Telehealth firms set sights on hospital system market

When telehealth giant American Well launched in 2006, its business focused mainly on providing patients with immediate access to low-acuity care for conditions like rashes, urinary tract infections and the flu.

It's the easiest way to get healthcare in a pinch: download an app, see a board-certified physician in minutes and finish the video visit with a prescription already routed to the pharmacy. No more two-week wait for a primary care appointment.

But that kind of direct-to-consumer urgent care—new and exciting just a decade ago—is now part of the mainstream. Most Americans have largely gotten used to the idea of accessing care virtually, even if not all of them have tried it.

It's “more and more a mature market,” said Dr. Roy Schoenberg, CEO of American Well. The company says 120 million Americans have access to its platform.

American Well is now turning its sights toward what it sees as the final frontier: hospitals and health systems.

The Boston-based firm and other telehealth industry giants like MDLive, Teladoc, Doctor on Demand and SnapMD are rapidly growing the parts of their businesses that cater directly to providers. Smaller startups like Carena, Bright.md and Zipnosis that only serve health systems are popping up every year.

Some virtual care providers simply provide the technology and set-up. Others offer networks of doctors that over-burdened, capacity-strained systems can tap to supplement their existing physician capacity. With so many options available, healthcare providers have no shortage of ways to expand the number of patients they see and take better care of their existing ones.

American Well doubled its book of business related to healthcare providers last year, and now provides its telehealth technology to more than 70 health systems that together have more than 700 hospitals, including Cleveland Clinic, Franklin, Tenn.-based Community Health Systems and Renton, Wash.-based Providence Health & Services. They use the American Well technology under their own brands and logos.

Health systems either use their own doctors to staff virtual visits, or they take advantage of the Online Care Group, a national network of thousands of board-certified doctors that American Well has recruited and trained. Many providers start out using the external doctor network and eventually transition to staffing the platform with their own doctors, who can use the virtual visits to not only offer urgent care to existing patients, but follow up with them after in-person appointments, Schoenberg said.

Convenience is a big benefit of telehealth, but it's not the only one. By encouraging patients with common ailments to seek care virtually, doctors can free up in-office primary care appointments for patients with more serious conditions. About a fifth of all urgent primary care visits could easily be conducted through virtual care, according to a 2015 report by the Advisory Board, a consulting firm.

High-quality smartphone cameras and better bandwidth have rendered the in-person exam unnecessary for many simple ailments, said Dr. Ian Tong, chief medical officer of San Francisco-based Doctor on Demand. “With a video, you can now do an examination that is a very thorough exam and get much of the same information that you can gather in the office,” Tong said.

Like American Well, San Francisco-based Doctor on Demand started out as a direct-to-consumer app. It soon moved on to selling the service to employers and health plans, which spurred health systems to begin using its virtual approach to care.

While American Well's clients largely use their own doctors with occasional supplementation by the company's external network, Doctor on Demand touts its employed group of physicians as a way for overworked health systems to unload their burden.

The company's full time, specially-trained doctors work in paid shifts so there's always a physician on call for patient virtual visits. Tong said fragmented care isn't an issue. “I see us offering enhanced access to those patients and being able to send you with your record back to your doctor,” he said.

Today, 63% percent of healthcare providers use telehealth in some way, according to a 2016 survey by telehealth software startup Avizia. Many of them are responding to the shift towards value-based care and are looking for efficient, low-cost ways of taking care of common conditions, said Teladoc CEO Jason Gorevic.

While employers and health plans still make up the most of Purchase, N.Y.-based Teladoc's business, the work it does in the provider space is growing rapidly, Gorevic said. Teladoc works with more than 120 health systems or hospitals. A year ago, it had just 60 clients.

Some, like Neptune, N.J.-based Meridian Health, are using Teladoc's technology to care for low-acuity conditions. Others, such as Jefferson Health in Philadelphia, are delivering post-discharge care to patients to cut down on hospital readmission rates.

Most of Teladoc's provider clients use their own physicians to staff the virtual care platform. But some also take advantage of Teladoc's network of 3,000 independent physicians to ensure access for their patients at all hours, Gorevic said. The majority of visits are conducted over the phone, but patients have the option to select a video visit.

Sunrise, Fla.-based MDLive is in a similar position. Most of its business is focused outside of the provider realm, split between Fortune 1000 businesses offering telehealth to their employees and health plans offering access to plan members. A year and a half ago, most health plans didn't reimburse for virtual visits, said MDLive's CEO Scott Decker. Now they do, and they're offering access to providers like MDLive as a benefit.

The fastest growing part of MDLive's business is the work it does with health systems, Decker said. The company provides its telehealth platform to about 15 systems, including Sutter Health in Sacramento and Trinity Health in Livonia, Mich.

Ninety percent of MDLive's visits—it now does 1,200 a day, compared with 700 a day just four months ago—are conducted by telephone. The rest are video visits. MDLive contracts with 1,500 physicians across the nation to deliver care. Its doctors run the gamut from internists to emergency physicians to hospitalists. Some see a few MDLive patients a week in between their day jobs. Others are professional telehealth physicians who only see patients remotely, Decker said.

“I think we are about to explode,” in growth, Decker said. And while low-acuity care dominates telehealth now, chronic care management is next big thing. “We're just on the cusp of that.”