Virtual care works for one thousand patients; how can it work for one million?

If you look at media coverage of telemedicine vendors today, particularly stories focused on investors’ perspectives, like this one from mobihealthnews.com, you wouldn’t be faulted for thinking there are only four, nearly identical, options when it comes to virtual care.

The Big Four, as they’re known, have drawn the attention of investors and clients, but as the industry transitions from the legacy fee-for-service payment model to value-based care, it’s clear they’re getting attention for all the wrong reasons.

Both investors quoted in the article say they’re excited about the shift to value-based care; but they aren’t putting their money where their mouth is. Instead they’re investing in companies that are fundamentally fee-for-service operations.

One investor quoted in the article says of one of the Big Four, “It was almost 100 percent video and had a more modern technology infrastructure, so it could be cheaper and could win that race to the bottom." Essentially saying he was investing in the company because they had technology to drive the point cost to the patient as low as possible, but this ignores the overall systemic costs.

Had the investor been truly interested in value-based care, which is expected to represent 75 percent of the market in coming years, he would know a key component of the payment model is delivering the overall cost of care as inexpensively as possible.

In order to do this, you need to better scale the costliest element of delivering care – physician time. A quick look at the Big Four shows their business models aren’t prepared for the changes coming to the industry.

For example, let’s look at a staffed model with a patient population of 3 million using one of the Big Four, which are built using synchronous communications such as phone or video and require one-on-one interactions. With a 10 percent utilization rate, you are looking at a utilization level of 300,000 patient encounters per year. Assuming each of these encounters takes 12 minutes, the Big Four need 10 doctors, responding to 5 encounters per hour, on a FTE basis to staff the service concurrently. Even if the doctors are only getting paid a percentage of the total fee for each visit they take, the ultimate cost of staffing the service is orders of magnitude higher than what we’re experiencing at CirrusMD.

Our platform is built with an asynchronous, text messaging-first workflow (over 85% of our encounters are completed with secure text messaging only, although video chat and phone are options when desired/necessary), which allows a doctor to manage multiple patient encounter at the same time, which is not possible with synchronous-only telemedicine platforms, like the Big Four. Doctors staffing a CirrusMD shift can interact with 5+ patients simultaneously, allowing us to easily scale physician resources. So with the same 3 million patients and 10 percent utilization averaging 12 minute encounters, CirrusMD only needs three doctors on a FTE basis to staff the service concurrently.

Investors looking for that continued race to the bottom would be better served by focusing on how these virtual care companies are planning to grow, create value, and meet the demand of a value-based world.

Andrew Altorfer

I'm the CEO at CirrusMD.

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