Employers’ Telemedicine Market

Recently, Credit Suisse https://www.credit.suisse.com, hosted a conference call with Adam Solander, Partner, Employee Benefits, Health, Care and Data, Privacy and Security Practice Group at King and Spalding https://.kslaw.com. The call was a follow-up to the lunch meeting Credit Suisse hosted with Christa Natoli, Deputy Executive Director for Center for Telehealth & eHealth Law (CTel), https://ctel.org a few weeks ago in New York City.

Adam is an expert on the employers’ view of telemedicine. His role is to represent clients with issues related to employee benefits, regulatory, and complaint issues, including designing, implementing, and maintaining employee benefit plans. He also advises clients on issues related to manage care laws in telemedicine.

The utilization rate for telemedicine was discussed. Today, the utilization rate is in the mid-single digits, maybe 6% or 7-8% even if all large employers offered telemedicine. Jailendra Singh Healthcare IT Analyst at Credit Suisse, asked Adam “What are the primary reasons behind such a low utilization rate and what needs to change before it picks up?

Adam reports that utilization differs if it comes from the health plan or if it comes from a directly contracted provider. Typically in the directly contracted provider space, there is more of the language in the contract that allows for more marketing which can really drive utilization.

Experts note that some of their employer clients have experienced a 40-60% utilization rate in their telemedicine program primarily driven by the integration of telemedicine into the employer’s benefit programs.

Adam said he has one employer client with a younger work force which has resulted in 65% utilization of telemedicine last year. In this group, the employees are encouraged not leave their desks for medical care, just to call their telemedicine provider.

Most agree that the telemedicine currently taking off is the result of the increase in the use of urgent care centers. Experts believe that from an employers’ perspective, telemedicine has mostly focused on being an urgent care replacement. Currently, there are thousands of urgent care centers in the U.S to solve very specific problems.

Experts say that the contracting model is shifting away from the PMPM approach. Adam reports that clients say if there is going to be some kind of PMPM, there has to be a strong ROI on the back end where the client may be willing to cover the fixed costs for implementing the program. Credit Suisse experts see a transition away from a PMPM type of model to more risk sharing arrangements where clients can see a clear path to ROI.

When Adam was asked about the telemedicine services most in demand, he said, “The hot areas that I’m seeing right now is the need for more concierge services as employees are asking for these services. Also mental health is an area where employers can’t get great services and as a result, this drives up costs. Mental health is something that directly impacts employees, so they are increasingly turning to telemedicine for help with mental health issues.”

Experts find that employers are focused on expanding telemedicine in areas such as drug use, for treating opioid addiction, as well as for chronic conditions such as asthma, cardiology etc. We are also seeing a lot of mixed programs which is telemedicine mixed with some sort of primary care practice on the back end.

The question was asked as to whether employer clients are happy with their telehealth vendors since almost 95% of large employers currently have telehealth contracts. Adam reports that cost is always a factor especially as budgets get tighter around the benefit plans, the contracting model plays into it, along with the scope of services being offered which can result in more shopping around. However, most employers are very happy with their telemedicine vendors but they do want to have more conversations around innovation.

Credit Suisse experts note that the “Virtual First Approach” model is the future of telemedicine, and is getting significant interest from employers. Adam also agrees that this is really the future of telemedicine.

Email Jailendra Singh Research Analyst at jailendra.singh@credit-suisse.com or call 212-325-8121 for more information or to provide feedback.

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