Cathy Tie

If the buzz of investment activity and increasing acceptance among patients signals are any indications, direct-to-consumer (DTC) telehealth is having its moment. Industry giants and investors are paying attention. Last year, Amazon acquired One Medical for a reported $3.9 billion, and in 2018, Amazon acquired PillPack, which started as an online pharmacy, for $750 million. Together, these acquisitions allow Amazon to bring its model of same or next-day deliveries to the virtual care space, with quick and easy appointments with doctors and rapid delivery of prescription drugs.

In 2021, 23andMe spent $400 million to acquire Lemonaid Health, an online platform for on-demand medical care. With its rich experience in consumer genetics, the company plans to combine genetics-based primary care with telehealth. Earlier in the same year, Hims & Hers Health, a virtual care company with a focus on public care, went public in a $1.6B SPAC deal.

DTC telehealth has been brewing for a long time, with a history spanning over a century. Let’s look at how DTC telehealth got off the ground, what it offers, and its market potential.

The Origins of DTC Telehealth

As early as 1905, physician Willem Einthoven used the telephone to send heartbeats from a hospital to his lab. By the 1920s, the idea of a ‘radio doctor’ was closer to reality than fiction. And by the 1960s, satellites were already laying the foundations of telehealth as we know it today by enabling remote parts of the US to access healthcare services.

All of these early telehealth services were focused on making physicians’ work more efficient. More recently, a different kind of telehealth puts the patients at its center. Dubbed direct-to-consumer (DTC) telehealth, the trend has grown in popularity over the last decade. This has been largely thanks to the growth of high-speed internet as it made more teleconsultations possible in high-definition and in real-time.

Beyond synchronous, virtual consultations, telehealth services also offer asynchronous communication. This is when patients record their vitals with devices or chat with a bot about their symptoms and a physician may look at that later. Telehealth also benefits from our increased ability to access and manipulate large amounts of data. For example, the integration of telehealth with electronic health records (EHR) provides deeper insights into a patient’s diagnosis. It also makes the switch from asynchronous communication to a synchronous teleconsultation or from teleconsultation to an in-person visit seamless.

Many of the limitations of healthcare systems are universal: acute shortages of specialized professionals, the inability to react quickly to systemic shocks like pandemics, and the inability to accurately track all patient trajectories. The major appeal of DTC telehealth lies in overcoming these limitations. Telehealth is fast, often more affordable, and enhances access to primary care. And if there was any doubt, the last two years have seen it established as a viable care delivery method.

During the pandemic, hospitals needed to deal with the overflow of COVID patients while limiting the spread of the virus among the rest of the population. Telehealth boomed. In the US, 35% of all primary care visits were delivered virtually in Q2 2020, up from just 1% a couple of years back.

As investment and research in the field have grown, different DTC telehealth solutions now cater to the clinical needs of different sets of patients, some niche and others broad-focused. Next, let’s take a look at virtual care and mental telehealth, two categories that together make up the bulk of DTC telehealth.

Care delivered remotely

Virtual care eliminates the need to spend time and energy visiting a hospital in the city unless they really need to. This benefits elderly patients as well as those who have recently gone through surgery and need to be regularly monitored. Virtual telehealth improves post-procedural care, speeding up recovery and rehabilitation. Virtual care is great for doctors too. It allows them to better optimize their schedule and see more patients per day or map a patient’s progress.

Mental healthcare delivery is particularly suited for virtual care for a few reasons. Visits to mental health professionals rarely require physical inspections, many patients are more comfortable talking over video consultations, and in-person therapy sessions can be often prohibitively expensive and not covered by insurance.

Multiple studies have shown the positive impacts of mental telehealth. In Texas, a study showed, telehealth reduced depression among adolescents with 88% of the families reporting that their children were doing better. Another study showed that telehealth is a great tool for suicide prevention. Patients receiving telehealth were more than four times less likely to have suicidal thoughts compared to those who only tracked their symptoms.

A market ready to explode

Telehealth is booming elsewhere as well. Across the Atlantic, UK-based teledermatology startup Skin+Me raised £10 million in series B funding in February this year. The startup offers personalized prescriptions following teleconsultations with dermatologists. DTC telehealth is booming in Asia as well. Singapore-based ORA, a startup with a vertically-integrated telehealth startup, recently raised $10 million in series A funding.

Overall, telehealth is expected to be a $455 billion industry worldwide by 2030. This is why, telehealth companies could be a great investment over the next decade for retail investors.

The future is exciting for companies that build telemedicine platforms, virtual pharmacies, or remote diagnostics for telehealth. As the telehealth ecosystem matures, they will all add value to each others’ businesses. You are also spoilt for choices even if you prefer to invest in picks and shovels during a gold rush. As the industry grows, there will be greater demand for enabling technologies. Some of these include cloud platforms, cybersecurity, data analytics, noninvasive monitoring, and emerging communication technologies.

Building telehealth for the 2030s

Developments in other fields could have an outsized impact on how telehealth looks like. In addition to the enabling technologies mentioned above, telepresence robots, real world evidence based care, and DTC distribution of pharmaceutical prescription products could redefine DTC telehealth and the broader pharmaceutical industry. As physicians and developers collaborate to take telehealth to more people, the ecosystem grows to support more patient demographics and business cases.

Telehealth will grow in ways that go beyond filling gaps in conventional healthcare to enabling completely new models of care delivery. It puts patients at the center of healthcare and pharmaceutical distribution, and offers a brand new way to distribute pharmaceutical prescription products, a $1.42 trillion global industry.