Take 2 Apps and FaceTime Me: Telehealth Luring Investors

Things you can now do with a smartphone: Order a pizza; sell Aunt Dottie's old silverware; have a doctor take a look at that thing on your shoulder. 


In today's always-connected world, consumers are embracing telemedicine or telehealth -- contacting a doctor electronically to receive immediate care for their ailments.

The growing appeal and availability of wired healthcare have caught the attention of healthcare companies and financial investors. Dale C. Van Demark a partner at McDermott Will & Emery LLP, noted that other direct-to-consumer businesses have been greeted with solid demand.

And while it wasn't clear at first whether telemedicine would catch on, that early skepticism was unwarranted. "The consumer is not frightened by remote medicine," Van Demark declared.

That acceptance encouraged telehealth service company Teladoc Inc. to confidentially file plans to go public earlier this year with underwriters Deutsche Bank SA and JPMorganChase & Co.   (JPM) The Dallas-based company provides round-the-clock access to board certified doctors and pediatricians through phone or video consultations.

A request is logged, and doctors call back within 16 minutes, according to the company. Teladoc advertises the option of talking to a doctor from the "convenience of your home, office, hotel or mountaintop."

According to the American Telemedicine Association, 36 states introduced telemedicine-related bills to define the practice, promulgate licensing standards and improve coverage and payment options.

Data provided by the association shows that states as large as California, Texas and New York already have telemedicine parity laws -- meaning that telehealth-provided services are often covered by insurance to the same extent as in-person services.

New York and Texas have Medicaid coverage for telehealth while Texas has both private insurance coverage and Medicaid coverage, according to the National Conference of State Legislatures. Most states have adopted coverage for telehealth, according to the group.

The availability of coverage is encouraging consumer health retailers such as Walgreens Boots Alliance Inc.  (WAG) and Rite Aid Corp.  (RAD) to get into the business.

Both have teamed up with privately owned companies in the space -- MDLive and Healthspot, respectively.

CVS Health Corp.'s  (CVS) Minute Clinic last year tested telehealth at sites across the country. Other players include Doctor on Demand, which also has a psychology arm. And just this week, Spruce -- an app that connects users with board-certified dermatologists for the professional diagnosis and treatment of skin conditions such as acne, rash, eczema and others -- received funding from Kleiner, Perkins, Caulfield & Byers.

Van Demark noted that investors in telehealth and telemedicine -- which ranges from videoconferencing to the remote monitoring of patients through devices that spot health problems ahead of time -- are as varied as the field itself.

"It could be anybody," he said. Both venture capital and private equity firms are interested in the sector. "Nontraditional healthcare companies see the benefit for strategic transactions. They could merge some IT technology with what telemedicine is doing."

Insurers could also be interested in the telehealth and telemedicine space, as insurance companies seek to reduce costs and not see a degradation in the quality of healthcare. "Insurance companies have been looking at technology as a way to achieve those goals," Van Denmark said. For example, Oscar Health Insurance, an independent healthcare startup, offers telehealth services.

Telehealth has also bred startups that straddle the area between mobile health and health-care services. Among them is newly launched startup Vytaliz, which is an app that connects patients with doctors through a click on a phone.

The company -- which treats headaches, toothaches, abdominal pain and symptoms -- dispatches a nurse to the home of the ailing patient, while video conferencing with a board-certified physician. The nurse is able to monitor vital signs, provide intravenous medicine and is equipped to match symptoms to illnesses.

According to founder Omar Elrabie, Vytaliz numbers urgent care centers among its competitors. Elrabie says insurers such as Blue Cross Blue Shield and UnitedHealth Group Inc.  (UNH) as possible telehealth partners.

As telehealth gains traction, it will and also help bring care to areas where doctors' offices and clinics are scarce. More people will have access to good doctors, and care providers will get access to new markets. And telemedicine will give new meaning to the phrase "digital examination."

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