Season 3, Post 8: Doctor’s Orders
The end of the pandemic may be in sight as vaccination programmes gain ground and economies correspondingly start to re-open. We’re all looking forward to a return to greater normality. However, while seeing friends and visiting restaurants may be high on our – certainly your author’s – list of priorities, sitting in a doctor’s waiting room is probably not. We wrote in-depth recently about telemedicine and the potential it offers to decentralise this legacy practice and improve outcomes for both patients and doctors. Data released this week reinforces our conviction in the durability of the trend.
Why visit a doctor when the doctor can come to you virtually, via the power of broadband and other technologies? There are major efficiencies in terms of better allocation of scarce resource (doctor’s time), reduced travel times (for both parties) and fewer/shorter hospital stays (from earlier and more effective diagnosis). Little wonder then that demand accelerated during last year’s pandemic. Figures released this week from Teladoc, the largest provider of telehealth services in the US, show that ‘visit’ numbers rose over 155% year-on-year in 2020, with some 10.6m users making virtual consultations. Teladoc paid membership numbers have more than doubled in the past two years.
We expect the trend only to continue growing in importance, regardless of a greater return to normality. Several reasons support such a contention: increasing familiarity with and comfort around the service; a growing number of corporates now signing up their workforces to telehealth plans; and the increasing range of reasons for virtual visits (mental health consultations at Teladoc, for example, rose 500% YOY). Teladoc’s Chief Executive, Jason Gorevic, highlighted that demand for its services would “well exceed” pre-pandemic levels. Consider also the large runway ahead. Although ~50m paid Teladoc members sounds impressive (and Teladoc is perhaps 4-5x the size of its nearest competitor), there are over 200m people in the US aged 18 or over, while in international developed markets, this figure tops 1bn.
Of course, telehealth visits will never fully substitute for an in-person consultations, lacking the ability to conduct a physical examination as well as that deeper inter-human connection based around non-verbal cues and the greater transmission of trust and empathy. At the same time, virtual consultations can only be as good as the underlying technology (broadband) that sustains it. Those perhaps most in need of medical services often have least ability to access them. Nonetheless, we expect the telemedicine industry to continue evolving and continue to monitor appropriately valued investment opportunities within it actively.
26 February 2021
The above does not constitute investment advice and is the sole opinion of the author at the time of publication. Past performance is no guide to future performance and the value of investments and income from them can fall as well as rise.
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