Six Misperceptions

Healthcare is a $2 trillion market in the United States and growing at a fast pace. For entrepreneurs, that figure is so alluring it is impossible to ignore. Companies, institutions and individuals from everywhere are looking to see how to get a piece of the healthcare market. It’s the gold rush of the 21st century and health technology is where a lot of companies are staking a claim. And now the attention is turning to telemedicine. The variety of new entrants is vast: vendors selling devices or software; sellers of remote health services; consultants and individuals simply wanting to get into the telemedicine job market. Every week there is a new conference, a newsletter or journal and even a new association targeting some aspect of telemedicine.

Based on the feedback from new entrepreneurs coming through the ATA offices it is apparent that there are a number of misperceptions about the telemedicine market. Here are six of them, learned over the past 18 years.

1. It’s not the technology, it’s the service. Dial up phones were a great invention. So was the VCR. They are both gone but telecommunications services and watching movies are bigger than ever. New and amazing devices and applications are coming on the market every day. But devices are tools that allow services to be provided at a distance. The focus, the purpose and the finances are on the service.


2. Despite what you hear, Medicare reimbursement is not the Holy Grail for telemedicine. It’s important, but… Medicare fee-for-service covers about 36 million Americans, 12 percent of the total U.S. population. 88 percent of Americans are covered elsewhere and 81 percent of healthcare spending comes from other sources. There are no federal restrictions on using telemedicine for billions of health dollars spent on managed care, bundled services and on alternative plans by private payers.


3. Healthcare institutions and physicians are partners, not the enemy. Transforming does not require replacing. So many new entrepreneurs in telemedicine start out with a negative, competitive attitude to traditional healthcare. We have not reached the point when someone with heart disease is going to trust their care to a computer alone. The role of doctors and hospitals is changing but they will continue to be the backbone of medicine.


4. Device regulation is not bad – it’s good; in fact it could rapidly accelerate adoption. FDA rules for wired and wireless telemedicine devices and their certification by an official government agency is a stamp of approval, providing reassurance for cautious buyers.


5. A great idea is born every minute but few of them are successful. I have heard of hundreds of stories about how a new technology, application or remote health service results in lower rates of hospitalization, improves compliance, etc. only to see it disappear a year later. Marketing, partnerships, revenue pathways and knowledge of healthcare business practices are essential, for starters.


6. Consumers don’t buy healthcare themselves. For fifty years the percent of spending on healthcare by consumers has dropped (not including insurance or co-pays). It is now about ten percent. Consumers are getting much more knowledgeable and engaged in selecting among available procedures and treatments but they don’t pay directly for healthcare products and services. The only exceptions are one-time beauty treatments and fitness fads.