The $250 Billion Telehealth Opportunity: Examining the future of digital health

The present and future of telehealth

Digital health has experienced a surge in investment over the past three years. During this time, Telehealth—the use of technology to access healthcare services remotely— has become a central building block for patient-centric care. 

In the first half of 2021, investors poured $14.7 billion into the digital health space. That’s equivalent to the total amount invested in 2020, and double the amount from 2019.

What opportunities do investors see? And what are the challenges for digital health? 

To answer these questions, we explored the top growth sectors for digital medicine and telehealth. Here’s what we found. 

Telehealth growth has stabilized, and the future is bright

Telehealth spans space by allowing patient and clinician contact, care, education, intervention, and monitoring. This has been especially important as the world has adopted social distancing and new digital interactions.

At the height of the pandemic, McKinsey estimated that $250 billion of the US healthcare market would be virtualized. And in 2020, that high number seemed justified. The CDC reported in 2020 that, to mitigate the spread of the Covid-19, nearly a third of all health visits were being conducted through telehealth. 

When McKinsey revisited their report in July 2021, telehealth usage numbers had stabilized, from 78 times pre-pandemic levels down to just 38 times early 2019 levels. This lower, more stable number still represents a significant shift in the healthcare system, especially in particular sectors and specialties.

Three opportunity sectors for telehealth

Mental Health

Of all healthcare sectors in the US, mental health has had the most significant uptake in telehealth adoption. A recent survey by the American Psychiatric Association found that 38% of Americans have used telehealth for mental health services in 2021, up from 31% in 2020. The future for telehealth in the mental health space looks bright: the same survey found that 59% of respondents said they would continue using telehealth, even after the pandemic.

Pediatric care

A recent independent study found that 92% of pediatricians believe telehealth for pediatric visits is a trend that’s here to stay. Another survey found that 90% of parents believe utilizing telehealth going forward will help them be more involved in their children’s health. One of the overall positive benefits of telehealth is that it helps bridge the gap in access to quality healthcare, and that is especially true for pediatric medicine. 

Retail pharmacies and urgent care

In the spring of 2019, Rite Aid and InTouch Health launched a series of RediClinic Express telehealth kiosks. More recently, Norwell Health and Walgreens forged a partnership to expand digital healthcare services in New York and the tri-state area, and Dollar General joined with Higi and Babylon Health to bring hybrid retail-telehealth services to rural communities.

These changes are transforming the way Americans interact with the healthcare system—as people are moving away from retail pharmacies and walk-in urgent care clinics toward digital options.

Telehealth challenges remain

The continued growth of telehealth may seem inevitable, especially as Amazon has started to roll out telehealth services via its Amazon Care app, but a few obstacles still stand in the way. 

Insurance and reimbursement challenges

Once the public health emergency has ended, insurance providers are going to have to decide whether or not they will continue covering telehealth visits, both in terms of the level of coverage as well as what types of telehealth visits they will cover. This will be especially important because McKinsey found that 54% of doctors are not willing to continue offering telehealth services at a discounted rate.

An uncertain regulatory future

Right now, there is no agreement among states about the simple definition of a telehealth “visit.” As states grapple with the future of telehealth for their local providers (and many that reach across state lines), the federal government will come under increasing pressure to codify norms and institute guardrails. 

Telehealth will be the foundation for a patient-centric future

Telehealth is one of the central building blocks for this new era of patient-centric care. In the future, the health and wellness landscape will be defined by providers that design more empathetic, accessible, and flexible digital experiences for their patients. 

The foundational importance of telehealth means many providers are going to have to embrace digital transformation while also navigating a constantly evolving set of consumer, insurance, and regulatory needs.

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