At the American Telemedicine Association’s (“ATA”) recent conference in Orlando, a panel of strategic investors discussed the growth of the telehealth industry. The panel delved into topics such as the driving forces for telehealth and which telehealth programs they believe have the ability to gain traction across a broad universe of stakeholders. Based on firsthand experience with deals that have worked, and those that have not, the panel shared their insights and discussed lessons learned, which in turn provided listeners with interesting insight regarding the future of the telehealth industry.

During the conference and prior to the panel session, the panelists took time to wander through the vast ATA exhibit hall, where numerous telehealth providers and platforms showcased their offerings. The investors assessed (and discussed during the panel) three distinct models: (1) “doctors on carts” (2) software delivering a “virtual care” experience, and (3) gadgets. The panelists identified a need for differentiation in the market and recommended greater development of telehealth platforms that are additive to solutions that already exist, as well as encouraging the industry to start moving away from standalone technology. Other highlights from this interesting panel discussion follow below.

Challenges facing the telehealth industry:

According to the panel, telehealth remains a huge business and investment opportunity, but one that is still largely aspirational. One panelist described telehealth as a three-legged stool – technology, operations, and provider networks – and said challenges must be carefully evaluated at each point. In particular, from the technology side, investors must consider how potential telehealth technologies fit into existing operational structures. For example, telehealth platforms and technology targeting the post-acute space face particular hurdles because of basic infrastructure upgrades needed in many post-acute settings.

Not surprisingly, the panel identified reimbursement as one of the greatest challenges facing the telehealth industry. General sentiment among the panel members was that until utilization of telehealth increases, the reimbursement landscape for telehealth services will not meaningfully change. Other challenges to greater utilization of telehealth services include a lack of awareness of telehealth’s capabilities “in the moment” when care is being provided, unfamiliarity with telehealth capabilities by comparatively sicker and older populations (for whom utilization of telehealth might be extremely beneficial), and a perpetual perception that the telehealth industry is “stuck in pilot mode.” Health care providers have the ability to change the way care is delivered by utilizing telehealth technology; however, according to the panelists, stakeholders must continue working to raise awareness of telehealth’s benefits for both patients and providers.

What story should telehealth stakeholders tell to empower providers and payers to adopt telehealth services?

The panelists discussed the importance of “knowing the audience” to whom stakeholders are attempting to sell telehealth business ideas, particularly with regard to potential providers of and payers for these services. Demonstrating the strategic value-add that use of telehealth technology provides is key to the equation.

With respect to providers, access to care is core to their mission, and as such, stakeholders should focus on examples of telehealth services or platforms that increase patient access to care. One successful strategy may be using telehealth technology to meet patients where they want to be met – i.e., in the home – and demonstrating that the technology can deliver the needed care in a lower cost setting. With respect to payers, some believe that any increased volume of telehealth services will drive prices up, and as such, stakeholders need to have their ROI case down in order to demonstrate to payers that telehealth will not just drive volume, but rather will reduce costs and/or improve health outcomes. Notably, several of the panelists recommended that those looking to sell telehealth services and/or platforms focus most heavily on potential opportunities for partnership and collaboration.

How should telehealth providers and companies work to raise capital?

The panelists advised that telehealth providers and companies “do their homework” regarding what their technology can do to help and to enhance an existing health system, as a means toward raising capital. Telehealth companies should be prepared to pursue strategic partnerships that would allow a potential health system partner to seamlessly integrate the telehealth services and/or platform into an existing system and/or platform. Companies should push a market-centric story. The panelists advised against companies pushing the message that their telehealth technology or platform will be a “win-win” for everyone; rather, companies should be prepared to explain the losers (i.e., the competing technologies and platforms that have not worked) and how their technology and/or platform will be able to navigate around that. Companies should acknowledge there is tremendous competition in the telehealth market and should resist saying their technology or platform will be the next WhatsApp of the health care industry.

Should telehealth providers and companies focus on the patient or consumer experience?

Some in the telehealth industry have targeted consumers (i.e., tech-savvy millennials who want the convenience of virtual care) as a potential key driver of growth. However, the panelists advised that a focus on consumers may not be beneficial to the telehealth industry. Interestingly, some panelists recommended that the telehealth industry actually pursue the sickest patients who consume the most health care services and, in turn, drive health care costs. The panelists described early but ongoing collaboration between software engineers and clinicians, in pursuit of looking for the right types of patients to target within specialties such as dermatology, wound care, and behavioral health. The panelists felt there is a compelling ROI case with regard to bringing telehealth to these populations.

How will the telehealth industry evolve and what are the most promising investment opportunities?

When asked to look ahead to what the future may hold, the panelists recommended thinking less of telehealth as a technology and more about how telehealth integrates into consumer solutions. The future of telehealth should focus on how tools enable us to change the delivery system and sites of service, so that many health care services can be shifted from being provided at “brick and mortar” sites like hospitals, to being provided at more convenient and less expensive sites of service such as patient’s homes, cars, on the phone, etc. The panelists discussed that another significant evolution in the telehealth space is providers that are building their own telehealth solutions in-house. Finally, the panelists reiterated that greater development of technology and platforms that manage particular high utilization populations, like those with chronic care conditions, also provide growth opportunities. According to the panelists, the major specialty growth areas within telehealth include tele-ICU, tele-stroke, and tele-behavioral health.

Finally, the panelists advised that investors target potential telehealth offerings that are marketed well and that provide a good patient experience, as these tend to be indicators that will convince health plans to sign on. Furthermore, technology and platforms that are easy to use will have the best chance at widespread adoption.

Telemental health seems to be emerging, even booming.  Also referred to as telebehaviorial health, e-counseling, e-therapy, online therapy, cybercounseling, or online counseling, for purposes of this post, I will define telemental health as the provision of remote mental health care services (usually via an audio/video secure platform) by psychiatrists, psychologists, social workers, counselors, and marriage and family therapists.  Most services involve assessment, therapy, and/or diagnosis.   Over the last few years, I have seen a wider variety of care models—from hospitals establishing telepsychiatric assessment programs in their emergency departments to virtual networks of mental health professionals providing telemental health services to underserved areas to remote substance abuse counseling being provided to inmates in state prisons.VA telehealth

Even the federal government is in on the act.  For example, in 2010, the Veterans Health Administration established a National Telemental Health Center. In 2013, the center provided almost 3,000 video encounters to 1,000 patients at 53 sites in 24 states.  The scope of the services the center provides includes all mental health conditions with a focus on post-traumatic stress disorder, depression, compensation and pension exams, bipolar disorder, behavioral pain and evidence-based psychotherapy.

There are many reasons for the recent boom.  First, telehealth is a good fit for providing mental health services because providers rarely have to lay hands on the patient in conventional face-to-face encounters.  Second, telemental health is accepted by a large number of payers as a legitimate use for telehealth—more so than other telehealth disciplines. As an example, most Medicaid programs and many private insurers cover and reimburse for telemental health services.  Finally, patients surveyed have consistently stated that they believe telemental health to be a credible and effective practice of medicine, and studies have found little or no difference in patient satisfaction as compared with face-to-face mental health consultations.

The Need for Telemental Health

In essence, we are stuck in a vortex of sorts with millions of Americans suffering from mental illness or substance abuse disorders combined with a shortage of qualified mental health providers to address these issues.  The numbers speak for themselves.

In addition to the high numbers described above, there is a critical mental health provider shortage creating significant access to care issues.  Here is a snapshot:

You get the idea.  And even with mental health parity laws, cost of care remains an issue—not to mention the social stigma and mistrust of mental health providers that exists in many communities.Mobile phone

Telemental health is bridging the gap.  Numerous studies have shown the effectiveness of telemental health services.  For example, a recent study showed that providing telemental health services to patients living in rural and underserved areas significantly reduced psychiatric hospitalization rates.  Another study concluded that the effects of telemental health on low-income homebound older adults were sustained significantly longer than those of in-person mental health services. Many other studies arrive at the same conclusion.  Note, however, obstacles remain, including how to properly assess non-verbal cues by video, technical difficulties, and the lack of proper training of many providers regarding telehealth.

Practice Guidance

There is also good news in that, unlike other telehealth subspecialties, there is a well-developed library of practice guidelines available regarding telemental health.  The American Psychiatric Association, American Psychological Association, National Association of Social Workers, Association of Social Work Boards, TeleMental Health Institute, for example, all have guidelines or statements related to telemental health.  The American Telemedicine Association has developed a series of practice guidelines over the years related to telemental health, including its latest regarding using real-time videoconferencing to provide online mental health services. There are also other resources such as the telehealth resource centers that provide guidance on telemental health.

Legal & Regulatory Issues

As with all things telehealth, however, there are a number of significant legal and regulatory issues implicated by the use of telemental health, including privacy and security, follow-up care, emergency care, treatment of minors, and reimbursement. While telemental health touches on some federal laws and regulations (e.g., HIPAA), most of the significant issues involve state law.  And as you might imagine, the result is an inconsistent patchwork of laws and regulations that vary widely by state.

We recently completed a 50-state survey of laws and regulations that may be implicated by the use of telemental health services to assess a variety of issues such as privacy, follow-up care, treatment of minors, and provider scope of practice.  Here are a few nuggets:

  • Psychiatrists, as practicing physicians, must comply with all the obligations that apply to physicians practicing telehealth generally. Very few states exempt mental health from physician requirements despite the fact that many psychiatrists never lay hands on patients. Ironically, Texas is one of the few states that explicitly carves out mental health services from other telehealth requirements.
  • In Delaware, an individual practicing “telepsychology” must conduct a risk benefit analysis and document findings specific to issues such as whether a patient’s presenting problems and Skype 4apparent condition are consistent with the use of telepsychology to the patient’s benefit; and whether the patient has sufficient knowledge and skills in the use of technology involved in rendering the service or can use a personal aid or assistive device to benefit from the service.
  • Kansas requires psychologists and social workers providing telemental health services to obtain the informed consent of the patient before services are provided.
  • In Maryland, physicians (psychiatrists) are required to develop a procedure to prevent access to data by unauthorized persons through password protection, encryption, or other means; and develop a policy on how soon an individual can expect a response from the physician to questions or other requests included in transmission.
  • Montana psychologists can initially establish a “defined professional relationship” electronically so long as the means of communication involves a two-way, real-time, interactive platform providing for both audio and visual interaction.
  • To regulate marriage and family therapy therapist, South Dakota relies on the American Association for Marriage and Family Therapy’s Code of Ethics which provides that therapists evaluate whether electronic therapy is appropriate for individuals and inform them of the potential risks and benefits associated with electronic therapy.

As I look over the telehealth landscape, I predict that telemental health will continue its significant growth.  Demand for mental health services will not recede, and coupled with the mental health provider shortage, telemental health will be viewed as a viable solution by more and more clinicians, payers, and policymakers.  There are, however, significant legal and regulatory considerations—especially at the state level— with which stakeholders must wrestle.