The option to book an online consultation with a doctor is easy and convenient, although there are concerns about prescriptions being handed out without in-person visits. Artificial intelligence (AI) and automation are set to improve digital health solutions, leading to better health management and patient outcomes.
- Four in ten people who relied on telemedicine services during the pandemic preferred them to in-person services.
- Teladoc’s mental health subsidiary BetterHelp reported an 18% increase in revenue in Q2 2023.
- How to invest in telemedicine: the Global X Telemedicine & Digital Health ETF, which holds Teladoc, is down 13% in the past six months.
The Covid-19 pandemic was a watershed moment for telemedicine. With in-person health visits restricted, the majority of services moved online. Anyone with a computer or smartphone and an internet connection was able to talk to a consultant virtually about their medical concerns.
According to analysis published in a policy response to the pandemic by the Organisation for Economic Cooperation and Development (OECD), approximately 40% of patients worldwide who relied on telemedicine and remote health services during the pandemic preferred them to in-person services.
There are clear benefits to telemedicine: it can reduce later healthcare utilisation and ensure that people only attend in-person visits if they really need to. This can help relieve some of the pressure on healthcare services. But, at the same time, “spending on telemedicine services is wasteful when it does not deliver benefits and when it could be replaced with cheaper alternatives with identical or better outcomes”, noted the OECD.
With so many telemedicine players competing in an ever-growing and ever-fiercer marketplace, there will inevitably be winners and losers. Some companies stand out, however, for how they’re helping people to better manage their health conditions, and improving patient outcomes.
Post-Pandemic Use of Telemedicine Holding Up Well
Teladoc [TDOC] is the standout name. Its main business is a primary care offering. More than 100 million Americans don’t have access to a primary care provider — the US equivalent of a general practitioner in the UK — according to a report from the National Association of Community Health Centers published in February.
“We have a vision of making virtual care the first step on any healthcare journey”, stated Teladoc in its 2022 annual report, adding that it was founded on the principle “that everyone should have access to the best healthcare, anywhere in the world on their terms”.
The signs are that the demand for Teladoc’s telemedicine services are holding up well in the post-pandemic world. The company saw 4.7 million virtual visits in the three months to 30 June. Although down slightly from 4.8 million in the first three months of the year, growth was flat year-over-year.
The company’s revenue grew 10% in the second quarter (Q2), to $652.4m. Its integrated care business grew 5% to $360.1m, while its mental health business, BetterHelp, brought in $292.4m, a year-over-year increase of 18%.
Pandemic Toll Drives Demand for Mental Health Services
As the pandemic took a toll on people’s wellbeing, mental health has quickly become one of telemedicine’s fastest growing areas. In June this year, 68.9% of all virtual health claims in the US were for mental health conditions, according to Fair Health’s monthly telehealth tracker.
Mental health offerings have been a key growth driver for other health companies. American Well [AWML], also known as Amwell, acquired Dublin-based SilverCloud in July 2021 and the online therapy service has since been integrated into Amwell’s Converge platform. Visits on Converge accounted for 43% of Amwell’s total visits in Q2 2023, up from 36% in the first three months of the year.
Hims & Hers [HIMS] provides people with personalised health and wellness experiences. Patients can also connect with licensed professionals to be prescribed over-the-counter drugs. Back in January, the company brought actress Kristen Bell on board as a mental health ambassador, to “combat stigma surrounding mental health and encourage conversation and exploration of treatment for people struggling with anxiety and depression”, according to a press release.
Relaxed Online Prescription Rules Could Be Rolled Back
Since the pandemic, some rules have been relaxed, and it’s been easier for people to get prescriptions online, such as Adderall, which is often prescribed for ADHD.
The Drug Enforcement Agency (DEA) recognises “the importance of telemedicine in providing Americans with access to needed medications”, but is considering rolling back the rules, over concerns that some people may get addicted to medications that they don’t really need, it announced in a May press release.
In-patient visits should be required for certain over-the-counter drugs, the DEA argued. The relaxed rules were extended by six months in May as it considers more than 38,000 comments from the public.
As the OECD pointed out its pandemic policy response mentioned earlier: “Telemedicine is only a tool and, like any other tool, it can be well used or misused. When well used it can be beneficial for patients and health systems, providing we continue to work on overcoming some pitfalls.”
AI and Automation Will Help to Improve Patient Outcomes
Nevertheless, telemedicine is here to stay, and is set to play a more critical role in helping people to manage their health, especially as telemedicine products and solutions evolve.
“A data-driven approach that leverages rapidly evolving technologies such as artificial intelligence, machine learning, and automation could be key to improving patient outcomes while also potentially lowering costs,” noted Arelis Agosto, Senior Healthcare Analyst at Global X, in research published in June.
Agosto sees Teladoc as one of four companies that will lead telemedicine innovation in the coming years. The other three are automated medicine management system provider Omnicell [OMCL], AI-powered cardiac monitor maker iRhythm [IRTC], and patient-monitoring technology maker Masimo [MASI].
How to Invest in Telemedicine
ETFs, or exchange-traded funds, offer an economical and diversified way to invest in a variety of stocks within a particular theme.
Funds in Focus: the Global X Telemedicine & Digital Health ETF
The Global X Telemedicine & Digital Health ETF [EDOC] has allocated 93.8% of its portfolio to healthcare as of 31 August. Consumer discretionary and financials have weightings of 3.4% and 1.5% respectively, while information technology (IT) and financials both have allocations under 1%. The fund is down 20.6% in the past year and down 13% in the past six months.
The First Trust Nasdaq Lux Digital Health Solutions ETF [EKG] has allocated 61.7% of its portfolio to medical equipment and services as of 12 September. Healthcare providers and pharmaceuticals and biotechnology have weightings of 20.7% and 16.6% respectively, while 1% has been allocated to software and computer services. The fund is down 2.8% in the past year and down 6.5% in the past six months.
The Fidelity Digital Health UCITS ETF [FDHT.L] has allocated healthcare 80.2% of its portfolio as of 13 September. Consumer staples and IT have weightings of 9.1% and 6.9% respectively. Industrials and consumer discretionary account for 2.2% and 1.6% respectively. The fund is down 5.1% in the past year and down 4.9% in the past six months.