CEO Discusses Present & Future Trends

Credit Suisse as part of the “Healthcare Disruptive Technologies and Innovations Series” hosted Patrick Spain, Co-Founder, Chairman and CEO of First Stop Health to present his ideas and thoughts at a virtual meeting with a small group of investors.

Founded in 2011, First Stop Health provides telemedicine services through employers to their employees. In addition to their initial target market of employers with 500 to 15K employees, First Stop is now targeting employers with over 15K employees (jumbo accounts.)

As for the telemedicine market and opportunities, Mr. Spain notes that 250-400 million of the 1.2 billion visits that patients make per year do not require an in-person visit and can be diagnosed virtually. However, in 2019, less than 10 million visits were done via telemedicine.

The CEO notes, that pre-COVID, the top reasons for telehealth visits were upper respiratory issues (20-25%) followed by pink eye, ear infections, rashes, and UTIs. He also suggests that toothaches can be handled via telemedicine since doctors can prescribe the antibiotic necessary for dentists to use when doing procedures.

In response to a question on normalized utilization rates for telemedicine post COVID, the CEO believes that the volume will be about 25% higher relative to pre-COID levels. By way of background, the utilization rate is determined by the number of calls per hundred employees.

While that is the widely accepted method used to calculate the utilization rate, Mr. Spain believes that the participation rate needs to include the number of employees and/or family members who use telemedicine which he believes is a more relevant figure to use. First Stop’s participation rate is around 29%.

In response to a questions concerning normalized utilization rates post COVID-19 levels, he believes that volumes will be about 25% higher (relative to pre-COVID levels) on an ongoing basis based on current trends. It is thought that the use of telemedicine has advanced by 5 years.

The company will be adding additional services to their telehealth offerings, including a more robust version of behavioral counseling and mental health later this year. The CEO believes that AI will be incorporated into First Stop’s mental health offerings since the demographics of those requiring mental health services are younger people.

According to the CEO, with the increased push for virtual care, the company has received an unprecedented number of inquiries for coverage, including coverage for part-time employees which has been a small percentage First Stop has previously covered. Given that First Stop is paid based on a PMPM model and not on a per visit model, the company was adversely impacted in March as a result of high utilization rates.

As for the impact of COVID-19, Mr. Spain noted that in the beginning, the number of telehealth visits were from people who thought they might have or were worried about COVID-19 was relatively small (under 5%). However, currently that number is roughly 20%.

First Stop Health’s, volumes in April were down about 50% from peak levels due partly to the fact that fewer people came down with flu and colds in April. Also, because of the shelter-in-place mandate and most people wearing masks, fewer people were likely to catch the flu or get a cold.

Mr. Spain believes that there will be another spike in virtual visits for more established platforms once cases decline and HIPAA regulations are back in place. This means patients and providers will no longer be able to use non-HIPAA compliant platforms such as FaceTime, Zoom etc.

First Stop was able to meet the physician demand from COVID-19 because they didn’t have to deal with as steep a ramp as other companies and was able to use their existing network of physicians. With respect to physician compensation, it was noted that the going industry rate is approximately $25 and varies depending on whether the service is audio-only or if video and audio are both used.

The bulk of First Stop’s physicians are ER doctors that are independent contractors, and therefore recruiting physicians is not a big issue. Mr. Spain reports that while First Stop has a core group of several thousand physicians who work primarily for the company, many of their physicians are working for two or three different telemedicine companies.

Also, First Stop pays physicians premiums if response times are not within the three minute time frame. However, as Mr. Spain notes, during heavy volume days, some of the company’s competitors were paying up to a $20 bonus per call to physicians on top of a normal rate of $25-$30.

For more information and to provide feedback, email Jailendra Singh at or call 212-325-8121.

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