by Dan D’Orazio, CEO, Sage Growth Partners
Digital and virtual health have been big news during the COVID-19 pandemic as physicians and patients seek ways to deliver and receive care without the risk of exposure to the virus, but how will the acceleration of the acceptance and use of these channels of care continue to evolve in the coming months and years? And what impact will the ascendance of digital health have on hospitals, physicians, and payers? These are issues we’re exploring right now.
Market hype gives way to market scale
For years, all the talk about digital and virtual health has lacked a focus on provider need, consumer demand, and payer willingness to scale. More has been done in these arenas to accelerate the adoption since the start of the COVID-19 pandemic than was done in the last ten years.
Healthcare had to literally stop for delivery reform to happen
Beyond the dramatic uptake in virtual care, the way healthcare is delivered has taken a massive leap forward—a leap that has catapulted us beyond the way care has been delivered for the last fifty years. More of patients’ recovery will happen at home. Hospital stays will be reduced in length and number. Physicians will have more time for complex patient needs, and patients will have quicker access to care. The U.S. has spent the last decade pushing insurance and payment reform but has only been able to nibble at the edges of how we deliver care.
Don’t take what’s happening now as an edict that all things digital are gold
The market has accelerated BUT the winners in digital and virtual health will still need the right use cases, the right user experience, and a measurable impact on access, efficacy, and cost. Use cases vary by market and payers are looking for something different than providers. The number of new digital entrants will accelerate and challenge market incumbents and the status quo. Solutions that, prior to COVID-19, were viewed as “pilots” and often lived in the weakly funded innovation departments of health systems will move to the mainstream.
Technology-only virtual care plays will be commoditized
The prevailing wisdom used to be that whoever owned the provider would win. Actually, it’s whoever owns the patient. Technology is likely more of a communication vehicle – and a commodity. Patients will now choose to receive virtual care through their payer or with their own provider. Competition for patient/member mindshare will increase rapidly, putting payers and providers in more direct competition to serve and satisfy the patient/member.
True market competition is emerging as provider reach grows
Assuming regulatory support, healthcare is no longer local. Constraints limiting “brick and mortar” provider growth have loosened dramatically. Provider proximity and brick and mortar helped build moats; now they may be an unnecessary cost in many situations. Locality will still play a major role—but think about primary care, behavioral health, dermatology, and second opinion consults that can be virtual and with any provider, anywhere. Much of specialty care still requires face-to-face interaction and the human touch, however. Labs, radiology, surgeries, and inpatient care all still require bricks and mortar and are still largely local. But systems and providers will no longer be able to slow walk the change from their heavy capital and operating expense models.
Hospitals “site of service” strategies may be more impacted by consumers than regulators
Expensive (read higher billing and more profitable) care settings, such as hospital outpatient departments, will be further challenged. Regulators have been consistently chipping away at HOPD rates, pursuing site neutral payments. Hospitals have been pursuing less expensive care venues, but doing so slowly and with a “healthcare lite” approach, not really transforming their care beyond the use of hospital outpatient clinics, ASCs, etc. The transformation of care brought about by COVID-19, the consumer appetite for an expansion of digital and virtual care access, and the virtual care wave will cause hospitals to truly embrace new models and rethink and redesign both their reach and cost structure as they adapt to a changed healthcare delivery landscape.
Interested in reading more?
For more information on how American consumers have been reacting to the COVID-19 crisis, please check out our COVID-19 Market Pulse, conducted in partnership with Black Book Research.
This research has been featured in 10+ publications, including Forbes, Medical Economics, and Healthcare IT News.