Wednesday, January 4, 2012

Seven Market Trends

The telemedicine market is expansive, multifaceted and growing. I have selected seven topics for brief comments and predictions as we start 2012:

1. Shifting away from reimbursement and from CMS decision-making

It’s been the Holy Grail for telemedicine in America. But the rapid growth of managed care, Accountable Care Organizations and medical homes are changing the way telemedicine services are paid, away from the fee for service model. One quarter of all Americans, 73 million patients, are now covered under a managed care health insurance program. With such shifts the focus of decision-making is gradually turning to local and regional healthcare decision makers.

2. Telemedicine as a standard of care

Medical images, x-rays and the like, have been viewed in digital form for forty years. Teleradiology is now so common that many hospitals don’t use the term – outsourcing radiology, at least for after-hours, is just the way things are now done in healthcare. It has become so common that providing 24/7 services by a radiologist, relying on teleradiology where needed, may be the first part of telemedicine to become a true standard of care. Such standards are included in state, federal and Joint Commission requirements and serve a basis for court decisions on legal liability that hold hospitals accountable. It would not surprise me to see a legal suit decided on this basis, it has already been raised in a few cases.

3. Emergence of independent remote clinical enterprises

Outsourcing the interpretation of radiological images is now used by most hospitals in the U.S. Independent diagnostic testing facilities have been around since 1998. Now, a relatively new and related market is the use of private firms of medical specialists to provide remote clinical consultations. A series of vendors have sprung up to do just that for stroke care, mental health, hospitalist and intensivist services, and dermatology. Some may be considered competitors to hospital-based telemedicine programs serving smaller clinics while others may be contractors to the hospital. Look for mergers and expansions of such enterprises as the market starts to take off.

4. The rise of virtual medical centers

In October 2011, Mercy Hospitals announced that it would build a $90 million virtual care center near its headquarters in Chesterfield, MO. The specialists will be located at one site and serve patients in outlying centers across the four states in which Mercy operates: Missouri, Kansas, Arkansas and Oklahoma. On a smaller scale, intensivists at Inova Health System in Virginia are based out of a corporate office building and provide remote ICU services to 122 ICU beds throughout northern Virginia. Other health systems are looking closely at these developments and, if successful, will start on their own versions of virtual centers.

5. mHealth

mHealth is still a sizzling subject and is an important addition to the mix of technologies changing the way healthcare is delivered along with other innovations such as social networking, “Big Data” and personalized medicine. In June 2010 I wrote that we were at the top of the hype cycle for mHealth. I was premature. Wild promises, naivety about the way healthcare is paid for and delivered, and investors throwing money at some, well, “interesting” devices and services have continued. Mobile health apps are multiplying exponentially. No doubt there will be some upcoming market adjustments, but wireless technologies will continue to help redefine what we mean by telemedicine.

6. Programs vs. networks for multi-site telemedicine operations

Federal grants have helped to establish about 200 telemedicine programs linking multiple health centers throughout the country. Almost all have been based out of one large medical center, operating a hub-and-spoke program that allows the medical center to provide remote clinical and educational services to connected spokes. Such a design can expand a center’s competitive footprint and increase referrals. An alternative approach connecting multiple centers, clinics and offices based on a true network design is starting to gain favor. Such a network is typically financed by paid memberships from participating sites and grants rather than clinical services fees. Services can be delivered from any site on the network to any other site. An early model is the Arizona Telemedicine Program. The Ontario Telehealth Network is a classic model of his approach.

7. Multi-nationalization

Once confined largely to international charities to under developed nations and a few remote image-reading centers, telemedicine is poised to become a major source of international trade. Global investments in high-speed networks and emerging practice guidelines are providing the infrastructure. Issues such as licensure, payment mechanisms, trade protectionism and cultural biases are but a few of the barriers in the way. However, the potential revenue from such services could have a significant effect on worldwide trade balances.

© 2012 Jonathan D. Linkous


  1. Non-communicable diseases account for 87 percent of all deaths in the US. Chronic disease (cancer, diabetes, heart disease, lung disease, and mental health problems) are projected to cost the world $47 trillion by 2030 (World Economic Forum, September 2011).

    Telemedicine, much like radiology outsourcing, is becoming commonplace. Specialty forerunners (radiology, mental health, dermatology, etc.) have made tremendous inroads the past 15 years in reducing costs and creating efficiencies.

    Now we are seeing home health and hospice care moving toward use of telemedicine in managing chronic diseases in the home. New comers to telemedicine will continue to grow; stellar products will remain.

    Compatible EMR applications will continue to challenge information management until 2 or 3 applications rise to the top; the race has already begun. Reimbursement and security issues will always be around, and addressed over and over again. If we are truly going to better manage care delivery and costs, telehealth is a viable part of our healthcare solution.

  2. Re #5: Mobility is key to mental health, physical health, continued employment and societal productivity. And BTW, reduced healthcare costs.

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  4. We appreciate your detailed and well considered observations on the telemedicine, industry particularly as they relate to mHealth applications.

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