During the early days of the pandemic in the U.S., Medicare members rapidly adopted telehealth as the Trump administration relaxed regulations. The number of members receiving telehealth increased from 11,000 in early March to 1.3 million in mid-April, more than an 11,000% increase. Investors in telehealth companies have reaped the benefits as utilization has grown.
The growth may have been more widespread than many realized. A survey of providers raises some questions about whether vendors such as Teladoc (NYSE: TDOC), Amwell (NYSE: AMWL), and MDLive are top of mind, or if brands, and stocks, with more consumer awareness like Microsoft (NASADQ: MSFT) Teams and Zoom (NASDAQ: ZOOM) are benefiting more from the sudden growth.
The clock is ticking
A survey, conducted by KLAS Research, of 174 providers who were heavy users of virtual care during April and May found 43 different vendors they had tried for delivering virtual care. I'm surprised 43 different vendors exist, but I'll take their word for it. What this highlights is how much the relaxation of regulations helped doctors and Medicare patients connect during the public health emergency.
Specifically, key parts of the COVID relief packages allowed doctors to conduct visits with Medicare patients in another state and reimbursed them for virtual visits at the same rate as office visits. Prior to the pandemic, virtual visits were only allowed for seniors in rural areas. Without an extension of this provision, the increased access for virtual care will end when the public health emergency is declared over. If an agreement can't be reached on extending the moratorium on legacy regulations, user growth for telehealth companies may be facing a sudden drop. Investors would be wise to keep an eye on Washington and any related news that could affect the current environment that has produced such robust growth.