Connected for Health this week was really about Telehealth. Yes, they had some peripheral sessions, like one on Personal Health Records (PHR), another on employer sponsored health and wellness programs, but make no mistake, this was really about telehealth. These other sessions were simply a distraction.

The odd thing about telehealth is that there are a lot of companies snooping around this market and some sticking their toes in, but it has yet to really gain mainstream acceptance. Some blame the technology as not being consumer oriented enough and still too expensive, others pointed to lack of consumer-driven advertising and promotion, while others pointed to lack of interoperability across telehealth devices. But at the end of the day, the real issue is money.
Where’s the Money
While some were reporting promising signs including some payers beginning to reimburse for telehealth and five states now having programs in place to reimburse telehealth (up from two last year), the big money issue circles back to lack of CMS (Centers for Medicare and Medicaid Services) funding.

Why?

The vast majority of the telehealth market today is in the caring of seniors, seniors who are on CMS plans. Thus, most senior telehealth services are being self-funded often from family members (children) of that senior. Costs are not insignificant and can range from $150-500/month. This obviously limits the available market for telehealth programs.

And based on the keynote presentation of Thomas Gustafson, former acting director of CMS, it will literally take an Act of Congress to change CMS’ current reimbursement policy regarding telehealth in any reasonable timeframe. Bring that one up at the next campaign rally you go to!

All is Not Lost
Despite lack of CMS funding, there appears to be some significant growth opportunities in this market. For example, Philips presented results of a survey of the 950 home healthcare agencies where only 17% are currently using telehealth technology but within the next two years, this number will more than double to 44%. The driver – an ability to provide higher service at lower cost.

Consensus among attendees is that growth in telehealth will also come from payers, employers and hospitals who all see an opportunity to decrease costs and improve outcomes. I bet some of those new retiree healthcare trusts that the UAW will now be managing are going to be very interested in telehealth as well.

Naomi Fried of Kaiser Permanente gave some insight on their motivations. It all began with an internal strategy/vision session where they set 2015 as the year for the home being the center of care. A key driver to move center of care to the home is to lower capital investments in new facilities. They broke down the strategy into 4 key areas:

1. Chronic care remote monitoring (seems logical and where most are looking today)
2. Episodic care – treatment in the home (calling Dr Welby?)
3. Home as the hospital – allowing for quicker discharges with follow-up and pre-op activities in the home (as if we aren’t already rapidly discharging patients)
4. Health and wellness activities in the home (aren’t we all ready there yet?)

Kaiser is moving ahead with this program and now has 12 telehealth programs today, all in pilot. One early result is quite impressive: They have seen a 40% reduction in ED visits (i.e., re-admittance) via use of remote care monitoring. That’s some real savings.

So what challenges as Kaiser run into in implementing these pilot programs?

Consumer acceptance and training has not been an issue. In fact, once these systems are installed in a home, consumers actually like them, take personal responsibility being quite diligent in taking their prescribed readings and often do not want to give back the devices when the trial period is over.

The challenges are internal and relate to workflow and data handling specifically, who does the monitoring, how and when should a physician get involved, what data is most important to collect and at what intervals and lastly, where should the data be stored and for how long. These are all challenges that Kaiser is currently addressing as they look to scale beyond pilot.

Another interesting challenge Kaiser found and this will extend to all telehealth programs is the difficulty of addressing behavioral health issues that often arise concurrently with physical health issues. One doctor reported that common wisdom is 80% of patients seen have a behavioral overlay to a physical ailment. I heard no good answers as to how one might address this issue in a telehealth setting, but if someone develops a creative solution to this problem, it could be big, that is if they can also overcome some of the regulatory barriers associated with behavioral health data.

Bottomline
Albeit this being the first time I have attended this event, from what I saw, it is clear that telehealth is gaining momentum. The market will grow, probably not as fast as some of the rosy projections I saw, but an 8-12% CAGR over the next few years is realistic and longer term could accelerate to higher percentages. This is certainly strong enough growth to attract large consumer electronics companies to jump into the fray and probably why they were all at this event (HP, Microsoft, Panasonic, Philips, Sharp, etc.). But as they move in, smaller manufacturers will ideally be acquired or simply whither away. Those lucky ones that are acquired will have either an extremely unique and patented piece of technology (very few on display at this event) or have an excellent distribution or partner network. Unfortunately for most of the smaller device manufacturers currently in this market, I do not foresee a long-term future.