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Challenges and Opportunities in Virtual Care — Are You In?

In our recent Benchmark Survey Report, we examined some of the trends that are shaping how healthcare organizations are deploying virtual care solutions. We examined the opportunities that exist for new players to get into the game, as well as how those that are already playing can expand their offerings. We also dove into some of the challenges that are being felt throughout the industry – whether in the day-to-day management of currently deployed virtual care platforms or the challenges that are expected by those that have yet to launch any telemedicine services. One thing was clear from our survey however, as virtual care continues to advance, the opportunities that exist in the industry greatly outweigh the challenges.

We’ve Come a Long Way

The truth is virtual care is nowhere near where it was 10 years ago, or even just last year for that matter. For example, our Benchmark Survey indicates that while the industry still leans heavily on video – one of the more traditional modes of careModality Type Deployment, video alone isn’t sufficient to meet the changing needs of today’s patients and providers. Because of this, many are turning to multi-modal care, with 61% of health systems reporting they offer more than one mode of care today. Which of these is gaining the most momentum? Believe it or not, it’s chat, with 44% of health systems saying they expect to include chat in their virtual care launch.

As technology changes, the clinical impact that these platforms provide also improves. Our study shows that virtual care solutions have the power to impact both clinical quality and efficiency. Quality reporting has always been difficult for healthcare providers, but 33% of survey respondents say their technology provider offers a reporting and analytics solution and 30% say their technology provider offers scheduled or ad hoc reporting. At the same time, virtual care is enabling providers to shorten patient visits by as much as 15 minutes – from the current patient visit average which is approximately 16 minutes to between one and five minutes, as reported in our survey. I don’t know about you but the ability to make five or ten times the health impact is an amazing opportunity I would not want to miss out on!

Miles to Go Before We Sleep

As much as virtual care has evolved, there are still hurdles that we need to get over before we can realize the adoption rates that we seek. What’s fascinating however is that the actual challenges providers face in their day-to-day operations are different from those that respondents anticipate they’ll encounter, which include integration, patient utilization, and claim management. Diving into each of these a bit deeper:

  • Program ChallengesIntegration – EMR integration specifically, has long been a pain point for providers and our research shows that this is only growing as an important focus area as virtual care adoption moves into the mainstream. About 21% of survey respondents who have virtual care identify lack of EMR integration as a challenge, even though 42% say their service doesn’t integrate with the EMR at all. That’s in comparison to the fact that nearly 54% of our survey respondents expect EMR integration to be a major challenge.
  • Patient Utilization – There’s still a bit of a “Field of Dreams” assumption to virtual care, despite research from multiple sources, including a 2018 Deloitte study, showing slow adoption. If you don’t believe me, just look at the disparity in the number of respondents in our survey who identified patient utilization as a challenge. Only 31% of those without a virtual care solution, compared to 64% of those with a virtual care service already deployed.
  • Managing Claims – We also saw an under-realization of the challenges associated with managing claims and reimbursement. In fact, only 15% of respondents without a virtual care solution thought that this would be a top challenge, versus the 39% of those with virtual care services who acknowledged this obstacle. The truth is, the healthcare revenue cycle has many parts, making it difficult to manage. Increased integration of virtual care solutions with EMRs and other legacy systems are important and can help make your life a lot easier.

What Lies Ahead

As patients, providers and as those with a stake in the virtual care industry, we should feel encouraged by the opportunities we have at our fingertips. Our survey shows that nearly 100% of health systems expect utilization to increase in the next 12 months – and that’s great news for everyone! So where should we focus our efforts and what can we expect? Undoubtedly, there are many applications for virtual care, but there’s a growing desire for it to be used for more complex conditions, with a big focus on behavioral health. However, to realize this in an effective way, we need increased collaboration between the technology companies that are creating the virtual care solutions and the health systems that are deploying them.

Regardless, the fact that we’re seeing such confidence from health systems when it comes to expanding their virtual care offerings in the coming year, signals to us that the industry is ripe for incredible growth. And it’s about time! Virtual care has long suffered from slow adoption rates, brought on by patients who were hesitant about leaving their trusted physicians and providers who were weary of expected financial and technological barriers. But virtual care doesn’t have to be scary and as our survey shows, many organizations have skewed ideas about the challenges that actually exist in the industry. To overcome this perception, we must educate patients and providers about the opportunities associated with virtual care, while continuing to focus on improving the patient experience. Though technology vendors may provide the platform, I believe, it’s with health systems, who are in a unique position to confidently vouch for the integrity of virtual care, and effectively market the service to truly increase adoption expand access to quality health care.

Interested in learning more about the On-Demand Virtual Care Benchmark Report?

We called out our key business, technology, and clinical findings, discussed what they mean for virtual care in 2019, and hosted an open discussion about the research in our latest webinar: Top Virtual Care Trends for 2019.

Get my Webinar

The Flip Side of ROI: Virtual Care and Cost Containment

The other day, I saw the Advisory Board released new research indicating that healthcare executives’ primary priority is cost containment, even over revenue growth. This focus shouldn’t surprise anyone remotely familiar with U.S. healthcare. Increasingly, health systems are being asked to do more with less – more patients, less staff; more innovation, less budget.

Working closely with our customers, I see first-hand the budgetary constraints and financial scrutiny that are an everyday part of operations. That’s why our team has worked hard to provide health systems with a clear understanding of the financial implications of an on-demand virtual care service, starting with revenue.

Why Revenue Still Matters

The Advisory Board’s study didn’t say healthcare executives were uninterested in revenue, just that often takes a back seat to cost containment. When it comes to effectively managing the bottom line, a two-pronged approach addressing both revenue and cost containment is vital.

As mission-driven organizations, non-profit health systems need to think about revenue. Grants and donations can only cover so much of a health system’s operating budget. In order to effectively provide services for their communities, health systems need to have additional sources of revenue.

A quick Google search yields numerous articles, seminars, webinars and other resources for health systems looking to maximize payer contracts. With the growing trend toward value-based care, effective contracting is critical to healthcare organizations bringing in revenue. Many of our customers use their virtual care services to support and enhance local payer contracts.

Virtual Care’s Revenue Impact

Traditionally, virtual care has been viewed as a patient satisfier (and sometimes market requirement) first and revenue generator second. The trouble is that revenue is seen primarily as visit fees, which often can’t cover the cost of care delivery much less software licensing. In reality, virtual care’s ability to generate revenue and return on investment for health systems lies in its utility as a patient acquisition channel. I won’t go into the nuts and bolts today, because it’s been done extensively in previous blog posts (here and here), as well as in case studies (here and here).

Cost Containment with Virtual Care

Cost containment is the flip side of the ROI coin

While revenue is important, health system executives are right to make cost containment a priority. Last year, expense growth outpaced revenue growth by 1.2%. And, just as health systems can’t achieve their missions without revenue, they can’t effectively operate in a deficit.

I really view cost containment and revenue growth as two sides of the same coin. And, while Zipnosis has been vocally focused on revenue, we have also been focused on the flip side. So, how does virtual care support health systems’ cost control initiatives? Two ways:

Expense Reduction for Risk-Based Populations

Health systems are also big employers, and employee compensation is one of the biggest expenses they face. To help control compensation costs, health systems are often self-insured. This creates a somewhat ironic situation where healthcare costs are actually a major health system expense.

Virtual care offers health systems a low-cost access point for convenient care delivery. When focused on risk-based populations like self-insured employees, this can translate to a major cost savings. A recent study by Humana found video visit costs paid out at approximately ⅓ the cost of in-person care while producing comparable follow-up rates and lower incidence of antibiotic prescriptions.

Looking at data from across the country, we calculate the mean cost of in-person care at $320 per visit (note: we’ve seen this as high as $500-$600). Conversely, our customers see the cost of delivering care via the virtual care platform at approximately $5. That’s an average per-visit savings of $315. On an individual visit level that may not look like much, but imagine the savings possible across an entire self-insured population. Even with activation between 5% and 10%, significant cost savings is possiTake the 2018 On-Demand Virtual Care Benchmark Surveyble – enough to cover software costs and free up budget to support important programs.

Enhancing Clinical Efficiency

I alluded to this somewhat in the previous section. Virtual care, in particular asynchronous modalities, can produce significant clinical efficiencies. On average, providers spend 15 minutes per in-person visit and are saddled with the administrative overhead of documentation later in their day, often after hours. With Zipnosis’s asynchronous modality, the visit time is a fraction of an in-person visit and there is no documentation.   

That efficiency is part of why virtual care can be an effective low-cost access point, but it also can help drive significant cost savings, since health system providers are able to grow their patient panels while avoiding the costs of adding staff, outsourcing, or the health system adding brick-and-mortar locations.

How to Grow Market Share with Virtual Care

This past week, I was at the American Telemedicine Association’s annual conference, and one of the things I heard over and over was the growing need for health systems and providers to offer virtual care. But health systems are often in a difficult position when it comes to technology investments like virtual care. They need, not only to prove it aligns with their mission and organizational objectives, but that it makes financial sense.

Healthcare organizations are increasingly being asked to do more with less—to think as businesses with an aim to expand and grow revenues. In fact, non-profit health systems are often caught between their business needs, the aims of their missions, and of course, delivering high quality care to diverse patient populations. The great news is that virtual care can help bridge that gap, supporting health systems in expanding access to care, both by increasing convenience and lowering costs while aiding in expansion and growth.

The Business Case for Virtual Care

When I say that building a business case is less clear that doesn’t mean it is difficult, more that, because the technology is relatively new and evolving, health systems sometimes find it challenging to pin down how they want virtual care to impact their business. While expanding access and enhancing patient experience are mission-driven goals, they also can create impacts on the bottom line. Other facets of virtual care, like increased clinical efficiency can bring a positive impact to the bottom line, particularly for populations where the health system owns a portion of their risk (e.g., self-insured employees or other owned health plans). But the real winner in building a business case has to do with gaining market share.

Virtual Care Meets Market Share

We recently published a study with MultiCare Health System in Washington that demonstrated the patient acquisition potential of offering a virtual care service to the marketplace. Through the study, we found that 34% of virtual care users who had not received care from MultiCare in the 24 months preceding their virtual visit sought in-person care in the 12 months after their virtual care experience – more than 3 times that of a control group.

So, how do you set patient acquisition goals relative to your market? Start by figuring out how much of the market you currently have—your market share.

What’s Your Market Share?Grabbing a piece of the market share pie

To calculate market share, try this for a nice-round-numbers approach. You, or someone at your organization, probably have a relatively good handle on how many patients you treat per year, on average. Divide that by your approximate market size, which you can find this with a quick Google search.

Setting Market Share Goals

The 34% patient conversion rate MultiCare achieved is tied to the closely circumscribed study cohort, imagine what that could look like relative to a major metropolitan market. For example, imagine you have 12% of a market of 3 million – that’s a nice size patient panel of 360,000. But, what could increasing your market share just 1% do? Before you pull out your calculators, I’ll tell you that it would add 26,400 patients to your health system—or 1% of your market potential.

Market Potential

market potential equation

Once you know your current market share, set attainable goals. Start with an aim of increasing your market share .25%. Using our hypothetical scenario above, that translates to 6,600 new patients.

Working with the 34% conversion rate, how many virtual visits would you need to achieve that .25% increase? Once again, I’ll do the math for you. You would need just over 19,000 new patients to come through your virtual care service to gain your 6,600 new patients and .25% market share increase.

That may sound like a lot, but there are budget sensitive strategies to increase growth and virtual visit volume that can help you achieve your market share and patient acquisition goals.

Accelerating Growth

From my perspective, one of the most interesting findings of our study with MultiCare is not the patient conversion rate but the market opportunity. The independent analytics firm who compiled and analyzed the study data found that understanding the demographics of patients who were likely to use virtual care meant that targeting just 20% of the market would yield 82% of the people most likely to use virtual care. That means highly focused, targeted marketing efforts could significantly increase virtual care utilization.

It’s exciting to hear from various health system customers about how they are leveraging virtual care to reach new patients and broaden access to care. Several of our health system partners are unlocking market potential by contracting with local health plans and employers to offer virtual care to their members and employees. Combined with targeted marketing, this approach can help accelerate your health system growth and put you well on your way to achieving your objectives.

Financial Sustainability: How to Add Revenue to Your Health System with a Virtual Care Service

Recently, KPMG released a survey that found the number one barrier to health systems launching virtual care is lack of financial sustainability. Simply put, health systems aren’t seeing how virtual care produces returns. And in an environment where budgets are tight and expenditures are closely monitored, justifying the investment in virtual care technology can be challenging.

There’s just one problem with this barrier—it’s not real. The perception that virtual care doesn’t produce a sustainable financial return is rooted in the old “telemedicine” mode of thinking. In reality, health systems are seeing the financial benefits of offering a virtual care service today. This isn’t just a pipe dream – it’s backed by data.

Finding Financial Sustainability

I’ve had virtual care financial returns on the brain lately, trying to figure out how health systems are missing the ROI virtual care produces – and I think I’ve hit on an answer. The reason such a large misunderstanding around the true value of virtual care persists within the healthcare community is the focus on transactional revenue and outsourced telemedicine networks. I touched on this a recent blog post. Measuring returns by looking exclusively at transactions is an outdated way of viewing virtual care’s impact. It’s consistent with the fee-for-service mentality most health systems are rapidly leaving behind – not with modern, value-based reimbursement and digital care delivery.

Unlike traditional telemedicine, the financial return from virtual care goes beyond the individual transaction, appearing as downstream revenue impacts. This is evident in areas like diminished patient leakage, reduced cost of care delivery, and most importantly, patient acquisition.

The Real Virtual Care Value

Recent research from healthcare analytics company Carrot Health demonstrates exactly how virtual care is increasing the revenues for one Zipnosis health system client. Carrot Health followed a cohort of 974 virtual care users who had not received in-person care in the 24 months prior to their virtual encounter – matching the health system’s definition of a new patient.

In a new white paper, Carrot Health revealed that this large, integrated health system saw 25% of new virtual care users convert to health system patients by using additional, in-person services within 12 months of their online encounter. With an average annualized per-patient revenue of close to $3,000, these conversions translated to more than $700,000 in additional revenue over the study period.

In a recent article I wrote for Becker’s Hospital Review, I noted that this is just the tip of the iceberg. Applied over a longer period, or for a larger population, the revenues increase exponentially. For example, a population of 2,000 new virtual care users at the same conversion rate would produce revenues of $1.5 million. How’s that for financial sustainability?

And, the Market Says…

Have you wondered about the venture money funneled into virtual care and telemedicine software companies over the past few years? The data suggesting patient preference for online care, while interesting and valuable, isn’t enough to sway investors. It’s the ability to see the potential financial impacts virtual care can have on health systems that gets venture firms excited.

When asked about the reasons for investing in Zipnosis, Matt Hermann of Ascension Ventures noted, “In today’s environment, compelling ROI data like Carrot Health has compiled about Zipnosis’ virtual care offering will help health systems parse through the innovation noise and have confidence in making critical business decisions. We think every health system should be deploying multi-modal virtual care solutions like Zipnosis for both short term and long term success.”

And long-term success is really the name of the game. Virtual care is transitioning from being an interesting but unimportant feature to a vital care delivery channel. Health systems are using virtual care to find financial sustainability by adding patients and revenue today. And as this transition builds steam, the returns health systems will see are only going to grow.

Still Testing with Telemedicine? Virtual Care Offers Viability

A few months ago, my beloved car, Brynhyld (Bryn for short; I name all my cars), started to show signs of needing more significant repairs: New clutch, new tires, new brakes – about 50% of the value of the car. But I LOVED Bryn. She had been with me through some amazing times in my life. It’s not all the time I’m grateful for my dad’s brainwashing me into liking cars, but this was one. I had already test-driven a dozen cars—just for fun. As a car nerd, I knew exactly what it would take to replace Bryn – pricing, options, and financing terms. So, on a snowy December night, I said goodbye to my beloved Bryn and brought a new car, Petra, into my life.

Most people don’t spend an hour each day reading car blogs, so buying a car can be a stressful experience. The same is true in telemedicine. It nearly impossible to understand what “models” exist, what the right prices are, which vendors are reliable, what ROI to expect, whether patients will use it, etc. So, we do a lot of test-drives with telemedicine.

Telemedicine is Testing

Testing features; testing care delivery models; testing value propositions, patient preference, regulations, and reimbursement. The industry has been using telemedicine to test-drive the next generation of digital care delivery tools for 70 years. This testing has been vital. In healthcare, it takes those 70 years to get to a point where we are ready for a more mature, durable set of tools – ready for substantive change. But now, we’re ready.

Virtual Care is Viable

The most important thing about virtual care is that it’s more than just technology. Virtual care is a movement – a shift in how healthcare organizations and consumers view care delivery.

Virtual care incorporates the data gleaned from all that telemedicine testing to create a dynamic and personalized healthcare delivery experience – not a “one-size-fits-all” telemedicine corral to video or phone.

Virtual care is more amorphous—and durable—by its nature. The excitement virtual care offers isn’t improved patient access (that’s table stakes) – it’s all the ways technology can improve care delivery for patients and health systems. Like linking Smart on FHIR apps for seamless navigation between systems and data sources.

Virtual Care incorporates an endless and ever evolving set of devices that can help providers more accurately and rapidly diagnose and treat their patients – and help patients receive treatment in a way that better fits their lives.

Virtual care is not anchored to a single department or moveable cart – it’s on iPads, in the pockets of nurses, on the screens of your smart TV.

Telemedicine regulations dictate a specific mode (phone or video) that limits patient and provider choice. Virtual care regulation is mode-agnostic and upholds the standard of care as the basis for regulation.

The Time for Testing is Past

It’s been incredible sitting at the tip of the spear in healthcare transformation the past decade. When I started Zipnosis, people told me no one would ever get a diagnosis without going into the clinic. Today, we’re part of a rapidly growing industry.

It’s time to stop testing with telemedicine. Telemedicine is the analog past.  Virtual care is the digital future of healthcare; a future dominated by data and devices that permeate the fabric (literally) of our society.

So, when the brakes on your telemedicine cart start to fail, when the telemedicine engine seizes up at scale, and when the promises of a real ROI lose traction, consider upgrading to virtual care. It’ll be a much better ride.

Telemedicine = Testing

Virtual Care = Viable

  • Hardware: Specialized, expensive, additive
  • Hardware: Agnostic, in hands of consumers, existing
  • Regulations: Mode-specific, special standards of care
  • Regulations: Mode agnostic, standard of care
  • Payment: Right price per visit x utilization
  • Payment: Inclusion in value-based care models, $0.00 transactional costs
  • Utilization: 1 or 2 options – limited clinical use cases and patient/provider preference matching
  • Utilization: Highly personalized options for patients/providers – unlimited clinical use cases over time