With complete alignment in the current value network, providers no longer feel like utilizing telehealth is detrimental to their practices. But, there’s no guarantee these regulatory changes will last. To ensure telehealth’s place in healthcare, provider advocacy groups are pushing for the permanence of regulations developed to improve telehealth access during COVID-19. The Community Health Care Association of New York State and the New York State Council for Community Behavioral Healthcare, for example, are teaming up to support a number of NY state policy changes to sustain telehealth beyond the pandemic. The American Medical Association is also advocating to make permanent many emergency policies put in place to expand telehealth access as COVID-19 began to rise in the US. 

Telehealth benefits patients regardless of whether or not there’s a pandemic; bringing healthcare to the patient (rather than the patient to healthcare) is a step toward making healthcare more accessible. But, telehealth’s ability to provide accessible healthcare to everyone regardless of location relies on all parties remaining aligned. Only time will tell if the changes made during the pandemic remain. 

For more, see:
Can telemedicine thrive beyond COVID?

Jessica is a research associate at the Clayton Christensen Institute for Disruptive Innovation, where she focuses on business model innovation in healthcare, including new approaches to population health management and person-centered care delivery.