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Telehealth Series Part II: The Business of Telehealth

Insight by , , , and


We look at telehealth business models and how they could change over time in the second installment of our Telehealth Ahead of the Curve series. We believe the evolution of telehealth continues to be underappreciated. While COVID-19 vaccine news has resulted in some rotation out of the group, we believe the strategic value of telehealth remains the same and purpose-built platforms are best positioned. Telehealth remains an integral part of health care delivery.

The Evolution Of Telehealth Is Underappreciated

COVID-19 has amplified secular tailwinds for telehealth. Even so, we believe that thetotal market opportunity for telehealth remains underappreciated. This is not just because of uncertainty around reimbursement (covered extensively in the first part of our Telehealth Ahead of the Curve Series, Part I: Paying for Telehealth), but also because of the evolution of telehealth beyond simply urgent care.

We believe the market still fails to recognize the multitude of use cases for telehealth and virtual care, spanning all of healthcare. It is clear to us that telehealth is evolving to be a key component of virtual care based on our proprietary Cowen Employer and Consumer Telehealth surveys, commentary from industry leaders, as well as discussions with health plans and industry experts. Telehealth is no longer a singular service delivering low-acuity care.

Business Models Are Evolving, Which We See Expanding Telehealth’s TAM

We believe the evolution of telehealth business models will expand its total addressable market. We see three major telehealth business models in the market today:

  1. employer/payor-oriented model: based on a per member per month (PMPM) and/or visit fee
  2. provider-oriented model: based on a SaaS structure
  3. direct to consumer model: based on subscription fees

We see growth opportunities in each of these areas, but also expect new business models incorporating telehealth to emerge, including risk-based models.

Market Volatility Aside, Strategic Long Term Value Of Telehealth Remains The Same

Even with some rotation out of telehealth following positive COVID-19 vaccine news, we believe the strategic long-term value of telehealth remains the same: it enables greater connectivity between providers and patients. There are a myriad of opportunities for industry participants to engage with telehealth and digital tools.

We anticipate sustainable growth going forward, propelled by an improving reimbursement environment and demand by providers and patients. As revenue models shift to at-risk models, we believe traditional telehealth vendors will be able to adapt more quickly. We see purpose-built telehealth platforms as best positioned to capture opportunities coming out of the pandemic, given their ability to integrate and navigate our complex healthcare system.

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