What Is Telehealth?

Telehealth refers to the use of telecommunications technology to deliver care and health services remotely. It allows people who need medical care to connect with their healthcare providers from the privacy of their homes via smartphones, tablets, and computers. Telehealth also encompasses health-related education services like diabetes management and nutrition courses. It is different from telemedicine, which refers more narrowly to the delivery of clinical care virtually.

Although telehealth has been around for decades in the United States, the coronavirus pandemic accelerated its adoption on a far broader scale. Within weeks of the World Health Organization declaring the COVID-19 a pandemic, and as lockdowns, quarantining, and social distancing became a part of everyday life, in-person healthcare visits dropped off precipitously.

“The pandemic created a huge public health issue, but the biggest problem wasn’t that COVID-19 patients couldn’t get care—it was that people without the disease couldn’t access their normal care,” Michael Okun, professor and chair of neurology at the University of Florida, told Science magazine in November 2020.

Patients were explicitly encouraged to use telehealth services in the COVID-19 personal finance assistance packages passed by Congress in spring 2020. And physicians embraced the change. According to a 2020 Telehealth EHR survey by Medical Economics, 77% of doctors used telehealth for the first time as a result of the coronavirus. Many also found that their ability to deliver quality healthcare was less diminished than they had previously believed it would be.

Key Takeaways

  • Telehealth, or the delivery of healthcare services at a distance, has been around for decades, but the coronavrius pandemic accelerated its adoption in the U.S.
  • Telehealth services can include checkups, screenings for illness, mental health services such as therapy sessions, weight management counseling, and more.
  • In terms of insurance coverage, states determine how telehealth is defined and paid for.
  • The current telehealth boom is likely to give way to a number of well-defined winners, whose platforms will be adopted by large healthcare providers.

How Telehealth Works

Telehealth essentially refers to each of the ways that patients and doctors can communicate with one another via technology when they are in different locations. This can include emails, phone calls, video calls, text messaging, or other forms of digital communication. The types of healthcare that may be provided via telehealth include:

  • Checkups with doctors and other healthcare providers.
  • Screenings for conditions like COVID-19.
  • Therapy sessions with mental health care providers.
  • Nutrition counseling, weight management, and other types of support and coaching for chronic health conditions.
  • Care for people in rural areas who aren’t near healthcare facilities.
  • Follow-ups after a hospitalization.
  • Non-emergency care for long-term care facility residents.

Additionally, many healthcare organizations offer online patient portals that centralize communication channels with doctors. Patient portals allow patients to quickly view their prescriptions and any notes made by their doctors, check on test results, research symptoms and conditions, and set up virtual appointments via phone or video call. In this way people can gain access to the same kind of information online that previously they could only get at a visit to their healthcare provider's office or clinic.

A survey of nearly 1,600 healthcare providers conducted in summer 2020 by the American Medical Association found the majority reported that telehealth improved the health of their patients and the timeliness of care provided to those who needed it. The majority (roughly 80%) also reported that patients had favorable responses to using new telehealth services.

However, some medical professionals have cautioned against a rush to adopt telehealth and its algorithms so as to reduce the possibility of exacerbating health inequalities in the U.S. Although an early mission for telehealth was the expansion of healthcare access to populations like the incarcerated, who otherwise would not receive timely and proper care, some experts are concerned that the current goal of expanding consumer markets could put people with no insurance, poor health, and a lack of digital resources at risk.

Insurance Coverage of Telehealth

In terms of insurance coverage, states determine how telehealth is defined and paid for. According to the National Conference of State Legislatures (NCSL), 43 states and the District of Columbia have some kind of private payer policy, which typically requires insurance coverage and/or reimbursement that's comparable to in-person healthcare visits. State Medicaid policies vary, though all states and the District of Columbia reimburse for live video services. This NCSL map spells out more.

In March 2020, the Centers for Medicare and Medicaid Services revised their Medicare payment policies so that telehealth visits would become reimbursed for a wider range of services. This meant that physicians could recommend them to patients with the lowest incomes. Many of these services will continue to be covered at least until the end of the calendar year in which the public health emergency (the pandemic) ends.

History of Telehealth

Telehealth began in the early 1900s with the advent of radio. Historical records exist of doctor-patient communication via radio in the mid-1920s. Telehealth technology was subsequently used to serve people in rural communities who had limited access to a physician. Doctors at the University of Nebraska, for example, pioneered the concept of using a two-way television setup to send information to their students across campus.

However, in-person doctor visits remained the norm for decades until the pandemic changed things almost overnight. According to an investigation in the journal JAMA Network Open, for example, the use of telehealth services for out-patient consultations rose from .3% in the period between March and June of 2019 to 23.6% in the same period of 2020.

Early in the pandemic, there was a lack of federal guidance on how, when, and where healthcare providers should use telehealth services. This lack of early leadership has also meant that the platforms currently in use to deliver telehealth services are similarly fragmented. Some physicians are using Zoom (or other video-conferencing software) for calls with patients. Others are taking advantage of far more advanced systems that use AI algorithms to enable patients to access telehealth services whenever the need arises.

The Federal Communications Commission (FCC) recently announced a new program that aims to provide $200 million worth of funding to telehealth initiatives. This new program relies on the federal government’s Coronavirus Aid, Relief and Economic Security (CARES) Act for funding but is also focused on building long-term capacity. Similarly, the Federal government is encouraging healthcare providers to take advantage of these new capabilities.

Telehealth and Privacy Issues

The privacy and security of telehealth services present a dilemma for the government going forward. HIPAA (the Health Insurance Portability and Accountability Act)—the legislation that regulates the way in which healthcare providers can collect and use patient data—is one of the strictest pieces of data privacy legislation in the world, and with good reason. With a highly fragmented healthcare system, it’s difficult for the U.S. to ensure the security of its citizens’ personal data without the long arm of the law.

But during the pandemic, the Centers for Medicare and Medicaid Services loosened the restrictions on how telehealth providers operate by temporarily removing some of the provisions in HIPAA, so doctors can communicate with patients via a device of their choice. Not only did this weaken the protections in place for patient data, it also led to an outcry from established telehealth companies, which had spent many years (and many dollars) reaching compliance.

In practice, this means that when the pandemic is over, only systems that are HIPAA compliant are likely to be used to provide telehealth services. In turn, this will greatly reduce the number of companies active in the sector because reaching compliance with HIPAA is a long, arduous process that can cost many thousands of dollars.

The Health Insurance Portability and Accountability Act (HIPAA) is likely to kill the idea that doctors and patients can just “jump on Zoom” for their appointments.

The Future of Telehealth

On the surface, the Covid-19 pandemic has led to a telehealth boom—total venture capital funding for telehealth companies, for instance, reached $4.3 billion last year. And it’s clear that widespread adoption of telehealth could come with significant benefits to both patient health and the economy, especially in a country where so much of the population is rural and where healthcare is currently so inefficient. There are some good reasons to believe, however, that the boom will not be as rapid as the spread of the virus that caused it.

Healthcare is already an $8.45 trillion industry, which means that any emerging technology that can have an impact on the sector is likely to be hugely profitable.

In addition, it’s important to realize that telehealth is not the only revolutionary force in healthcare at the moment. Some in the tech sector claim that robots are already revolutionizing healthcare, and even Amazon is getting into the industry. When it comes to the future of telehealth, it pays to look at where other technologies have been successfully applied within the healthcare sector.

Perform that analysis, and a trend becomes clear: the healthcare sector is one that is still dominated by a relatively small number of large companies. Some of these companies produce pharmaceuticals; others provide healthcare more directly.

It is this realization, perhaps, that is driving telehealth companies to partner with much larger, more experienced firms (such as telehealth startup Amwell partnering with pharmacy benefits manager Optum in a $194 million deal) in order to roll out their products to the general public. It also means it’s a fairly safe bet that the largest telehealth advances (and platforms) are likely to come from the existing titans of the industry.

In other words, telehealth is unlike many other tech sectors, in that the imperative to “move fast and break things” is not that appealing to the federal lawmakers who will ultimately decide the fate of many of the telehealth startups currently seeing their stock prices rocket. 

Ultimately, the healthcare sector requires significant investment and expertise to enter, and this is why it continues to be dominated by a few large companies. It is also why the industry as a whole is relatively slow to adopt new technologies, except during a global crisis. And although telehealth is now an important part of insurance plans, it hasn’t been offered as part of them for more than a few years.

Because of this, the current telehealth boom is likely to give way, in fairly short order, to a number of well-defined winners whose platforms will be adopted by large healthcare providers. Only then, will these telehealth companies meet with huge success.