“Telehealth 1.0 is dead,” but digital health is not yet ignored

Once the health care darling of the pandemic, telemedicine saved the industry from collapse due to the abrupt shutdown of in-person care — and became an essential investment.

But now the necessary investment is one that is nearing zero as telehealth companies resize or even close altogether in the face of reduced demand.

UnitedHealth Group (UNH) is discontinuing its telehealth offerings. Market leaders Amwell (AMWL) and Teladoc (TDOC) suffered layoffs last year and saw their shares plunge more than 50%. Amwell once had a market cap of nearly $6 billion; today it is less than $200 million.

But some experts say telemedicine shouldn’t be discounted just yet.

“Telehealth 1.0 is dead,” said Owen Tripp, CEO of virtual health platform Included Health.

“It is felled and put through the wood chipper. But when we do that, we create the mulch that is necessary for the growth of a lot of really interesting and big things,” he told Yahoo Finance.

The digital health company has experienced its own post-pandemic rollercoaster ride, from reportedly preparing for an IPO in late 2021 to laying off about 6% of its workforce in mid-2022.

Tripp said the problem with basic telehealth is that it is primarily a single point of contact with no long-term health monitoring.

“The problem with telemedicine 1.0 is that it’s just like this: put a quarter in the jukebox, listen to a song, and then it’s over. You don’t see the same doctor anymore,” Tripp said.

His company launched a dedicated virtual care strategy to connect the dots of the disjointed care system. It includes a hub where patients can return and interact with doctors they have already seen.

The future of telehealth

Despite declines in the telehealth business, digital healthcare remains in demand, according to a survey released in March by investment firm Rock Health. The survey found that for the third year in a row, more than 75% of respondents said they had ever used virtual care, with 83% saying they had used it in the past year.

The story goes on

However, the survey found that even people who receive virtual care prefer in-person care for certain things. For example, 69% said they prefer virtual care for prescription refills, while less than 20% said they prefer it for emergency care or physical therapy, and only 24% said they prefer it for an annual physical.

Sari Kaganoff, chief commercial officer of Rock Health, compared the emerging telehealth industry to the dot-com era, when websites popped up everywhere, “and for a while, that was enough.”

“Would anyone say the internet is dead these days? No, obviously not. Every single company has a website. It is part of your offer. You can’t just have one website,” Kaganoff told Yahoo Finance.

Likewise, she said, telehealth needs to evolve and grow beyond current capabilities to do more. And how companies differentiate themselves will be crucial, she said.

For Kaganoff, that means it could be a small business with a specific purpose, such as writing a prescription for a common illness.

However, Tripp says there should be an even bigger goal.

“Your primary care, your behavioral health, your specialty — all of those things need to be connected,” Tripp said, adding that this is difficult to achieve nationally and as a 24/7 service.

“This is a new expectation arising from the pandemic. Very few players are able to fulfill them,” he said.

Anjalee Khemlani is the senior healthcare reporter at Yahoo Finance, covering all things pharma, insurance, care services, digital health, PBMs, and healthcare politics and policy. Follow Anjalee on all social media platforms @AnjKhem.

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