CDC recommends telehealth visits to prepare for the possibility of a bigger outbreak of the coronavirus, which could impact encounters in direct to consumer telehealth systems. The impact will depend on the severity of the coronavirus which may result in accelerating investments in remote care systems and services.
Credit Suisse https://www.credit-suisse.com is focused on the impact of the coronavirus affecting investors. If there are major outbreaks, there may be implications both major and minor for companies in the healthcare field with respect to their day-to-day operations and employee base. Conversations are being held with companies in the healthcare IT sector as well as with industry experts and stakeholders.
Credit Suisse reports that the while it’s too early to jump to a definite conclusion and/or quantify the impact, researchers view any major outbreak as having positive implications for Teladoc Health. There are potentially positive, implications for Change Healthcare and HMS Holdings, neutral implications for eHealth, potentially negative implications for Premier and for Tivity Health, as conversations with these companies are still ongoing concerning the effect of the coronavirus on companies.
Teledoc Health (TDOC) https://teladochealth.com reports that in the long run, consumers will become more aware of the importance of telehealth. Teledoc notes that if concerns related to the virus continue to increase, individuals with low acuity medical conditions are likely to avoid hospitals, ERs, physician waiting areas, etc. and would possibly leverage telehealth services. In the long run, this should accelerate consumer awareness about telehealth, and TDOC, the leader in the employer-based telehealth market, should be a major beneficiary of this trend in both the short and long term.
TDOC is positioned to ensure best practices for virtual care visits for patients who think they may have been exposed by enabling virtual care at greater scale through technology. The company is also actively partnering in the U.S with CDC and WHO to provide near real-time disease surveillance data as well as proliferate disease-specific clinical practice guidelines.
For individuals who prefer to use telehealth for low acuity medical conditions, Change Healthcare (CHNG) https://changehealthcare.com stands to benefit as companies within different parts of the telehealth supply chain are also CHNG’s potential customers. CHNG offers several back end services such as eligibility, enrollment, and claims processing that may be required.
As for HMS Holdings (HMSY) https://hms.com, since the virus is reportedly more likely to infect older adults, particularly people with chronic health problems, the number of reported infections among children and pregnant women has been low. As a result, the exposure of Medicaid to this population is likely to be limited. However, if the outbreak impacts the Medicaid population, HMSY could experience a positive impact from the increased Medicaid claims since their Coordination of Benefits Business (COB), enables HMSY to earn a percentage on the recovered claims.
eHealth’s (EHTH) https://ehealthinsurance.com business is primarily driven by seniors and individuals obtaining health insurance online or via call centers, so an impact from the coronavirus situation worsening should be insignificant. The company notes that the company has infrastructure in place to allow brokers/agents to work remotely. Importantly, the busiest time of the year (4Q) is still far out.
Premier (PINC) https://premierinc.com reports that in the event there are increases in coronavirus cases in the U.S., there may be increased ER visits or hospitalizations for individuals who are showing symptoms similar to those symptoms reported for the coronavirus.
However, in Credit Suisse’s view, if there is increased utilization in hospitals, there is likely to carry lower acuity/intensity relative to elective surgical procedures. As a result, this is likely to still have a net unfavorable impact on the hospitals’ case mix as well as on PINC’s supply chain business.
Also, the company’s performance services segment could see some pressure if the coronavirus situation gets worse in U.S hospitals and health systems. Then it could be likely that consulting and performance collaborative projects will be put on hold.
Finally, PINC will be in the midst of the healthcare supply chain disruptions amid the global health crisis, which would significantly impact how hospitals and other facilities source, procure, and manage their inventory of the necessary medical equipment needed to combat the virus.
The majority of Personal Protective Equipment (PPE) used by U.S healthcare providers is manufactured in China and other countries that have been hit the hardest by the virus. PINC recently surveyed their 4K+ hospital members to assess the state of the supply chain and asked how the company can proactively address any warning signals regarding potential shortages of PPE.
Results on the survey are still being analyzed and finalized. PINC has taken the lead with FDA and CDC and is now serving as a command and control center for intelligence and updates, plus aggregating supply and demand information across the system.
Tivity Health (TVTY) https://www.tivityhealth.com finds that older adults are most likely to react to the threat of the coronavirus by avoiding any crowded or shared places. Also, seniors may avoid fitness centers, due to the flu epidemic or if there are adverse weather situations. While 25% of TVTY’s Medicare eligible are on a per member per month model it is not expected the company will see any impact, however, 75% of Medicare eligible are on a hybrid model, where the majority of revenue is related to the number of visits incurred which could impact the company.
For more information or to provide feedback, email Jailendra Singh, Research Analyst at jailendra.singh@credit-suisse.com or call 212-325-8121.