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Telehealth effectively providing revenue stop-gap for U.S. hospitals, finds Fitch


The COVID-19 pandemic has accelerated the use of telehealth in U.S. healthcare, and according to Fitch Ratings, providers and distributors are poised to benefit from this trend, as remote care services are helping to effectively provide a revenue stop-gap during this time of social distancing and patient apprehension over entering the healthcare system.

Telehealth is largely providing revenue continuity, and the ripple effects are being felt in the supply chain as well, with doctors continuing to prescribe medications. 

All of this is good news for hospitals and health systems, but it comes with one caveat: The demand for telehealth after the pandemic ends will depend on whether payers — including Medicare and private insurers — continue to reimburse telehealth at current levels. At the moment, its reimbursement is higher than in the past due to temporary waivers that are slated to evaporate once the public health crisis comes to a close.


In-office visits are still the primary delivery channel for U.S. healthcare, but the distribution of digital services is ensuring access to care, and keeping revenue flowing in part by improving providers’ ability to bill for these services, found Fitch.

That has spurred the federal government to begin moving in the direction of making lasting changes to the reimbursement picture, as reflected in an executive order signed by President Trump earlier this month that would make permanent some of the telehealth provisions that have been enacted by the Centers for Medicare and Medicaid Services.

A number of healthcare providers have reported an increased demand for remote services during the second quarter of this year. HCA Healthcare, Community Health and Tenet Healthcare all reported upticks in telehealth usage, with 500,000 virtual visits, 230,000 visits, and 190,000 visits recorded during Q2, respectively.

On the distributor side, telemedicine has been partially offsetting volume declines in various pharmaceutical and medical distribution businesses, caused by fewer physician visits and pharmacy interactions. McKesson said telehealth accounted for up to15{f08ff3a0ad7db12f5b424ba38f473ff67b97b420df338baa81683bbacd458fca} of its oncology practice in Q2, while AmerisourceBergen indicated its community-based practices adapted to treating patients virtually.

Because of the need for technology-based infrastructure to support virtual care services, a considerable amount of capital is flowing into telehealth through M&A. But post-pandemic, that trend could be mitigated by uncertainty around reimbursement, especially with CMS seeking public input on which telehealth services to make permanent, as well as lingering questions about the effectiveness of video visits versus in-person visits.

Challenges remain for providers, especially with low volumes of elective patient procedures during the pandemic, but in the long term hospitals and health systems will likely be able to attract and retain more patients with virtual care due to convenience, Fitch found. Increased patient flow and greater operating efficiency could improve profitability and cash flow, as information collected during visits — along with data from other technologies — could help control healthcare costs.


One factor that could help telehealth retain its popularity is the traction it has been gaining among Americans over 50. Poll numbers released this week show one in four older Americans had a telehealth visit during the first three months of the public health crisis. That’s a big leap from the year prior, in which just four out of 100 people aged 590 or older had experienced such a visit.

Awareness about the special risks of COVID-19 among older adults may have also played a role, as 45{f08ff3a0ad7db12f5b424ba38f473ff67b97b420df338baa81683bbacd458fca} of respondents said the pandemic made them more interested in telehealth. The percentage was higher among those who’d had a telehealth visit in the past. But only 15{f08ff3a0ad7db12f5b424ba38f473ff67b97b420df338baa81683bbacd458fca} of the respondents who had a telehealth visit said that fear of the virus led them to request such a visit, whether for a new concern or in place of a previously scheduled visit.

Twitter: @JELagasse
Email the writer: [email protected]


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