Breakaway | More Additions to Telehealth Services List = Greater B2B Opportunities | PTON, LULU

10/19/20 01:00PM EDT

Breakaway | More Additions to Telehealth Services List = Greater B2B Opportunities | PTON, LULU - 20201019 Telemedicine Note

In these last, unusual months, the COVID-19 outbreak has dominated and changed, probably for the better, how we think about delivery of health care. AMWL, TDOC and to a lesser extent GDRX have come to define telehealth as a consumer-focused virtual care delivery service. B2C telehealth, particularly during the COVID-19 outbreak has proven its worth in making access to health care safer but also, given the heavy utilization in urban areas including those with low disease spread, convenient.

Perhaps still underappreciated are the trends in B2B telehealth that can and are also being liberated by regulatory rollbacks. We have highlighted the changes to rules that make it easier for physicians to supervise clinicians below the NPP level.  One area of focus, in particular, has been on cardiac therapy. CMS recently proposed revisions to regulations that permit physicians to supervise therapists conducting intensive cardiac therapy via what CMS refers to as Communication Technology-based Services; telehealth by another name and without all the regulatory baggage. This move comes after a pre-pandemic effort to increase reimbursement for cardiac therapy.

On Wednesday, CMS complemented that effort with additions to the list of physicians services that can be conducted via telehealth by a doctor or an NPP using its new expedited subregulatory process. These new services include cardiac rehabilitation therapy and analysis and programming of neurostimulators. In the former case, physicians and other NPPs can provide cardiac rehabilitation services via telehealth with or without ECG monitoring. A typical cardiac rehabiliation program includes exercise, education on tobacco cessation, nuitrition, and stress reduction. These services are usually provided at a hospital outpatient venue marketed as a sports medicine department.

In our Sunday note last week we discussed reduced hospital throughput which has several causes, one of which is patient reluctance to engage with a health care provider in the age of COVID-19. On Friday, CMS released the shocking results of a survey that indicates over 1/3 of Medicare beneficaries have foregone care for an ongoing condition. Some of that care is being replaced with telehealth but not all, as demonstrated by higher acuity levels reported by HCA during their pre-announcement.

Given the throughput challenges for hospitals which exacerbate capex budget woes, the next few years are going to be all about the battle for patients. Coming over the castle walls are non-traditional solutions. Specialist telehealth platforms like SOC Telmed and TDOC's recently acquired One Touch will, of course, be in a good position to take advantage of the changes

However, cardiac rehabilitation services are usually staffed by Exercise Physiologists who oversee a workout and monitor relevant vital signs. That reality presents us with another possibility. Interactive exercise platforms such as LULU's Mirror and PTON, assuming protection of personal health information, could fill an important gap in access. Use of these platforms would need to be tailored to the needs of a post-cardiac care patients and have proper physician oversight, which no longer requires his or her physical presence.

The price point at PTON and the short term duration, usually about a couple months, of rehabilitation therapy are two other parts of the home fitness model that would need to be modified for a medical channel. Finally, there is a long history of non-traditional players trying and failing at health care.  AMZN, JPM & BRK's Haven effort has been off to a slow start. Google and Microsoft have both tried to improve use of patient records with little to show for it. Apple watch's monitoring features have met with skepticism from physicians. PTON probably knows all this. It convened a new Health and Wellness Advisory Council last month to get some experts involved.

Hedgeye has a great retail team whose work includes research on LULU, PTON and NLS. I suspect we will be spending more time together. Hit sales@hedgeye.com if you need to see some background on the home fitness business.

Emily Evans
Managing Director – Health Policy

Due Diligence | Verification | Advisory



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