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American Well CEO shares progress on telehealth (transcript)

Posted Jan 02 2013 11:47am

American Well is a pioneering telehealth company. Four years ago, when the company was just launching its first commercial deployments,  I interviewed CEO Dr. Roy Schoenberg . Recently I interviewed him again and asked for his views on the progress of telehealth since 2008, impact of the Affordable Care Act, how physicians and health plans are reacting to American Well, and what it all means for patients. He also contrasted the US market with Australia and New Zealand, the first permanent overseas markets for the company.

The audio for this podcast can be accessed here .

David Williams: This is David Williams , co-founder of MedPharma Partners and author of the Health Business Blog. I’m speaking today with Dr. Roy Schoenberg. He is CEO of American Well . Roy, thanks for joining me today.

Dr. Roy Schoenberg: Thank you, David. Good morning.

Williams: It’s been a few years since we last caught up. Can you describe what progress you’ve made since we last spoke?

Schoenberg: A lot has happened in the health care industry. Everybody’s looking at the political arena where the health care industry is seeing a tremendous transformation.  Other dimensions of health care including the recent embrace of technology and the changing ways in which health care is delivered have also set the stage. We have so many issues including access, supply of physicians, reimbursement, and the way people are getting their health care benefits.

We have seen significant change in the way that people along the entire spectrum of this industry are looking at how technology can be used to actually acquire health care services. This has been led by the biggest stakeholders in the health care business, which are the health insurance companies. Over the last couple of years they have taken the lead in changing health care delivery.

There are a lot of different things that we can do to let patients know what they need to do for themselves and how to get more involved in preventive care. Along the same lines is the understanding that we don’t have enough health care services available in many parts of the country and that using ubiquitous technologies like the Internet in order to disseminate and redistribute is going to have a significant impact.

We have been at the right place at the right time and as you could imagine that has had a tremendous transformative impact on our business itself.

Williams: Could you comment on what has happened from the federal government level, and what impact you see from the HITECH part of the stimulus and also from the Affordable Care Act?

Schoenberg: With the Affordable Care Act you’re going to have anywhere between 34 to 36 million people who have been underinsured or non-insured now having proper access to the health care system.   That is happy news for a lot of people but the reality is that the supply part of the health care system hasn’t really significantly changed and it’s already been very strained.

As a result of that even the federal government, which usually takes longer than private commercial industry, has taken seriously the notion that we need to fundamentally change how we perceive supply and demand. One of the things that we have seen in the last couple of years in a variety of areas is new opinions by the movers and shakers of Washington, but also from the legislators at the state and the local level. They are saying, ‘We need to revisit the notion of the use of technology.’

This became most prominent starting in the last year from legislation that was passed in a variety of different states –I believe 16 to date.  It says explicitly that telehealth needs to be a reimbursable form of care delivery. State medical boards have literally had a 180-degree change in the way they see the validity of telehealth and telemedicine as a conduit for care delivery.

More and more opinion papers coming out of Washington both by legislators as well as by regulators are talking about the fact that it has now become imperative for us to enlist technology.

We are seeing increasingly that many people are thinking of telehealth and telemedicine as such a transformative tool. There is a lively discussion around what the regulations should be and how we can make sure that the use of this technology is going to be on the safe side of care delivery rather than on how the Internet has traditionally been abused by Internet pharmacies or for those kinds of interventions that are absolutely inappropriate.

We’re seeing a flurry of embrace at a variety of levels. Some of it is inquisitive; some of it is very decisive. We are seeing that the industry from top to bottom has decided to move forward on the use of these technologies.

Williams: Let’s talk a little more about access. You’re describing having another 35 million or so people in the system placing demands on providers and the use of technology to work on expanding supply. If we look at the example of electronic medical records, one could make the argument that use of that technology actually decreases supply because it reduces the available capacity of some providers as they adopt it. How is it that telehealth has a different and better effect?

Schoenberg: I want to make a distinction between two terms because people usually think of telemedicine and telehealth as the same thing. Telemedicine has been around for about 20 years. It is used to connect physicians across geographies in order to deliver care for patients.

In a rural area a patient can use telemedicine to see an oncologist that comes from a highly reputable tertiary medical center in an urban area. That in itself creates efficiency, but it does not increase the supply of medical services. It just allows consultation and immediate care to happen more readily.

Telehealth on the other hand is the use of technologies to bring health care services and available physicians into the hands of patients wherever those patients are.  Patients can directly tap into the telehealth system, find an available physician and connect with them. What that means is that we have physicians out there that have the opportunity to be in front of a patient right now as we’re having this interview.

There are numerous physicians that are not in front of a patient right now even though they could be, whether it’s because of cancellations, because they live in a specific place, or because they don’t want to practice five days a week. Increasingly many physicians are lessening their clinical hours, maybe because they are young mothers, or they are physicians who are on the retirement path. In any one of those cases technology allows us to tap into those physicians and say, “If you have an hour right now, we can actually use that time from your home to care for patients that need to see you.” What that means and what we have seen across the board is that we have the ability to bring back into the grid many of those lost opportunities and literally put them in front of patients that need to be seen.

Now we need to think about telehealth also as a way not only to overcome geographies, but also to overcome other barriers of access. It’s not only in the islands of Hawaii, or rural North Dakota, or Upstate New York.

Many patients live in metropolitan areas, but they are elderly patients, they have many different medical conditions that make it very difficult for them to leave their home. Usually these patients fall off the grid because they don’t get followed up. They don’t show up as needed in front of the different physicians.

We can use telehealth rather than force them to show up at the gates of health care. We can use telehealth to bring health care to them. That is another example of how access to health care has remarkably changed just by the fact that technology can extend the health care system into where the patients are.

These are just two examples. But as you said, electronic medical records  –which are absolutely necessary to change the accountability of care that’s being delivered– don’t really change the availability of the service themselves.

Telehealth on the flip side is truly redistributing the available supply and sometimes the supply that went off the grid and making it available to patients. That’s why it is perceived as such a radical change and a radical improvement in the availability of the entire system to its end consumers who are the patients.

Williams: Since the last time we spoke, there have been some other services that have sprung up that are going at the same problem in a different way. For example, ZocDoc allows physicians to increase their income and improve their mix. What’s the connection between what ZocDoc is doing and what you’re doing if any?

Schoenberg: In a way ZocDoc, the older kind of minute clinic and what we do are really different solutions for the same issue. Patients are struggling to get a hold of health care professionals to get care and we all help to fill that need.

What ZocDoc is doing is pretty remarkable. They say, we know that there are cancelled appointments, we know that there are holes in the schedule of physicians and we want to make sure that if there are people around in that physician office or in that geography that need to get in front of a doctor, we’re going to bring that opportunity to their attention.

What ZocDoc is doing is facilitating filling up a physician’s calendar where there are options for seeing patients.  It brokers those open appointments to patients over the web and they have done a terrific job in every way. I think physicians are very happy with it and patients are very happy with it.

That helps if you live in a place where there is a physician with an open appointment. Unfortunately in many of the cases, it’s not the physician you need, you need to see a specialist, or you live too far, or you have difficulty coming out of your house or traveling, or a variety of different issues. You therefore cannot wait for an appointment that’s going to happen in three days even if it’s from ZocDoc.

While they are brokering opportunities of in-person encounters, we’re using technology to allow you to see the physician from wherever you are. It’s different solutions for the same issue and realistically they complementary offerings.

Williams: When we spoke last time, you were starting your first major implementation in Hawaii. Now I imagine you’re looking out the next five or ten years. I’m wondering how you see the market for telehealth as you’ve defined it and in particular do you have a sense of how larger the opportunity is for the telehealth market in the United States?

Schoenberg:  We’re very careful not to make prophecies about where telehealth is going to be. But one thing that we can do is extrapolate from the change in our business that happened over the last couple of years. Five years ago we started as the crazy people who proposed that health care could be delivered meaningfully through technology in the state of Hawaii, a state that suffers from major geographical barriers for the delivery of care.

Today we’re looking at our client pool, the biggest health plans in the country, the federal government, national pharmacy chains, large behavioral health systems, very large employer groups and these have diversified so rapidly. Some people will not have the appreciation for how slow the traditional health care system moves. This industry, which is in every way a health care industry derivative, has moved at the pace of consumer technology. That is an incredible difference from any other thing that we’ve seen in health care.

Not only are different people using telehealth and enjoying it, but the people that govern the money flows are increasingly getting to the point of saying, ‘Well, this needs to be part of regular health care.” Usually the people that drive that would be the insurance companies that govern most of the dollars flowing in the health care system, and they are saying at this time, ‘We are going to incorporate telehealth increasingly as a part of our plan of benefit product.’

What that means is that down the line, telehealth will become part of your medicine cabinet. When you are at home and you have a health care issue, the first point of entry into the health care system will be right there where you are. You will be able to walk and use your iPad or you iPhone or your browser in order to tap into the health care system and begin to understand how you should acquire services.

It is clear that not everything you need is going to be delivered to you through telehealth. Clearly if you need surgery or if you need an injection, or whatever it is, that’s not going to happen through a browser, but I believe what we will see rapidly is that health care will be available to us at our home through this technology. It will then either solve all of our issues or advise us about what would be the prudent next step of acquiring a physician from a system that usually tends to be painful to interact with and often costly.

Williams: One topic that has gained some momentum since we last spoke is physician quality and patient experience. There has been some more published information about what the quality is of various physicians or physician groups. There is an increasing interest in how traditional care settings compare with less traditional mechanisms of delivering care including minute clinics, or onsite clinics. Has American Well done anything to make a comparison of its services with those that are offered in more traditional ways?

Schoenberg: It’s difficult to compare the scope of services that you deliver through telehealth versus the ones that you deliver in person.

Nobody is looking to reinvent health care. The relationship that we have with doctors and the trust that we have with doctors is fundamental for our ability to receive good care and to follow up in the instructions that we receive in order to care for the issues that we have.

Understanding that we need to preserve those things rather than introduce alternatives to them has been at the foundation of the technologies that we brought into the market. First of all we want to make sure that your interaction with a physician is going to be intimate.

We do not believe that an exchange of an email with Dr. Joe Schmo is a clinical encounter. We even don’t believe that telephone interaction with a physician is sufficient. For the most part you need to have a full intimate interaction, seeing and talking to the physician.

The second thing is that the health care professionals you interact with cannot be the people you don’t know. When we deploy our systems, we’re using them to connect patients with physicians that were otherwise made available to them by their insurance company.

If you forget technology, when you need to see a physician, you go into the directory of whatever health plan that you belong to. That’s how you find the list of physicians that have been checked and credentialed, followed for quality of care, licensed properly and board certified.

What technology should do rather than say, “Well, there is a pool of unknown Dr. Joe Schmo’s who say they are physicians and you’re going to get to them through the Internet,” is to make sure that the people you interact with are going to be the same people that you would otherwise schedule appointments with.

The level of accountability for the care that’s being delivered over technology shouldn’t be any different than the level of accountability that happens when you are seeing someone in person. The information presented to physicians before they see you has to be complete and exhaustive. They need to understand the rest of your medical record before they start treating you because that’s very important to direct their care.

We need to make sure that the care that they give you is properly documented so that they feel accountable. We want to make sure that the care that they deliver to you is going to be known to the next physician that you’re going to be seen by in order to preserve something called continuity of care, which is remarkably important for quality, but also for the efficiency of the system.

This also cannot be a gadget-type intervention that you find over the web. It has to be tied to the way that you get health care services. It means it has to be tied to your insurance product. You need to pay a co-pay for it like you do when you see a doctor. It needs to be introduced to you and explained to you by the same people who tell you how you can acquire medical services. The only way to make sure that the quality of service that you get over telehealth is good enough is to make sure that telehealth is an extension of your traditional health care system rather than a new alternative.

Williams: It was interesting to see that your first deployment outside of the US was in Australia and New Zealand. Could you comment about why that region of the world was first and what’s different there compared to what we see here in the United States?

Schoenberg: The first time we deployed the system outside of the US was actually for a period of time during the earthquake in Haiti. We allowed physicians from a top medical center in Boston to be available through the system to the medical personnel on the ground there who needed help performing field surgery and everything else. That was really the first time we crossed the border of the United States. But from commercial deployment standpoint, you’re absolutely right.

Australia is our largest overseas deployment. It’s the same in the sense that Australia is not unlike Hawaii in many areas. They have a lot of rural geographies involved.

There is a really desperate need for distribution of medical services. There are many areas where patients have to literally take a plane and fly for hours before they see the right kind of health care professional or even any kind of health care professional.

In that sense using technology that makes access to downtown Melbourne the same as it is in Central Australia has been on the mind of regulators and the government, and everybody else there.

The other dimension that is very interesting is that they have fast forwarded the thinking that we’re seeing here in Washington in 2012 to the point that the government has already embraced very far reaching rules about how imperative it is for the country as a whole to embrace these technologies.

The government has stated in a variety of different ways and in different kinds of domains that reimbursement for physicians for seeing a patient through technology should not be any different than reimbursing a physician for seeing the patient in person. It’s just that maybe the technology is the only way in which this patient can see the physician, and since the physician has to deliver the best care they have through the limitations of technology, they’re not doing anything less than seeing the patient in person.

One thing that is unique about Australia is that they are the best example of a national agenda for embracing telehealth that we’ve seen anywhere. We were fortunate to be the ones picked by the people that run telehealth in Australia to actually realize that. Interestingly enough, we do see that happening in other parts of the world, not necessarily just in places that have geographical issues. The United Kingdom is embracing similar rules in order to revamp their National Health Service.

Other countries are following suit, and I think luckily we are at the point that Washington is picking up on it. We’re going to see that remarkable change happen right in front of our eyes in 2013.  I’m happy to go on record in saying that is going to be a transformational year for the health care industry because of the use of telehealth.

Williams: I’ve been speaking today with Dr. Roy Schoenberg, CEO of American Well. Roy thanks so much for your time.

Schoenberg: Thank you so much, David.

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