In the board game Life, there’s a space near the end marked Day of Reckoning. At this point, players have to decide if they think they have enough money to win. If they think they do, they can keep playing. If they don’t, they place everything they have on one number (out of 10), spin the dial, and hope for the best while knowing there’s a 90% chance they’ll go bankrupt.

I’m beginning to think healthcare is facing a day of reckoning of sorts when it comes to telehealth. Three years after the pandemic, when sudden (and largely successful) adoption had us wondering what telehealth’s future looks like, utilization has plateaued. That has put organizations in the difficult position of trying to decide if they can move ahead with what they have – that is, if their existing telehealth offerings are enough to compete with All Those Disruptors Out There, not to mention the health systems down the street – or if they need to gamble on a strategy with a slight chance of succeeding.

It’s an unenviable position. Extenuating circumstances aren’t making the decision any easier for health system leaders who must tread carefully with telehealth investments but face external pressures to Do Something and avoid being disrupted by forces they can neither control nor predict. Vendors are equally challenged, as their accumulated expertise in the use case they have so carefully developed, tested, and rolled out smacks into the stark reality that point solutions (save for behavioral health) may not have a place in the long-term future of telehealth. Fortunately, knowing that utilization has plateaued but that demand remains strong can give the industry some direction – not a lot, admittedly, but some – for determining where to go next.

Providers are using telehealth – just not all that often

Recently, the Office of the National Coordinator for Health IT (ONC) released data that put a pretty positive light on telehealth. The agency’s report suggested that 85% of physicians used telehealth at least once in 2021, up significantly from 15% in 2018-2019. In addition, 62% of physicians were fully or somewhat satisfied with their use of telehealth. Tellingly, there was little urban-rural divide when it came to utilization – an important data point in light of concerns that rural areas are in danger of being left behind as telehealth takes off. (Slightly higher percentages of telephone and video conferencing for telehealth in rural areas, as opposed to dedicated telehealth platforms, helps to explain how physicians and patients may be closing the gap.)

Peeking behind the curtain, though, the data presents some concerns.

• Utilization is highest among physicians in a value-based care model such as an accountable care organization (ACO) and affiliated with large health systems. It’s lowest among physicians in small practices. (We’ll dive into this later.)

• The majority of physicians (53%) use telehealth for less than 25% of their total patient visits.

• A telehealth platform integrated with an electronic health record (EHR) – the option that arguably provides the best continuity with in-person care – is the least commonly used form of telehealth across all types of physicians, payment models, and care sites.

In other words, utilization and access aren’t being distributed as as equitably as the industry would like. Provider interest is there, but it depends largely on how a provider is being paid and whether they have the resources to support the technology being used. Our long-held suspicions about who uses telehealth, it turns out, continued to hold true through the pandemic.

Aside from behavioral health, utilization seems limited

Additional data on telehealth utilization highlights other concerns about where utilization is headed. First, there’s the FAIR Health assessment of commercial health insurance claims. From January 2022 until December 2022, telehealth visits as a percentage of all claims remained largely steady at 5.5%. This is less than January 2021, when utilization hit 7.0%, but an increase from December 2021, when telehealth was less than 5% of all claims.

The more interesting data point to me is the dominance of behavioral health, which accounted for roughly 60% of all telehealth claims. That means the dozens of other medical specialties – including primary care – only accounted for 40% of telehealth claims. It roughly aligns with McKinsey’s take on telehealth, too, which shows that telehealth accounts for 54% of all behavioral health visits but 14% of medical specialty visits and just 5% of procedural specialty visits. (Again, it confirms long-held suspicions about who is and isn’t interested in telehealth.)

Next, there’s the Bipartisan Policy Center’s assessment of Medicare claims. This report pegged telehealth at roughly 6.8% of all claims for the first nine months of 2021, with behavioral health accounting for a little more than one-third of all telehealth visits. (Primary care accounted for nearly 27%, which is far more than in the under-65 population.) If Medicare claims followed the same trends as reflected in FAIR Health’s look at commercial claims, then the 2022 figures are probably a bit lower.

Looking at these data points, and then looking at them in the context of the ONC data, it’s hard not to nod in agreement with the early 2022 assessment of Trilliant Health, which came to the following sobering conclusions about telehealth’s broader impact on the economy:

• Nearly 46% of patients had just one telehealth visit in all of 2021, and another 34% had fewer than five. That explains, per the ONC’s data, how so many physicians had used telehealth “at least once” and also only used telehealth for a small percentage of their encounters.
• In only one specialty – behavioral health – is telehealth a “substitute good” for in-person care. In all other specialties, including primary care, when choice isn’t constrained, patients prefer in-person care. (That doesn’t account for a return to the requirement for in-person visits prior to remote prescriptions of controlled substances at the end of the public health emergency, which the American Telemedicine Association is not too happy about.)
• Accounting for the wide disparities in reimbursement rates for virtual care episodes as compared to in-person care episodes, telehealth’s potential total share of the healthcare market is all of 1%.

Is telehealth a luxury now?

Clearly, healthcare faces a dilemma. The technology that quite literally saved the industry in the spring of 2020 is no longer a commodity. Two separate studies, one of the general patient population and another of patients in oncology, both found that preferences have shifted to in-person visits, even if in-person visits were to cost more out of pocket that virtual visits.

In fact, Trilliant Health likened telehealth’s total addressable market to that of a luxury good, given that the total number of patients using telehealth more than several times a year falls at less than 10 million. The comparison of a virtual healthcare visit to a BMW or a Peleton may have ruffled some feathers, but it’s not that far off base.

One of telehealth’s most persistent criticisms has been that it’s largely available only to healthcare organizations that can afford to support it at scale and patients that can afford the technology to access it regularly. Audio-only telehealth filled some access gaps in the early days of the pandemic, but it has always remained a fraction of the total number of virtual visits. Until that changes, patients without broadband, reliable cell signals, and unlimited data plans won’t bother with telehealth. The same goes for small office physicians who, as the public health emergency ends, can no longer use video conferencing software but don’t have the technology budget, expertise, or willpower to invest in dedicated telehealth technology.

The other main complaint is that, under current care delivery and payment models, telehealth only makes fiscal sense in two scenarios: When reimbursement for virtual care is at or close to parity for in-person care, and when enough patients are covered under a value-based contract such as a Medicare ACO. Linking these scenarios to the data presented earlier, the first example explains the popularity of telehealth for behavioral health, and the second example points to the higher adoption levels for primary care in Medicare. (If you think telehealth for low-acuity urgent care makes fiscal sense, well, I have some stock in publicly traded telehealth vendors to sell you. It’s pretty cheap.)

The idea of telehealth as a luxury good and not a commodity stings even harder when we recall McKinsey’s rosy projection from 2020 that telehealth would be a $250 billion industry. It doesn’t help that a share of 1% of the market also comes with the stigma of 1% – a figure that to many represents privilege, wealth, and ignorance of the true needs of everyone else.

The thing is, the 1% figure is probably pretty realistic. After all, the types of medical visits associated with telehealth (behavioral health, primary care, remote monitoring, follow-up, etc.) reimburse at a lower rate than in-person visits. This is obvious for things like inpatient procedures, sure, but it’s also true for specialty consults, imaging scans, and a host of other in-person encounters that require the use of expensive equipment or a discussion among multiple providers. It shouldn’t be surprising that telehealth’s total market share is significantly less than its total share of visits.

Plus, if you’re going to be 1% of a market, it might as well be healthcare, which as of 2021 is a $4.3 trillion industry in the United States. One percent of that is still $43 billion. Heck, the far more impressive-sounding $250 billion is still only 5.8% of that figure – which isn’t too far off from telehealth’s utilization as a percentage of all visits.

Of course, there’s more to the story

It would be fine if the story ended here. Not great, not terrible, but fine. Telehealth would be a niche market, albeit a $43 billion niche market, focused largely on behavioral health and occasionally on primacy care, with additional use cases available thanks to a tech-savvy physician group here, a willing payer there, an innovative vendor over here, and a large employer over there. It might integrate with the EHR, or it might not – but since it’s not really being used for high-acuity care or specialty care all that much, there really isn’t all that much missing from the patient record at the end of the day. It would probably continue to drive inequity in care, at least initially, though continued investment in technology infrastructure could combat that to a certain degree.

It would be a fine ending because, for once, we’d actually know where telehealth stood. Before the pandemic, writers like me put out stories every year with the theme “This is finally the year for telehealth to take off!” Analysts and consultants would crunch numbers and grossly exaggerate telehealth’s projected total impact on the industry. (If you’d have projected a market cap of $12 jillion for telehealth as it surpassed eleventeen percent of all visits, you honestly wouldn’t have been that far off.) Vendors would claim their total addressable market was every American with a smartphone with no regard for the need to narrow the digital divide before things like continuous remote monitoring or synchronous visits would be possible.

Now that healthcare first had no choice but to embrace telehealth to survive and then returned to in-person visits in all cases but behavioral health, we know what telehealth represents. We know the limits it faces broadly in fee-for-service medicine and specifically in so many types of specialty care. We know that Wall Street is a lot less bullish on telehealth than it once was. It’s like when your favorite baseball team begins the season with promise but wakes up on May 1 in last place with a 6-20 record. We know exactly where we stand, whether we like it or not.

The story doesn’t end here, though. There are a few important reasons why.

One is the demonstrated impact on clinical and financial outcomes. An Epic Research evaluation of nearly 19 million telehealth visits to primary care found that 61% of visits didn’t require an in-person follow-up within the next 90 days. A second paper, which got a lot of press when it was released last year, found that telehealth is as good or better than in-person care on 13 of 16 HEDIS measures (Health Care Effectiveness Data and Information Set). One paper even showed that remote monitoring improved blood pressure monitoring “despite a nationally observed disruption of traditional hypertension care” during the pandemic. In other words, telehealth is quite effective when it’s done right.

The second reason is that telehealth in behavioral health has shown the industry what can be possible. There are startup CEOs, healthcare executives, and even physician champions looking at behavioral health, with 54% of all visits being done virtually and a 60% share of all telehealth claims, and wondering why their specialty of choice can’t do better than a handful of visits here and there. Arguably, no one else will achieve such lofty numbers, to be sure, but even doubling the number of virtual visits in any given specialty will represent significant progress – and begin to provide evidence to contrarians simply convinced that virtual care cannot work in their specialty. At some point, the other shoe will drop.

Plus, at the risk of sounding cliché, patients will start to come to expect it. Anyone who frequently sees a behavioral health professional virtually will start to wonder why every other specialist demands an in-person visit. Anyone who has had fairly seamless virtual visit experiences – whether for check-ins during the pandemic or for behavioral health appointments using purpose-built telehealth products – will ask why the experience is so much more clunky everywhere else in the hospital. Even those who understand the complexities of managing their chronic condition will question why they must go to the office to review numbers that both they patient and their provider can see in the same database when they can talk to a behavioral health provider from their couch.

Finally, the concept of the “digital front door” doesn’t seem to want to go away. Vendors continue to push it, and health systems continue to invest in it. Even with telehealth utilization at less than 6% and market share at 1%, they’re scared of losing patients to entities that do telehealth better – whether it’s the standalone app advertising discount visits on the subway, the service available through the region’s largest employer at no cost to employees, or the payer that knows that getting more members to use telehealth gives it leverage come contract negotiation time. Even with executives touting the value of personal relationships with physicians and the wonderful amenities in their new brick-and-mortar facilities, they’re scared that a digital front door that only opens partway will be the end of their business, especially if patients say there’s no discernable difference to the patient experience when they use virtual care.

Now what? It pays to choose widely

So what, pray tell, can the industry do as it faces its day of reckoning with telehealth? How should the industry move forward knowing that utilization is basically flat but demand exists in pockets here and there – that opportunities for expansion are paradoxically both constrained and yet available under the right circumstances? Well, it’s complicated.

Under current reimbursement and care delivery models, point solutions will have a rough go unless they serve 1) behavioral health or 2) a specialty that has seen demonstrated improvement to clinical and financial outcomes in value-based care models. In the second case, vendors may need to set their sights on specialty physician groups, as the business case will be easier to make for these stakeholders than for large health systems hosting dozens of specialties. The one exception here may be post-natal / early childhood care; since many state Medicaid programs are extending coverage for the first 12 months or more of a child’s life, we can expect a corresponding push for broader care coordination and a small but significant role for telehealth under such a new care model.

Along the same lines, any new value-based care model – whether designed by Medicare, Medicaid, or commercial insurers – should consider telehealth from the perspective of the utilization threshold that can be reasonably expected for a given specialty. Obviously, some specialties are literally more hands-on than others; care pathways, treatment plans, and patient engagement approaches also differ tremendously. Figuring out where and when encounters can be handled virtually will require significant work, but I think it’s imperative to get that right before any sort of value-based specialty care model is put in place. Otherwise, the Powers That Be could easily be seen as imposing their will on providers who either feel they’re being asked to use telehealth when it doesn’t make sense or are given a bar that’s so low that they only need to see a handful of patients virtually a handful of times to hit the mark.

Meanwhile, health systems need to look long and hard at telehealth’s role in their near-term business strategy. I know that’s not exactly groundbreaking advice, but leadership needs to decide if they’re comfortable with sticking to telehealth for behavioral health (and possibly primary care or urgent care) for the time being, or if they feel the need to broaden their horizons in the face of unforeseen competition. If it’s the latter, where’s the greatest danger to their business, and does it make sense to invest time, resources, energy, and attention into rolling out technology that will apply to roughly 6% of visits and 1% of revenue?

It’s an unenviable Catch-22. Most health systems likely have to spend money to make money on telehealth, and they don’t have much to spend given the many financial pressures they face – but those retail, pharmacy, and digital health competitors do. These circumstances only put pressure on health systems to act quickly, which has never been their preferred approach to telehealth adoption, what with so many purpose-built applications serving one business unit within one building and never scaling much beyond that.

Those types of solutions proliferate because, up until March 2020, that was the best way for most vendors to get in the door: Present a compelling use case tied to a specific clinical outcome for a given population, get buy-in, and work alongside provider staff to get the ball rolling. It’s hard to blame vendors for taking that approach, especially when large platforms have struggled to integrate both technology and service offerings – and when, stop me if I sound like a broken record, it’s worked so well in behavioral health.

At the same time, the integrated platform appears to be the more pragmatic path forward. It gives patients a more unified experience (especially if they must navigate multiple specialties), it lets health systems deploy to new specialties without custom development, and (implemented properly) it gives point solutions something to plug into so they aren’t lost in the shuffle (and a partner that can help them scale – or that can acquire them, if that’s the end goal).

I wish there was an answer to the “Now what?” question beyond “Think before you leap.” (I know if I were paying a consultant, and they came up with that after months of work, I’d be none too pleased…) At the same time, every healthcare stakeholder is looking at telehealth for different reasons both now and in the future, so I don’t think a specific piece of advice is going to apply.

However, I do think that looking at the evidence presented here of where and how telehealth utilization has stuck, and coupling that with business priorities, will help steer organizations toward a better decision. It won’t result in enterprise-wide deployment or a sudden digital transformation, but it also won’t leave leadership in a position where they feel they have no choice but to spin the wheel and hope for the best.