US health systems overwhelmingly plan to expand virtual care

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US providers are bullish on virtual care: More than 96% of health systems plan to expand their virtual care offerings over the next 12 months, according to a new survey from virtual care services provider Zipnosis.

It's important to note that this data isn't reflective of the general US hospital and health system landscape - there were only 56 respondents, some of whom were recruited from the America Telemedicine Association and may have been more likely to already offer virtual care. Nonetheless, we believe the data provides a strong indicator that provider organizations are taking a greater interest in virtual care.

Deeper investments in virtual care make sense as several tailwinds point to a growing revenue opportunity:

• Forthcoming legislation should make it easier for providers to obtain revenue from telemedicine. Restrictive legislation has historically hindered providers' ability to receive payment for telehealth services, but recent government proposals suggest that could change. For example, the Centers for Medicare and Medicaid Services has proposed legislation to remove current mandates that impose restrictions on where doctors and patients must be stationed when using telemedicine in order for providers to receive compensation.
• And providers should face an uptick in demand as employers push workers toward virtual care services. The share of large employers offering telemedicine as a health plan benefit spiked from 63% in 2017 to 74% in 2018, likely in an effort to reduce rising employee health costs. Given that employers are the principal source of health insurance in the US, their endorsement of virtual care should send more consumers to telemedicine services.

But hospitals need to overcome substantial hurdles before seeing a reliable return from virtual care services:

• Consumers are still lukewarm on the tech. Only about 0.7% of commercially insured US individuals held telemedicine visits in 2017, and even if growth accelerated rapidly in 2018 and continues to climb in 2019, we expect this figure to grow to 11% at most this year.
• Providers have trouble integrating virtual care solutions with their data networks, which threatens to create inefficiencies. Nearly 42% of providers that offer on-demand virtual care said their solution did not integrate with their electronic health record (EHR) software. That could potentially make it difficult for clinicians to integrate data gathered during virtual care visits with a patient's existing medical history, inhibiting physicians' ability to make an informed treatment decision down the line.

Mental health care could provide the best initial business case for US hospitals and health systems investing in virtual care. Providers may face greater demand for telemental health treatment than other types of virtual care: Mental health visits accountedfor 53% of all telemedicine encounters between 2005 and 2017, per a November 2018 JAMA study cited by Reuters. And since mental health treatment doesn't necessitate a physical assessment, there's less likely to be a drop in care quality.

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