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The CEO of American Well shares his message for investors who think telehealth will take a back seat again after coronavirus

Ido Schoenberg co-heads American Well

  • Many more people are using telehealth during the coronavirus pandemic.
  • A big question is whether people will keep going online for their healthcare after the outbreak ends.
  • Ido Schoenberg, co-CEO of telehealth firm American Well, said that concerns that telehealth use will decrease after the coronavirus outbreak ends are reasonable. But there are reasons to believe telehealth use will remain strong, he said.
  • With a likely recession looming, many businesses are unlikely to survive, he said. 
  • But telehealth is a lean alternative to traditional care could actually benefit from a cost-cutting environment like that, Schoenberg said.
  • Visit Business Insider's homepage for more stories.

Ido Schoenberg, a co-CEO of American Well, knows that telehealth isn't "cool."

Only a small number of patients and doctors connected virtually even a year ago, Schoenberg told Business Insider in an interview. Barriers included regulation that makes it difficult for doctors to get paid for delivering care online, and consumers' reluctance to use telehealth, he said.

Now, that's changing rapidly because of the coronavirus outbreak. Quarantines pushed a critical mass of people to try telehealth services like American Well, and Schoenberg said his company has ten times more online visitors than it did this time last year.

Amwell, as the company ks known, isn't alone. Medical records giants Epic Systems and Cerner have noted 100% or more growth in telehealth visits across their technology in US health systems, they told Business Insider. The services quickly emerged as a viable way to keep non-critical patients at home during the pandemic, as Business Insider's Lydia Ramsey reported. Sidelined doctors also took their practices virtual, and healthcare workers adopted it to treat coronavirus patients from a safer distance inside the hospital.

Schoenberg said that concerns that this growth could be short-lived are reasonable. But telehealth services like his own will continue to draw users, because they offer a cheaper alternative to traditional doctors' visits as the pandemic pushes the country closer to a recession, according to Schoenberg.

"The current crisis is horrific. It's horrific from a health standpoint. It's also horrific from an economic standpoint. We see that many people are losing their jobs. Many businesses may or may not survive this. And a recession is likely," he said.

Keeping up with demand

To keep up with demand, telehealth firms are creating partnerships with giant payers and health systems, adding appointment capacity and physicians, and beefing up coronavirus administrative teams. Amwell is now working with UnitedHealth, Ascension, and medical associations in ways it never has before, according to Schoenberg.

Read more: Meet the 12 telemedicine startups being put to the test as they gear up to confront the coronavirus pandemic

Many telehealth companies are private, so financial information on them is limited. Last year, the telehealth industry raised $3.3 billion, according to a report from CB Insights. Amwell is privately held, and has raised $566.9 million from investors, but declined to disclose its valuation to Business Insider.

The Trump administration removed some barriers to widespread telehealth use during the pandemic, such as limits on reimbursement and on where doctors can practice. Those limits are set to be restored when the pandemic ends, however.

New Medicare coverage, for instance, is legally temporary, according to the Centers for Medicare & Medicaid Services. The US Department of Health and Human Services is similarly allowing doctors to practice telehealth across state lines without separate licenses. 

Recession threatens employers

But there are reasons to think that telehealth use will persist after the pandemic, Schoenberg said.

A potential recession that could hit employers' finances puts healthcare businesses in the hot seat. About 153 million people rely on employer-provided health coverage in some form, according to a 2019 survey by the Kaiser Family Foundation. Already, more than 26 million Americans have filed unemployment claims in the past 5 weeks.

"I think that we are in for a challenging period as a nation, and everybody will feel the impact in one way or another," Schoenberg said.

At the same time, telehealth is more efficient compared to many traditional means of seeking care because it's cheaper and reduces waste, Schoenberg said. Even in a post-pandemic world where more people may frequent brick-and-mortar doctors' offices, telehealth should remain an easy choice for both patients and doctors who are trying to cut costs, according to Schoenberg.

Read more: 'The world will never be the same': Healthcare executives say telehealth is here to stay beyond the coronavirus

"There is a lot to be said about the enormous clinical waste that we see in healthcare today. It works pretty much like it worked thousands of years ago. I go to the cave, and there is a line, and I wait outside the cave, and there's no way to know what's in the cave until I'm in the cave," Schoenberg said. 

"Painted less colorfully, it's a location-driven industry. While every other industry has changed completely."

The estimated costs of waste in the US healthcare system is somewhere between $760 billion and $935 billion, according to a 2019 report published in the Journal of the American Medical Association. Roughly 30 percent of that comes from administrative complexity like navigating the complicated web of insurance-related billing procedures.

Ido Schoenberg and his brother Roy Schoenberg, Amwell's co-CEO and president, founded the company together in 2006 to connect employers, health systems, insurers, and patients with technology, removing barriers to care. 

"Digital connectivity isn't just about videoconferencing. That ability to connect data from patients, move it into the cloud, analyze it in real time, and send the right intervention back into their most convenient location, which typically is the home, is this fundamental change," Schoenberg said.

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