Investors bet billions on virtual doctor visits before virus fueled a boom
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INTERNATIONAL - Fifty patients waited to see Mia Finkelston, a family physician. A father worried about his son’s allergies . A 55-year-old woman with a dry throat wondered whether her 89-year-old mother-in-law should visit. A 60-something asthma patient complained of aches, pains and high fever.
Yet Finkelston didn’t need to leave her home in Southern Maryland, near Chesapeake Bay.
Via a video camera in her basement, she offered advice to patients hundreds of miles away.
She represents the vanguard of telemedicine, which is experiencing a boom during the coronavirus pandemic after a well-timed infusion of Silicon Valley money.
This month, Finkelston, medical director at American Well Corp. or Amwell, one of the largest telemedicine businesses in the country, triaged a flood of cases. Along with screening for signs of the virus, she offered another valuable commodity: reassurance.
“You have people who are very methodical or scientific-minded and then you have a group of people who overthink everything,” said Finkelston, who lives in Leonardtown. “They are probably all of the people who buy all of the toilet paper.”
Over the last decade, venture capitalists have funded more than $4 billion in U.S. telemedicine deals, according to transaction tracker PitchBook Data Inc. They’ve long hoped online health will catch on because of its promise to expand access and lower cost, yet never dreamed it would face so much demand, so quickly. The field typically delivers care via telephone, email, text or video feed.
One of the biggest beneficiaries of VC funding has been Boston-based Amwell, which received $290 million in a 2018 round. Another was New York-based Oscar Insurance Corp, co-founded by Joshua Kushner, the brother of Jared Kushner, Trump’s son-in-law and top White House adviser. It has raised more than $1 billion since 2014, according to PitchBook.
There was also Roman Health Medical LLC, which helps men with hair loss and erectile dysfunction. All three companies have adapted their services to screen patients for the virus known as Covid-19.
If all goes well -- a big if in a life-or-death field -- their investments are poised to pay off, as well as offer a lifeline to Americans trapped in their homes. The Trump Administration is relying on these companies to play a critical role in keeping low risk patients out of overburdened hospitals.
Regulations have long thwarted telemedicine. Some states are now relaxing requirements that doctors be licensed in the same state as their patients. This month, federal agencies eased the strict rules that protect patient privacy, which could be compromised in telemedicine, as long as the services are used in good faith and for expanding Medicare coverage to those outside the already-approved rural areas.
“This will be an inflection point for telehealth, but only if consumers are patient and understanding,” said Marty Felsenthal, a venture capitalist who sits on the board of telemedicine provider MDLive Inc.
Telehealth has grown rapidly in recent years, with related claims surging more than 50% from 2016 to 2017, according to Fair Health Inc., which collects health insurance data. But it’s still a small market. In the past year, about 10% of consumers used long-distance medicine instead of a visit to the doctor’s office, urgent care center or emergency room, according to a July 2019 J.D. Power survey.
It’s unclear whether long-distance medicine is up to today’s challenge. A doctor shortage and unprecedented interest are extending the wait times of supposedly on-demand health care -- in some cases, for more than an hour. Such delays have led companies to recruit more physicians and consider some who are in retirement.
Hill Ferguson, chief executive officer of San Francisco-based Doctor on Demand Inc., said about a third of current inquiries are related to coronavirus. The rest are seeking help for other health issues, such as diabetes and hypertension, because they are stuck at home. “We are treating more of everything, not just coronavirus,” said Ferguson, whose company’s backers include Goldman Sachs Group Inc. and Silicon Valley venture capital firm Andreessen Horowitz.
K Health Inc., which is based in New York, is trying to make its process even faster. Its 70 doctors are seeing as many as three dozen patients a day, mostly through text messages, while software analyzes symptoms. “We are doing more than 1,000 conversations a day on the platform, and it is growing very rapidly,” said Allon Bloch, the company’s co-founder and CEO.
Jay Parkinson, founder of telemedicine company Sherpaa Health Inc., worries about the risk of an industry designed to treat minor ailments such as pink eye, not determine whether to send a critically ill patient to find a scarce test or respirator.
“Our entire system is set up for cheap transactions” that involve 10-minute interactions with doctors that patients won’t likely see again, he said. “It is very hard to do anything safely if there is no long-term relationship.”
Shivan Mehta, associate chief innovation officer at the University of Pennsylvania’s Penn Medicine Center for Innovation, said the need for more intense interactions depends on an ailment’s severity.
“We are starting to learn when is a video really important, when is a telephone call OK, when is a secure email appropriate,” Mehta said. This crisis is “a natural experiment that will tell us what works and what doesn’t.”