Hopefully, Panda Health’s Predicted Digital Health “Shakeup” Won’t Be Too Hasty

Earlier this summer, application marketplace Panda Health released a reported called The Great Shakeup suggesting that upheaval is coming to the digital health landscape.

The rationale is sound. At the beginning of the pandemic, hospitals and health systems implemented just about any technology application that would enable them to maintain care continuity, if not keep them in business. Given the severity of the need, the typical buying cycle of 12-18 months was truncated significantly – in some cases, to 12-18 hours. Considerations like system integration, workflow compatibility, and change management were an afterthought at best.

This was understandable given the circumstances. But three years have passed. That’s an important milestone if for no other reason than, as Panda Health points out. the typical contract with a digital health vendor is three to five years.

In other words, it’s renewal time. Given that health system leaders have had a lot of time to reflect on their decisions, things might get ugly.

Lots of churn in telehealth, as one might expect

In an interview with Healthcare IT Today (a client of mine), Panda Health President and COO Ryan Bengtson said the highest level of vendor churn is expected to be in the technology categories of telemedicine and remote patient monitoring.

As the saying goes, this is shocking but not surprising. As I wrote back in April, telehealth has evolved from a necessity to a luxury. Absent a transition to full-scale value-based care, telehealth only really makes sense in behavioral health and for Medicare beneficiaries being seen under an accountable care organization (ACO) model. It also just so happens that the market is ripe with point solutions representing seemingly every medical specialty or point of care within the patient journey.

Take these two points together and it’s clear that smart health systems will be taking a long, hard look at their telehealth portfolio. Bengtson said any point solution that doesn’t integrate with a health system’s larger clinical technology stack may be in trouble. Add to that the omnipresent desire to reduce the complexity and cost of managing multiple products that do the same thing and it’s clear that vendor consolidation is coming. (There’s probably a Game of Thrones reference to be made here, but I never watched it.)

An unclear path forward

The next couple years are going to be very interesting, in part because some of the most obvious solutions, like objects in the rearview mirror, are less appealing than they seem.

Platforms could solve the technology side of the point solution problem. It makes sense to host all the telehealth stuff in one place, right? But unless there’s some way to curate disparate telehealth offerings, surface recommendations to patients in the interface they’re familiar with (a portal, probably, sigh), and ensure that clinicians can connect to them as well, the care experience isn’t going to be much better.

Plus, doing the platform thing right really requires an all-or-nothing approach. It’s not just telehealth; it’s medication adherence, chronic care management, remote monitoring, and basically anything else that involves provisioning care in between appointments. After all, if some solutions are on a platform but others are floating harmlessly somewhere on the Internet, then there’s not really much incentive to go to the platform. Frustrated patients will abandon the telehealth experience in favor of the sometimes inconvenient but always familiar in-person appointment. As usage rates plummet, even the biggest technophile decision-makers will have a hard time justifying a renewal – and point solutions will suffer.

What about going all-in with a big vendor? They’ve been acquiring companies or otherwise expanding into specialties left and right, haven’t they? Well, yes – and Wall Street seems far from impressed with this approach. Teladoc Health is trading at 8% of its winter 2021 peak. Amwell is trading at just over 6% of its peak, also from winter 2021. (Both are as of July 20.) To roughly paraphrase Hello Health and Sherpaa co-founder Dr. Jay Parkinson, there are only so many cases of ink eye you can treat virtually.

The problem – as I also pointed out in my recent treatise and as others have said many, many times as well – is that patients are going to seek telehealth no matter where it comes from. They don’t care if it’s from their hospital, from retail health, from their insurer, from a concierge service, or from an app that advertises a coupon code on Facebook. Health systems that ignore this risk losing a lot of patients at the top of the funnel, only to see them in the ED years from now and not know a damn thing about their recent medical history.

All of this is to say that a cautious approach to digital health vendor churn may be warranted. Just because the revenue or year-over-year usage data is in the red doesn’t automatically mean a solution should get the axe. Health systems need to look a little deeper and consider who’s using a telehealth product and what they’ll do if it goes away.

If there’s a suitable alternative, or if they’ll maintain strong enough ties to stick around, then the health system may be able to get along without it. But if patients may walk out the (digital) (front) door and may not come back, then the telehealth tool may be worth keeping. Rewriting a vendor contract is harder, but engaging with patients who have come and gone is even harder.