Wednesday, February 13, 2013

Six Misperceptions about the Telemedicine Market

The following is by Jonathan D. Linkous, CEO of the American Telemedicine Association:

Six Misperceptions about the Telemedicine Market

Healthcare is a $2.5 trillion market in the United States and growing. Companies, institutions and individuals from everywhere are looking to see how to get a piece of the healthcare market. It’s the gold rush of the 21st century and health technology is where a lot of companies are staking a claim.

And now the excitement is turning to telemedicine. The variety of new entrants is vast: vendors selling devices or software; health systems using telemedicine to expand their market share and new providers of remote health services. ATA’s annual meeting is one of the fastest growing meetings and trade shows in the country. The opportunities are large but so are the dangers. So, based on the feedback from hundreds of entrepreneurs coming through the ATA offices over the past 20 years I wanted to share six of the biggest misperceptions about the telemedicine market.
  1. It’s not the technology, it’s the service. Dial up phones were a great invention. So was the VCR. They are both gone but telecommunications services and watching movies are bigger than ever. New and amazing devices and applications are coming on the market every day. But devices are TOOLS that allow services to be provided at a distance. In healthcare, the focus, the purpose and the finances are on the service.
  2. Despite what you hear, Medicare reimbursement is not the Holy Grail for telemedicine. It’s important, but… Medicare fee-for-service covers about 36 million Americans, 12 percent of the total U.S. population. 88 percent of Americans are covered elsewhere and 81 percent of healthcare spending comes from other sources. There are no federal restrictions on using telemedicine for billions of health dollars spent on managed care, bundled services and on alternative plans by private payers.
  3. Healthcare institutions, physicians and industry are partners not enemies. “Transforming” does not require “replacing.” So many new entrepreneurs in telemedicine start out with a negative, competitive attitude to traditional healthcare. We have not reached the point when someone with heart disease is going to trust their care to a computer alone. The roles of hospitals and health providers are changing but they will continue to be the backbone of medicine.
  4. Device regulation is not bad – it’s good. In fact it could rapidly accelerate adoption. FDA rules for wired and mobile telemedicine devices and their certification by an official government agency is a stamp of approval, providing reassurance for cautious buyers.
  5. A great idea is born every minute but few of them are successful. I have heard of hundreds of stories about how a new technology, application or remote health service results in lower rates of hospitalization, improves compliance, etc. only to see it disappear a year later. A positive study nis nice but marketing, partnerships, revenue pathways and knowledge of healthcare business practices are essential, for starters.
  6. Consumers don’t buy healthcare themselves. For fifty years the percent of out-of-pocket spending on healthcare by consumers has dropped (not counting insurance or co-pays). It is now less than ten percent of healthcare costs. Consumers are getting much more knowledgeable and engaged in selecting among available procedures and treatments but they rarely pay directly for a healthcare product and service.
ATA’s 2013 Annual Meeting – May 5-7, 2013 in Austin, TX - One of the best ways to learn and participate in the brave new market of remote healthcare. - Focused exclusively on applications and services providing remote healthcare to patients and consumers. The meeting provides over 500 peer-reviewed presentations, over 300 exhibitors and 6,000 attendees. Register or exhibit at

Jonathan D. Linkous
American Telemedicine Association

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