Telemedicine Becoming More Popular for Nonemergency Care

A few years ago, executives at Pepsi Bottling Ventures noticed many of the company’s employees were not visiting doctors on a regular basis. A large percentage of the workers drive trucks and deliver products to 22 bottling and distribution facilities in North Carolina, South Carolina, Virginia, Maryland, and Delaware. Unlike office workers who can take an hour or two to see a doctor and then return to work, the drivers do not have the same flexibility because of their busy schedules and job requirements.

To encourage employees to remain healthy, the human resources department considered signing agreements with physicians to reduce the times workers would have to wait before being seen. An insurance broker then introduced another idea: telemedicine. After a representative from Consult A Doctor pitched its services in which people can call a telephone number and speak with a physician about non-emergency medical issues, Pepsi Bottling Ventures soon signed up.

In 2012, Pepsi Bottling Ventures saw increased utilization of Consult A Doctor, although there were only 389 consults among the approximately 2000 employees enrolled in its health plans. Still, the company claims to have had a 400% return on investment and savings of more than $200,000 related to Consult A Doctor through more productivity and cheaper medical care.

“It was an easy decision,” Claire Niver, senior vice president of human resources and corporate affairs at Pepsi Bottling Ventures, said in an interview with First Report Managed Care. “We thought there was tremendous upside if we marketed it properly with not a lot of investment.”

In early September, Consult A Doctor was acquired by Teladoc, the industry’s leader that has experienced growth after companies and payers were hesitant to embrace the new technologies. Jason Gorevic, Teladoc’s chief executive officer since 2009, said Consult A Doctor is a quarter of the size of Teladoc but has good relationships with small- and mid-size businesses as well as a strong broker distribution channel, areas that Teladoc has not focused on in the past.

Founded in 2002 and launched across the United States in 2007, Teladoc now has more than 120,000 consults each year and has contracts with several health insurers and large employers. The service is intended for allergies, respiratory infections, cold and flu symptoms, and other non-emergency care after normal business hours or if people cannot visit doctors. It is not meant to replace primary care or emergency room care.

Approximately 6 million people have access to Teladoc’s national network of board-certified physicians who are on call 24 hours per day, 7 days per week. The doctors, who have an average of 15 years of experience, are able to make diagnoses, prescribe medications, and refer people to see their primary care physicians or visit the emergency room. The average time from when people initiate contact via the telephone or online to when they receive a response from a doctor is 16 minutes.

“After many years of evangelizing and educating the market on the benefits of telehealth, the market both among payers and large employers has really found the value and started to adopt it in large measures,” Mr. Gorevic said in an interview with First Report Managed Care. “The biggest evolution I would say is in the maturity of the market.”

Mr. Gorevic said demand for the company’s services increased beginning in 2012, during which revenues were up 75% from the previous year. He attributes the growth to people becoming more comfortable with technology and health plans understanding the benefits of the service.

Recently, Teladoc has experienced a surge of new business, at least in part due to the fact that several provisions of the Patient Protection and Affordable Care Act (ACA) will be implemented in 2014. Next year, several million more people will have insurance because of the mandate that requires most United States citizens to have coverage or pay a tax.

In its marketing materials, Teladoc emphasizes its goal of improving access to care, reducing healthcare costs, and providing high quality care, all of which are primary objectives of the ACA and other health reform initiatives.

“It’s really been our focus since the company was founded in 2002,” Mr. Gorevic said. “We continue to stay focused on cracking that nut. Certainly no individual company or person can change that for the whole system, but we think we can really improve those dimensions, especially within the focus of access to care for acute, episodic conditions.”

In June, Teladoc became the first telemedicine company to receive certification from the National Committee for Quality Assurance (NCQA), a private, non-profit organization. The NCQA certified Teladoc’s credentialing process for doctors, who are independent contractors. The health plans audit the credentialing to ensure it matches their standards. Teladoc has approximately 125 clinical guidelines that physicians follow based on evidence-based medicine and adopted for a telehealth setting.

According to Teladoc’s research, 91% of patients indicated that Teladoc’s physicians completely resolved their issues, 8% were referred to their primary care physician or an urgent care center, and 1% were referred to an emergency room.

For the first 8 years of its existence, Teladoc offered only telephone services, but it expanded into video consultations in 2010. This year, the company launched a mobile application so that people can access the service on their cell phones and tablet devices. By early next year, Teladoc plans on offering members access to behavioral health and dermatology consultations.

Before arriving at Teladoc, Mr. Gorevic worked as the chief marketing and product officer at WellPoint. In that role, companies attempted to sell their services to WellPoint, including a few that focused on telemedicine. WellPoint launched early versions of electronic visits and telehealth initiatives, although they were primitive compared with today’s offerings.

“The market has sort of evolved and matured so much in the technologies - - and operational processes have matured significantly - - to where today there’s a really hard [return on investment] for our clients,” Mr. Gorevic said. “We have a demonstrable base of success and a track record that we can point to. That really helps to address the concerns that somebody like I would have had sitting on the other side of the table at a managed care plan.”

Mr. Gorevic has helped Teladoc secure contracts with Aetna, Blue Cross of California, Highmark, Centene, Amerigroup, and United Health’s Medicaid population. He said the company is in the process of reaching agreements with other Blue Cross and Blue Shield plans, too.

Teladoc also has deals with large employers such as Rent-A-Center. The organizations typically pay Teladoc a per member per month or per employee per month fee. Each consultation costs $38, which will increase to $40 in 2014. Meanwhile, an actuarial analysis performed for Teladoc revealed that the average emergency room visit for the same diagnoses as those found in Teladoc consultations cost $1500. There are smaller savings when people use Teladoc instead of an urgent care center or an unnecessary primary care visit.

Consult A Doctor and Teladoc have similar missions and business plans. Both offer consultations via the telephone and the Internet and tout the ease of use. When Pepsi Bottling Ventures signed a deal with Consult A Doctor, the company was drawn to the convenience of telemedicine, although its employees were skeptical and did not use the service often. Although only a small percentage of employees utilize telemedicine, the most effective marketing method is when colleagues tell each other about the virtues of telemedicine instead of having executives talk about the programs.

“People were reticent [at first],” Ms. Niver said. “They were like, ‘I don’t know. I’m not sure. How does that work? They’re probably going to send me to the doctor anyway.’ I think that once people saw that folks were having some success with it, they were willing to give it a try…We don’t want people using Consult A Doctor for emergency things, but for the non-emergent issues, it really gives them another option that people have found helpful.”

Teladoc, a privately-held company based in Dallas, Texas, raised $15 million in funding from 5 undisclosed investors in September, according to a Securities and Exchange Commission filing. Its investors include venture capital firms Kleiner Perkins Caufield & Byers, Cardinal Partners, HLM Venture Partners, Trident Capital, and New Capital Partners. They are hoping telemedicine continues to become more popular.

“I think [telemedicine is] on the cusp of something big here,” Ms. Niver said. “It’s not going to be the end-all, be-all because you can’t do everything telephonically, of course, nor do we want that to be the case. It’s just another avenue for people to access the proper care.”