Health Systems Must Beware of Retail Telemedicine

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The trend of mergers and acquisitions in healthcare has only grown stronger in recent years. At the same time, retail outlets have started expanding to deliver healthcare services, including telehealth — and health systems need to watch out.

Health systems are facing more competition from major retail outlets such as Walmart, CVS and Amazon.

In 2018, for instance, Walmart engaged in preliminary talks to acquire Humana, Amazon purchased the online pharmacy PillPack and JPMorgan Chase, Berkshire Hathaway and Amazon formed a nonprofit healthcare venture, whose mission remains unclear, led by Atul Gawande, M.D., MPH.

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“These developments indicate a clear trend on the part of both health organizations and retail outlets to compete by offering more convenient and accessible healthcare services,” author Keisuke Nakagawa, M.D., a postdoctoral scholar in psychiatry at University of California, Davis, and his colleagues wrote in an analysis of telehealth use by retail outlets published in this month’s telemedicine issue of Health Affairs.

So here’s where we are: Healthcare providers are undergoing an intense period of consolidation, with mid- and large-size organizations gobbling up the competition. Retail outlets are seeing a similar trend, positioning them to become even stronger players in the space, especially considering many already offer healthcare services, such as pharmacies or clinics.

In October, Walmart partnered with RB, a consumer health and hygiene company, to provide better healthcare access for consumers. The partners collaborated on a telehealth initiative with Doctor On Demand, making seeing a doctor easier by reducing the cost barrier and providing consumers with access to board-certified physicians via mobile devices.

Consumers who buy Mucinex, Delsym, Airborne or Digestive Advantage from Walmart receive a free telehealth consultation with a Doctor On Demand physician, who are available 24 hours a day, seven days a week, with a typical wait time of five minutes.

But retail isn’t toppling healthcare just yet. While national retail chains like Walmart, CVS and Walgreens have physical locations and digital assets that make them convenient channels for offering telehealth to consumers, vertically integrated healthcare organizations like UnitedHealth already have established networks of hospitals, clinics and providers they can refer patients to for in-person follow-up visits after telehealth consultations.

If healthcare organizations continue acquiring large provider groups and vertically integrating, retail outlets could be left with a limited supply of providers, especially in certain regions of the country, Nakagawa wrote.

That might only boost telemedicine, though. Consumers are finding more ways to access healthcare outside of traditional settings, whether it be visiting urgent care clinics or telehealth video consultations, according to the Health Affairs analysis.

“As healthcare organizations compete to increase their market shares, they must simultaneously meet consumers’ demands for convenience and affordability,” Nakagawa wrote.

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To meet this demand, large health systems typically partner with vendors to offer telehealth services, and retail operations like CVS and Walgreens use telehealth to complement in-store clinics and pharmacies.

But consumer demand isn’t the only factor driving telemedicine adoption.

The Centers for Medicare & Medicaid Services (CMS) has made concrete moves to expand telehealth access. Medicare now pays for virtual check-ins for all patients and Medicare patients receiving home dialysis may undergo monthly assessments via telehealth platforms.

CMS Administrator Seema Verma, MPH, has touted telehealth for giving patients a new way to access care, connecting them with doctors and providing a lifeline for those in rural areas with limited access.

Regulatory and legislative changes have also been employed to encourage the use of telemedicine. Each state can define telehealth in its own policies for reimbursements and other related issues.

Forty-nine states and Washington D.C. provide reimbursement for live video in Medicaid fee-for-service, according to the Public Health Institute. Fifteen states provide reimbursement for store-and-forward. Thirty-two state Medicaid programs offer a transmission or facility fee when telehealth is used.

Given all that, a few things are clear: Telemedicine isn’t going away. Employing telehealth methods in healthcare is trending upwards, and partnering with larger markets and provider groups is one way for health systems to avoid being overtaken by big retail companies. This kind of move could limit the consumer pool that the retail outlets have to choose from.

Or more health systems and retail chains can strike partnerships to offer telehealth services together. Either way, it’s clear that healthcare organizations need to consider launching a telemedicine program. Otherwise, they could start losing patients to companies that have only recently become competitors.

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