Telemedicine, in its original form of the phone call, has been around for decades. For people in remote or rural areas without easy access to in-person care, consulting a doctor over the phone has often been the go-to approach. But for a large swath of the world used to taking half a day off work just for a 15-30 minute doctor’s appointment, it may seem like telemedicine was invented only last year. That’s mostly because it wasn’t until 2020 that telemedicine, in its myriad forms, debuted into the mainstream consciousness.
Telemedicine has faced an uphill battle to become more relevant in the U.S., with challenges such as meeting HIPAA compliance requirements and insurance companies unwilling to pay for virtual visits. But when COVID-19 began raging across the globe and people had to stay home, both the insurance and healthcare industries were forced to adapt.
“It’s been said that there are decades where nothing happens, and then there are weeks when decades happen,” said StartUp Health co-founders Steven Krein and Unity Stoakes in the company’s 2020 year-end report. That statement couldn’t be truer for telemedicine: Around $3.1 billion in funding flowed into the sector in 2020 — about three times what we saw in 2019, according to the report. A health tech fund and insights company, StartUp Health counts Alphabet, Sequoia and Andreessen Horowitz as some of its co-investors.
Now that people see the benefits and conveniences of “dialing a doc” from the kitchen table, healthcare has changed forever. It’s impossible to predict how healthcare institutions will operate post-pandemic, but with so many people now accustomed to telemedicine, startups that provide services around virtual care continue to be poised for success.
The state of telemedicine
Major players in the field now look at the state of healthcare as, “before COVID and after COVID,” Stoakes told Extra Crunch. “In the post-pandemic world, there’s a significant transformation that’s occurred,” he said. “It’s all accelerated; the customers have shown up. There’s more capital than ever and consumers and physicians have adapted quickly,” he added.
In the U.S., healthcare is first and foremost a business, so while there are treatment approaches that have long been proven to improve patient outcomes, if they didn’t make sense financially, they weren’t instituted at scale. Telemedicine is a great example of this.
A 2017 study by the American Journal of Accountable Care showed that telemedicine can be quite useful for managing healthcare. “The use of telemedicine has been shown to allow for better long-term care management and patient satisfaction; it also offers a new means to locate health information and communicate with practitioners (e.g., via e-mail and interactive chats or video conferences), thereby increasing convenience for the patient and reducing the amount of potential travel required for both physician and patient,” the study reads.
But as we’ve seen, it took a global healthcare emergency to drive widespread adoption of virtual healthcare in the U.S. Now that investors recognize the potential, they are increasingly pouring money into startups that promise to take telemedicine to the next level. Some of the investors backing these newer companies include StartUp Health, Andreessen Horowitz, Sequoia, Alphabet, Kaiser Permanente Ventures, U.S. Venture Partners, Maveron, First Round Capital, DreamIt Ventures, Human Ventures and Tusk Venture Partners.
Currently, major contenders in the telemedicine space in the U.S. include white label solutions providers such as Teladoc, Amwell and Truepill; video conferencing provider Zoom for Healthcare, and telehealth provider MDLive (recently acquired by Cigna).
In China, which has the second-largest healthcare system in the world after the U.S., the population has been quick to adopt tech in many aspects of life, but telemedicine lagged behind until recently. Once the pandemic hit, telehealth providers rushed to offer virtual care services, and the Chinese government relaxed regulations while promoting the use of telemedicine to help people stay at home and reduce the risk of infection.
Ping An Good Doctor, a $12.8 billion market cap company and one of the country’s largest telehealth platforms, was poised to take advantage: It saw a 900% growth in new users and an 800% spike in online consultations from December 2019 to January 2020 alone, according to China Briefing. By the end of 2020, its registered user base grew by 18.3% to 372.8 million, and average daily consultations grew by nearly 25% to reach 903,000.
Ping An wasn’t alone. In 2020, JD Health saw annual active user accounts grow to 89.8 million, and its Internet Hospital platform saw an average of 100,000 daily online consultations, more than five times the number in 2019. Alibaba Health also saw online consultations and pharmaceutical sales jump significantly, helping boost revenue by 74% to $1.11 billion in the first six months of FY 2020.
A significant portion of these large companies have focused mostly on getting doctors on patients’ screens, but a few startups have built on that advance and are focusing on three key areas that show ample room for improvement.
- Doctor availability.
- In-person exams.
- Affordability.
The companies we’ll talk about below aim to solve challenges in traditional healthcare as well as issues in virtual healthcare.
Doctor availability
Healthcare in the U.S. has traditionally been associated with employment, so it makes sense that a company such as Wheel would be successful. This company, which launched in 2018 and has raised $16.1 million so far, focuses on powering the virtual care industry with a clinician-focused approach. Any company — whether in healthcare or not — can contract out the entire care process through Wheel, which offers white-label solutions.
“Companies are learning that building virtual care services in a silo is an inefficient and costly way to deliver care to patients — especially when considering the challenge of meeting patient demand in real time while balancing clinician supply across specialties, licensing and availability,” the company told Extra Crunch via email. Wheel offers a solution to this problem by offering a plug-and-play solution that includes a network of providers, making it possible for any company to launch a virtual care offering without having to build out its own.
Americans have become used to getting everything on demand, and that very expectation has extended to virtual healthcare, especially when it comes to simple medical complaints.
“The promise of virtual care is built around the idea of effortlessly connecting patients with the right clinician for their care needs in real time. In order to make this happen, we need large networks of clinicians who are trained, experienced and available to provide high-quality care,” said Michelle Davey, co-founder and CEO of Wheel, in an interview.
On the other side of the consultation, Wheel gives physicians the flexibility to work on the platform at their own pace and provides all the tools they need to manage their virtual care practice, including training in online consulting best practices, which has also been dubbed “webside manners.”
Physicians on its platform are required to undergo training to properly consult online, as many doctors have a hard time adjusting to virtual consulting as they were solely trained for in-person visits. The training includes teaching doctors to focus on the camera, exhibit positive body language, being aware of hand gestures, staying seated and practicing intentional listening, among other practices aimed at putting patients at ease and facilitating communication.
Webside manners aren’t just about offering good customer experience, though. “It’s about empathy and understanding the totality of the encounter,” wrote Dr. Neel Naik, director of emergency medicine simulation education and an assistant professor of clinical emergency medicine at Weill Cornell Medicine, in a 2020 post on the American Medical Association’s website. “This is, I think, where a lot of people have difficulties with telemedicine. They try to take what they do in person and move it, en block, into the virtual realm,” Dr. Naik said. “We can’t do that. We have to teach a different set of skills to actually care for a patient,” he added.
For people who suffer from chronic conditions and live outside major city centers, seeing a specialist can be an ordeal and often require significant traveling. This is where we see companies like Omada Health playing a big role. Omada, which has 350 employees and has raised $258 million to date, offers telemedicine care management for diabetes, musculoskeletal issues, preventative health, hypertension and behavioral health issues.
Its main differentiator is the amount of hand-holding it offers its patients, which has apparently resulted in better health outcomes. One of the biggest challenges for doctors is making sure that patients follow treatment protocols after they leave the doctor’s office. Omada fills this gap by giving patients access to groups of people with similar conditions and keeping patients in touch with professionals who make sure patients are staying on track, ultimately improving recovery rates.
Another major player in specialty care, though significantly smaller than Omada, is Thirty Madison. The end-to-end healthcare platform was founded in 2017 and offers treatments for migraines, allergies, acid reflux and hair loss via dedicated brands. Patients can subscribe to one or more of the treatments, and Thirty Madison will assign a doctor or recommend doctor-approved treatments and medication tailored to a patient’s needs, effectively acting as a replacement for an in-person specialist.
The in-person exam
While telemedicine may work for a lot of ailments, for some conditions, doctors need more information to treat patients — think strep throat or ear infections. Without the ability to look down your throat or in your ear, a doctor can’t make those diagnoses. Startups that offer a combination of telemedicine and hardware are bridging the gap.
One example is TytoCare, which offers a full-stack platform comprising virtual consultations and wireless examination kits that allow doctors to remotely perform guided medical exams on patients, or patients to test and monitor themselves. It has product packages aimed at professionals (TytoPro), setting up remote clinics (Tyto Clinic) and home kits for consumer use (TytoHome).
“With TytoHome, we bring a much deeper level of medical care into the home,” Dedi Gilad, CEO, and co-founder of TytoCare told Extra Crunch. Using the kit, patients can perform their own health exams or manage chronic diseases with the help of online tutorials on Tyto’s website or have a doctor remotely guide them through an examination.
In its latest offering, which focuses on health systems and hospitals, TytoCare is being used to provide “home hospitalizations” to patients with COVID-19 or those who suspect they may have the virus.
“Through in-home hospitalizations, we treated about 60,000 patients directly to avoid the need for a physician to be in the same room. We did it with the University of Miami for their athletes — for anyone who thought they had COVID, we could monitor their lung function, temperature and oxygen saturation in the blood regularly, but remotely,” Gilad said. “TytoCare is also being used for patients who were in the hospital and then went home,” he added.
TytoCare, which has raised $152 million so far, counts more than 350,000 users across the world.
A more nascent telemedicine and hardware company is China’s Maizhiyu. The company has developed a digital device that can perform a “pulse diagnosis,” a key aspect of traditional Chinese medicine that involves analyzing a patient’s pulse on three areas of the wrist to arrive at a diagnosis. The inability to measure pulse rates remotely had been a hurdle in getting telemedicine into the hands of traditional doctors in China, who are an important part of the local healthcare system. The company was founded in 2018 and has raised $340,000 (¥2.2 million).
Affordability
Medical care in the U.S. is very expensive and has long been dictated by insurance coverage. Due to astronomical out-of-pocket costs, people have limited healthcare provider choices, because who they can consult is dependent on which doctors accept their insurance. This is where we see companies like K Health making strides.
The telemedicine startup charges a fee of $19/visit, or $9/month for unlimited consultations, which often amounts to less than a co-pay for an in-person visit. With such low pricing, the startup cuts out the friction of — and the need for — dealing with insurance altogether. K Health has amassed more than 4 million users since it was founded in 2016 and commands a $1.63 billion valuation off $278 million in funding.
In Latin America, 1Doc3, which recently raised a $3 million pre-Series A, is making waves thanks to a business model similar to K Health. In a region with poor internet connectivity, the company uses text and chat to offer a telemedicine platform powered by AI that does symptom assessment, triage and pre-diagnosis before connecting the patient to a doctor. The company also offers prescription delivery to patients after consultations. It also contracts with employers to offer healthcare coverage to their employees.
1Doc3 was founded in Colombia and has already expanded to Mexico, the second-biggest market in the region after Brazil. It has been around since 2013, but didn’t see accelerated growth until last year, when its consultations jumped from 2,500 to 35,000 per month between February and December 2020.
In Africa, Egypt’s Vezeeta is well on its way to democratizing healthcare in the region. The company offers specialized care consultations that may be harder to come by outside of city centers in developing countries, such as oncology and oncology surgery, dermatology, gynecology, infertility, diabetes management and psychiatry.
The company operates through a self-pay model and also offers its services in Saudi Arabia, Egypt, Jordan, Lebanon, Nigeria, Kenya and other countries. Founded in 2016, Vezeeta has raised a total of $62 million to date.
It’s evident from the innovation on display from these startups that telemedicine is here to stay, but the question now is: Will telehealth converts remain committed even if their existing providers start pushing for in-person visits? There will always be a need for in-person care, but will patients take their small medical needs to an online doctor and leave complex needs to their primary physicians? The next challenge lies with synchronizing record-keeping across the medical care spectrum, but that’s a problem for another batch of startups.
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