Over the last two years, there has been significant discussion around the impact of the COVID-19 crisis in accelerating changes in the provision of care, including tele-services and the home. As a result of the unprecedented increase in telehealth demand during the peak of the pandemic, health systems, payers, employers, new entrants and Wall Street financiers have aggressively pursued telehealth expansion strategies.

The delineation between total telehealth visits versus the number of unique individuals who used telehealth is essential to understanding the future demand for telehealth. In our analysis of more than 70 billion claims lines representing more than 300 million Americans, we find that the growth in telehealth utilization is largely attributed to the law of small numbers.

When analyzing televisit volumes from the lens of who is consuming care, we find that approximately 38 million Americans (12% of the population, excluding traditional Medicare beneficiaries) used telehealth in 2020.

Prior to CMS’ waiver going into effect during the public health emergency, video interaction was a prerequisite for classification as a telehealth visit. According to survey estimates from the Kaiser Family Foundation, 56% of Medicare beneficiaries who had a telehealth visit between the summer and fall pf 2020 did so using only audio.

Applying the pre-waiver criteria to our all-payer claims analysis to include traditional Medicare, the total percentage of Americans who utilized telehealth last year would still represent less than 15% of the U.S. population.

The data further reveals that 60% of telehealth users are women, which is consistent with pre-pandemic trends. Notably, women between the ages of 30-39 have been the most consistent users of telehealth during all stages of the pandemic.

Longitudinal analysis of telehealth users by gender and age reveals telehealth grew in popularity among women ages 20-29 and declined among women ages 40-49 between pre-peak and peak-pandemic periods.

As telehealth volumes begin to taper from peak highs, health systems need to analyze post-pandemic demand for this modality with care. Although the pandemic triggered a level of "forced adoption," the data makes it clear that telehealth was not necessarily viewed as a substitute for in-person care, except for behavioral health services. Perhaps more importantly, Amazon and Walmart’s entry into the telehealth market suggests that telehealth will increasingly be a commodity good.

The commoditization of telehealth inherently puts health systems at a disadvantage when competing in an already oversupplied market, especially in light of Amazon Care's plans to expand its virtual care services. With Amazon’s Prime membership footprint already engaging more than 40% of Americans, the inherent overlap between pre-established relationships with Amazon’s consumer base and current telehealth users should concern health systems.

The increase in capital investments in telehealth is catering to very small consumer segments of corresponding demand. Even if aggregate telehealth visits remain at current levels or even increase, they will still be distributed over a relatively small segment of the total population with an increasing number of suppliers.

What separates health systems from all other care providers is their ability to deliver complex healthcare services, not commodity health services. When investing limited financial resources in an already highly commoditized market, health system executives should consider which consumers they are seeking to attract.

As more competitors enter an already oversupplied telehealth market, gaining consumer loyalty will be even harder. Thus, successful telehealth strategies in a post-pandemic health economy will hinge upon health systems having a precise understanding of which population segments will drive future utilization and their respective healthcare preferences.

Ultimately, the question remains whether health systems can cater to those consumer preferences, but more importantly whether they can do it better than longstanding consumer brands like Walmart and Amazon. 

Jain is a health services researcher and strategic advisor with expertise in integrated delivery systems and data-driven decision-making. She leads research and thought leadership at Trilliant Health and serves on the faculty of the Johns Hopkins School of Medicine. Dr. Jain has previously served in executive roles in research and advisory services, governance education and value acceleration at the Health Management Academy and Emory Healthcare. Her research has been published in academic journals such as Health Affairs, JAMA, the American Journal of Managed Care, the Journal of Healthcare Management and leading industry publications such as Modern Healthcare and the American Hospital Association’s Market Scan. She has an undergraduate degree from Rice University and a doctorate degree from Emory University.