There is a dark cloud hovering over virtual care as big companies have struggled to launch telehealth-centric businesses.
Retail giant Walmart announced Tuesday it was closing all of its clinics and shuttering its virtual care platform. The decision impacted 51 clinics across five states and represents a sharp reversal of a five-year strategy.
UnitedHealth Group's Optum has had some recent layoffs around digital health amid reports that its axing Optum Virtual Care altogether. Last month, virtual care company Teladoc announced its CEO Jason Gorevic was departing the company after a nearly 15-year run. The company's stock has fallen by more than 40% this year. Other public telehealth companies like Amwell and Doximity have faced similar challenges.
But telehealth executives and investors say there is still a huge opportunity with virtual care. Those remaining in virtual health said there is a need to offer compelling returns to patients rather than just improved access.
Here is what five telehealth executives and investors had to say about recent challenges in virtual care. Responses have been edited for clarity and length.
"I think that there's plenty of opportunity for all sorts of startups and mid-sized companies to do well. Is there an opportunity for one of those to become a dominant player that reshapes healthcare? I think that’s the real question. Can many companies rise to a good business, but not a giant business? I think the answer is absolutely, yes. Can any of them rise to become a dominant player synonymous with healthcare at the scale of the biggest healthcare institutions or even bigger? The jury's still out. It's the heaviest lift you can imagine to reinvent and the learn all the lessons that healthcare institutions have learned [over time] and how they've made what they do work. Underlying all of this is the payment model system. Virtually every [large] healthcare organization out there has figured out, to varying degrees of success, how to work within the payment models available."
"I think there is still a really strong future for businesses that are not tied to bricks-and-mortar [buildings] and not are tied to fee-for-service [medicine] and is not simply a video or audio version of what would happen in an office. So that’s actually a transformation of who is involved, how they’re involved and what role they play during and after an interaction. I don't think telecommunications is the business model. The actual care model is the business model. For folks who continue to leverage telemedicine as part of a non-fee-for-service model, [it] is not going to change. It is the unbridled, fee-for-service telemedicine that is really is really showing its age right now."
"When venture capital dollars were flowing very freely at very high prices...and interest rates were very low, startups would not just raise venture capital, they would also [add] additional debt on top. So, they [were] very well funded and could build these telehealth companies and deliver care and not think nearly as rigorously as they probably should have on whether this was just a good service or actually a good business. I think that's where a lot of companies got lost. Economics were upside down. While these companies might have been providing a lot of convenience, accessibility and good services to patients [and] consumers, they were not viable businesses. I think you've seen that really flip on its head in the last 12 to 18 months. Look at some of the publicly traded businesses in the category. They are trading at significantly lower prices than they were this time last year or this time, 24 months ago. I think that's indicative of the market souring of this category."
"Outpatient care doesn't work in a fee-for-service system. From a pure financial perspective, if you only look at what that primary care practice makes, it [only] works because it's part of a [health] system that creates downstream revenue and is systemically taking care of someone. [In] a fee-for-service system, many primary care doctors now are owned by a larger systems, which quite honestly subsidize them… No one goes to health system because they're really good at lightweight, convenient online care. Healthcare is hard. The cost can be high, the revenue can be low. A lot of times when you're delivering primary care, the benefit comes to the health system as a whole, not necessarily just to the delivery of primary care."
"It's important to understand that those [companies] that are exiting, including Walmart and others, [are] not saying that easier access to health services is not something that's important. They just realized that some of their initial models were struggling a little bit to find their way. We see that as affirming our view where we offer technology to connect existing trusted providers with consumers...We don't think that that trend is going anywhere with so much potential convenience, cost savings, improvement of outcome, access to higher quality care, that is possible when you use a hybrid care solution. I think that some of the [recent] demonstrate that this is really complicated. The answer is not by having one here or do it all, but rather have a solution that is working across the ecosystem to build bridges and really combining a hybrid way the solutions that exist."
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