Why expanding virtual visits now may be a huge opportunity—or a huge mistake

Aly Seidel, Daily Briefing

The telehealth market is projected to grow rapidly in the coming years as interest grows both among busy, cost-conscious patients and overscheduled providers.

One sign of the scale of the opportunity? Fully 64 percent of patients say they would be willing to see a doctor over video, according to American Well's 2015 telehealth index consumer survey.

If you don't start serving the market today, you could be left behind tomorrow. But to truly succeed, providers need to understand the market and how telehealth can best fit into their strategic plans, says Madhavi Kasinadhuni, a senior consultant with Advisory Board's Service Line Strategy Advisor.

"Most providers aren't clear on why they want to offer this service, or how to build a targeted telehealth offering aimed at a specific patient population, in order to achieve financially sustainable volumes," Kasinadhuni says. Organizations need to "have a sense of how patients would benefit."

So before you go all-in, here are three steps to take to determine whether virtual visits are right for you.

1. Do your research on state regulations

"The first step is to really to understand the regulatory environment in your state," Kasinadhuni says.

State reimbursement is possibly the most important factor in a telehealth strategy, Kasinadhuni says. If state policies don't mandate reimbursement, providers could risk financial losses due to high upfront investment costs and, once the program is operation, per-visit revenue losses from appointments that would otherwise have been done in person, she says.

So before investing in virtual visits, Kasinadhuni recommends asking three questions to evaluate your state's telehealth-friendliness:

  • Does your state allow for the practice of telemedicine without a full in-state license?
  • Does your state mandate that private insurers cover telehealth services at parity with public payers?
  • Does a third-party vendor already offer virtual visits in your market?

The answers to those questions will go a long way toward determining whether your organization can earn a financial return on its telehealth investment, Kasinadhuni says.

2. Assess your patient demographics

Even if regulations are favorable, that doesn't mean your patient demographics will be. Patients who are early adopters of virtual visits tend to be relatively young, well-educated, and employed full-time, Kasinadhuni says.

If your current patient demographics are favorable, then virtual visits could be a smart investment. If not, your limited resources may be better spent in other ways to retain your current patient base.

3. Weigh how much risk you're willing to take on.

When setting your strategic telehealth goals, it's important to be realistic about the amount of financial risk you're willing to take. Virtual visits require an investment of time, money, and resources—without always knowing when those investments will pay off.

It's possible to explore some telehealth technologies without going all-in on virtual visits. For example, secure email or online scheduling portals are a fairly low-risk investment. "You likely already have the infrastructure in place," Kasinadhuni says, and if you don't, it's fairly inexpensive to create.

But don't assume that, just because patients engage with these low-risk telehealth services, you're ready to move on to higher-risk offerings. Different services will appeal to different patients. The patients who responded enthusiastically to IM services may not be as interested in video visits.

"You could invest in it, spend hundreds of thousands of dollars, get your physicians on board, spend money to market it aggressively, and then find your patients aren't using it," Kasinadhuni says.

Next steps

Despite all these caveats, investing in telehealth can be a wise move. Just don't expand for expansion's sake—rather, make sure you're expanding carefully, and for the right reasons.

"If after all your preparation, you think virtual visits are going to become a reality in your market, you need to ensure you're ready for adoption," Kasinadhuni says.     

To help get ready, check out the Virtual Visits Market Shock report for insights on how to protect market share, expand capacity, and reduce cost of care with virtual visits.

Get the report


IT, Telemedicine

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