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A Conversation with Dr. Roy Schoenberg:
Why Now is the Time for Telehealth to Take Off
June 2014
Interviewed by Nancy Fabozzi, Frost & Sullivan
Company Background
American Well Systems, ...
Nancy Fabozzi: Talk about how you got started in
health IT and how yo...
and older technologies, were used to connect the two. But
it was really to allow physicia...
NF: What was the impetus for the change of attitude?
Why did they com...
telehealth network, there is going to be a physician there.That
is also a change in think...
do this and they’re ready for it. That’s why this is a perfect
storm ...
Frost & Sullivan, the Growth Partnership Company, works in collaboration with clients to leverage
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Movers & Shakers - A Conversation with Dr. Roy Schoenberg: Why Now is the Time for Telehealth to Take Off


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Movers & Shakers Interview with Roy Schoenberg, MD, MPH,
President & CEO, American Well Systems

Interviewed by Nancy Fabozzi, Frost & Sullivan

Published in: Health & Medicine, Business
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Movers & Shakers - A Conversation with Dr. Roy Schoenberg: Why Now is the Time for Telehealth to Take Off

  1. 1. MO V E R S S H A KE RS A Conversation with Dr. Roy Schoenberg: Why Now is the Time for Telehealth to Take Off June 2014 “We Accelerate Growth”
  2. 2. MOVERS & SHAKERS 2 Interviewed by Nancy Fabozzi, Frost & Sullivan Company Background American Well Systems, founded in 2006, provides a patented telehealth solution consisting of software, services, and access to clinical services. American Well’s goal is to augment the in-office physician visit, thereby improving access to quality healthcare for a wide range of consumers. The company’s core offering is its Online Care Suite, a telehealth solution that connects providers and patients for live clinical encounters using mobile, Web, or telephone.The company, which is currently the nation’s largest telehealth network, also handles all the administration, security, and record-keeping that modern healthcare requires. American Well’s core customers are healthcare consumers, national and local health plans, delivery networks, retail pharmacies, providers, physicians, and payers in the United States and internationally. The company’s partners include prestigious healthcare organizations such as Ascension Health,Veteran’s Administration, Massachusetts General Hospital, Tufts Medical Center, OptumHealth, WellPoint, Rite Aid, and numerous others. American Well is headquartered in Boston, Massachusetts. Introduction As part of Frost & Sullivan’s ongoing analysis of the digital transformation of US healthcare, Nancy Fabozzi, principal analyst with Frost & Sullivan’s Connected Health group, spoke with Dr. Roy Schoenberg, president and CEO of American Well Systems, to get his perspectives on key trends impacting telehealth and what it takes to successfully compete in this market. The interview took place at the American Telemedicine Association (ATA) Annual Meeting and Trade Show, recently held in Baltimore, Maryland. Dr. Schoenberg serves on the board of the ATA and is the 2014 recipient of ATA’s Industry award for leadership in the field of Telemedicine. In 2013, Schoenberg was appointed to a telehealth task force convened by the US Federation of State Medical Boards (FSMB).The federation recently delivered landmark guidelines for the appropriate use of telehealth in medical practice, which he contributed to. Schoenberg founded American Well with his brother, Dr. Ido Schoenberg. Both have a long history in health information technology. Prior to American Well, Roy Schoenberg was president and founder of CareKey, a care management/patient portal company, which was acquired by the TriZetto Group in 2005. He also founded iMDSoft, a high-acuity care IT vendor, along with his brother Ido and Ido’s wife, Phyllis Gotlib. Roy Schoenberg holds an MD from Hebrew University and an MPH from Harvard. Frost & Sullivan is honored to feature Roy Schoenberg and American Well Systems as part of its Movers & Shakers series. Movers & Shakers Interview with Roy Schoenberg, MD, MPH, President & CEO, American Well Systems
  3. 3. ROY SCHOENBERG, AMERICAN WELL SYSTEMS Nancy Fabozzi: Talk about how you got started in health IT and how you came to your current position at American Well. Roy Schoenberg: I was born in Israel and trained in medicine there. I also served in the Israeli military as a physician. From an early age,I liked playing with computers as a hobby. My brother and I started our first software company back in Israel called iMDSoft. That company created clinical IT systems for intensive care units and operating rooms. (Note: iMDSoft was acquired byTPG Capital in 2012).An early adopter of iMDSoft was Massachusetts General Hospital, so I started to fly back and forth between Boston and Israel. This was around 1995. In 1998, I got an invitation to join the informatics group at Harvard/MIT as a faculty member. So I did academics for a couple of years and then my brother and I started CareKey, where our focus was patient portals. Our timing was fortunate with CareKey as this was roughly around the time that HIPAA came into play, which caused health insurance plans to realize that they needed to start talking to their membership to get consent for managing personal health information. After CareKey was acquired by TriZetto, I spent some time ensuring a smooth transition. Then, during a long-awaited vacation, it occurred to me that, even though patients signed up for the portals, many didn’t keep using them.We had a lot of early excitement and then it kind of waned. NF: When I looked at the patient portal market last year, I realized that most of this market is dominated by enabling administrative functions. So “stickiness” is limited. RS: That’s right. When you look at the consumer online industry as a whole, everything is transactional. You can buy airline tickets, download a movie, buy stocks, etc. You can get the goods. In healthcare, prior to the development of the telehealth industry, you could only get information–like that provided with theWebMD’s of the world. You could get health information but you couldn’t actually get healthcare. We started American Well with the understanding that we are now stepping into an era where the technology and the need converge to the point where we can actually deliver healthcare online. In doing so, we are going to do a lot of good for a lot of people. And if we change the way people acquire healthcare, that can have a big impact on costs. So this was the thinking around seven years ago. I think it was the right time. But it took a good number of years for the telehealth market to get the point of alignment that we see here today (at ATA) and almost take for granted. When we started American Well, we had the technology to bring patients and providers together, but needed to determine the best entity to bring telehealth services to the market. From the very beginning, we chose to bring that service out through the large health insurance companies. They were, and are still to this day, our biggest clients because, fundamentally, they are the one entity that brings together patients (or members) and providers that they contract with. We felt that health plans were the natural introductory point for American Well and this new technology. NF: And you had those payer contacts from your previous business (CareKey)? RS: We had those contacts and the experience of working with health insurance companies. That was helpful. This industry puts a lot of focus on credibility and relationships so this seemed like the right way to go and it was the right decision. I don’t think we would have been here today without the support of many of the large Blue Cross and Blue Shield organizations, UnitedHealth Group, Wellpoint, and others. So we started the new company and moved along steadily for a number of years. In the last two years, all of this started really accelerating. NF: Before we look at trends impacting the telehealth market today,let’s take a step back and look at how this market came about. First,can you explain the difference between telemedicine and telehealth? RS: Well, telemedicine has been around for decades. Different people have different definitions of telemedicine, but this was fundamentally technology designed to connect physicians. For example, you might have a physician with a very deep specialty, say oncology, who worked out of a specialty center,usually in an urban area.Then you had remote physicians, often primary care physicians, that needed access to that specialist. Every technology in the book, ISDN lines
  4. 4. MOVERS & SHAKERS 4 and older technologies, were used to connect the two. But it was really to allow physicians to communicate.Telehealth, which is kind of the little sister of telemedicine, showed up just about five or six years ago. It was based on the same notion of delivering care, but on the other end of the line, you now have the consumer–the patients themselves rather than the physician. This is a completely different thing. Today, telehealth is using modern technology–Internet-based mobile and Web video– to really connect physicians and their patients. If telemedicine was really more of an efficiency tool to allow skills to be spread inside the healthcare system delivery arm, telehealth has the opportunity to completely change where healthcare takes place and the accessibility of healthcare for all of us. NF: What is driving this new urgency,or acceleration, around telehealth that we are seeing today? RS: Our healthcare system is further and further stretched. It can be a difficult and painful process for people to get access to healthcare, and not only in places with challenging geography. Even if you live in Boston, where it seems like every other person is a physician,good luck finding a primary care physician–it’s just impossible. Getting a specialist is ridiculous! And we have all of those other barriers–like people that don’t have insurance or that have insurance with a high deductible that makes them pay a lot of money out of pocket. Then there is the whole world of patients who may have insurance and may live in a metropolitan area, but they have chronic conditions and need ongoing care or they are elderly and it’s difficult for them to leave their home. There is also a new attitude about healthcare. Today, there is a growing notion that patients have to have some level of accountability for their own healthcare. It wasn’t the case until a couple of years ago where, at least financially, we didn’t care. We had health insurance, paid a co-pay, and we just consumed whatever healthcare we needed to consume. Now, everyone understands that that can’t happen. We have to have skin in the game. A byproduct of that new attitude is that we are slowly but surely becoming consumers of healthcare services. We are beginning to ask “do I need this?” “What’s the next best thing for me to do?” With that attitude comes the understanding that we are now beginning to guide ourselves through that maze of healthcare in order to save money and to appropriately consume healthcare. Telehealth brings healthcare to us, essentially like GPS. It helps us navigate healthcare. For many, telehealth is becoming the first line of defense if we are the ones deciding what healthcare we need to consume. That’s the key reason that, in the last year or so, everybody has figured out that this is the one technology that is going to fundamentally change healthcare. NF: I’ve been hearing here at ATA a lot of talk about the new position on telehealth from the US Federation of Medical Board (FSMB). Can you explain that? RS: Until the recent position on telehealth from FSMB,there was a lot of great innovation (in the telehealth market) but it was like any other novelty–something that people really appreciate and really encourage, but many looked at it like playing in a sandbox. It was interesting, but not yet part of the mainstream. For example, getting paid for telehealth as a doctor was difficult because the codes for telemedicine are primarily for physician-to-physician or telemedicine interactions,not the consumer side,or telehealth. One of the main issues was that the medical authorities in this country had never formally recognized telehealth. Medical boards are the ones who issue licenses for physicians,or take the license away if needed. They are the authorities on what is approved medical practice. And they have been,across the board (until now), skeptical about telehealth. Why? Potential competitive issues, disruption, reimbursement questions, and, quite appropriately, concerns about patient safety, which is really their main charter. But this year was the first time that the FSMB stepped forward and said that they believe that good healthcare can be rendered through telehealth technology. (Note: On May 9, 2014, the Federation of State Medical Boards formally adopted new guidelines aimed at ensuring the safety of telemedicine.) Essentially, what they said was that, under very well-defined and well-controlled settings, it is legitimate to establish a patient-physician relationship via the use of video telehealth technology, as opposed to an in- person visit, and to render care, including prescribing. This is the first time in the US that the medical authorities have embraced telehealth. This is a big deal.
  5. 5. ROY SCHOENBERG, AMERICAN WELL SYSTEMS NF: What was the impetus for the change of attitude? Why did they come to this conclusion now? RS: I think there is a growing understanding in the medical community that the inaccessibility of care cannot possibly be better than allowing a patient to get in front of a physician with this technology. With modern, video-based telehealth technology allowing patients to get access to quality healthcare where they wouldn’t have it otherwise, there was no longer a moral justification to say “this is bad,” therefore causing the patient to potentially be stuck at home and not get care at all. NF: So are the FSMB guidelines a real game-changer for the telehealth market? What’s different now? RS: The thing about the FSMB guidelines that will potentially shake up the market is that while the Federation said that they will allow healthcare to happen through telehealth, they are also very specific about how that will look.That means not everybody can do telehealth. FSMB actually lists the criteria and the operational principles of what makes a good and valid telehealth encounter.So they literally eliminated a lot of players in the industry that were just doing email encounters. That cannot be considered good healthcare. FSMB has said that if you are to establish a physician-patient relationship, you have to have video. This is because, if I’m a physician treating a patient where there is no pre-established contact, the visual clues become very important.The physician needs to see whether the patient is young or old, whether the patient is septic, frail, and so on. FSMB understands that for patients interacting with their own physician, where the relationship has been established, it is perfectly acceptable to interact through phone or email as part of follow-up care. That is encouraged. But if a patient is forming a new relationship with a physician, there has to be a starting point of intimacy that allows good care to be rendered. And for that, you need to see your doctor and your doctor needs to see you.That’s not going to happen through email or a phone call from a doctor the patient has never met before, hoping that good healthcare will come out of it. FSMB said this is where they draw the line. NF: Obviously, FSMB is concerned about patient safety.What are some of the potential patient safety implications of telehealth? Clearly, a safety violation can put the skids on this new technology very fast. RS: The state medical boards and associations are chartered with making sure that patient safety is upheld, that we don’t shoot from the hip because something looks sparkly and interesting. A lot of people, especially at this conference, are very eager to start allowing everything under the sun to happen. We are seeing concerns about patient safety, like physicians that are delivering care through the telephone without seeing patients. We are seeing their license being revoked and other actions from medical boards around the country. I am all for the enthusiasm, but we need to do telehealth right because if we do it wrong and some bad apples cause patient harm,the entire industry will be marked. That’s the thing that scares me the most. If people invest money in companies that are pirating telehealth, we will end up with so many misunderstandings about the safety and appeal and vision of this industry, and we will set it back. ATA is rolling out a certification program for telehealth vendors that will create transparency for the public.This is not only protecting patient safety, but it is also important for companies that want to operate in the telehealth ecosystem. A certification program like this is going to provide a good benchmark for vendors to understand what they need to build, what standards they need to comply with, and what’s good telehealth in medical practice.The clarity around (these standards) is also going to change the industry very quickly. NF: One of the things that has impressed me at ATA is seeing the high level of quality of the technology; the clarity of the video and sound. It actually makes for a very satisfying encounter, and much more intimate than I thought. It seems this is conducive to high- quality care. RS: I think in years to come, it is going to become clear that not only can telehealth technology provide safe healthcare, but in some circumstances, it can do more effective and more beneficial healthcare. One of the aspects of telehealth is the assumption that, as a patient, when you tap into a
  6. 6. MOVERS & SHAKERS 6 telehealth network, there is going to be a physician there.That is also a change in thinking. Physicians usually don’t wait for you, you wait for them! So at AmericanWell, we have invested a large amount of development dollars to focus on building a brokerage system that allows physicians to make themselves available on their own terms and then allows patients to come in on their own terms and still marry them effectively. That network of real-time availability of healthcare services across a national network also allows you to do some unbelievable things. For example, say you’re diabetic and, during the telehealth encounter, the physician tells you what you eat is very critical for controlling your blood sugar and that you need to talk to a nutritionist. Right there, the physician can hand you over, in real time, to a nutritionist on the network that can pick it up from there and help you. So you can literally sit there, see the physician and then seamlessly transition to a nutritionist. This is a totally different process from what usually happens today, where one physician sends you to another side of the healthcare system hoping that you’ll follow up and get the care you need. However, you may never come back, no one follows up, and so on. This fragmentation leads to gaps in care, worse outcomes, and higher costs. The patient gets lost along the way. Also, there are new things that we can do with telehealth that we have never thought about. For example, our client, WellPoint, recently provided one of our telehealth kiosks to a large homeless shelter in Ohio through the work of their charitable foundation. The kiosk was delivered by FedEx, plugged in, powered by the Internet, and then, instantly, everybody in this very large homeless shelter had healthcare! These people, who are a challenging population, had zero access to healthcare and then suddenly, out of nowhere, they had access to healthcare. NF: Amazing. This is like what Dr. Paul Farmer spoke about in his opening keynote about telehealth as a tool for global health equity. RS: Absolutely. We have an opportunity here with this technology to bring healthcare to where it’s needed most. We think about those things and how it changes people’s lives in environments like Haiti or a homeless shelter in Ohio, or federally qualified health centers serving Medicaid patients. In addition, so much healthcare has to happen with elderly populations that are not necessarily deprived or not covered. They have Medicare but they are still very challenged in getting the healthcare they need. There is enormous social value in telehealth, and that is why this industry is seeing its inflection point. It’s because people now understand that this will impact the lives of Americans. One of the reasons this has happened is because the health insurance companies–the Blues,WellPoint, UnitedHealth Care–took a step ahead of the government payers and said that they fundamentally believe that this (telehealth) will be part of the fabric of healthcare in the US. These payers have gotten ahead of the game and have introduced telehealth into their benefit structure. So between the health insurance companies covering it as a benefit, between the medical state boards embracing this, because of the government’s increasing awareness of this, and because we all now have the technology to do this via our smartphones and computers, this is all new. We didn’t have this five or six years ago. But it’s now here, today. NF: What is the training that goes into helping physicians conduct an effective and appropriate telehealth consultation with patients? Is AmericanWell involved in medical training efforts? RS: We are very involved in this because, side by side with the legitimacy of telehealth, comes the understanding that the physician that you see through telehealth will understand that medium and be able to give you good-quality and safe care. And that means that physicians also have to learn the advantages and disadvantages of seeing a patient through videoconferencing. At American Well, we have been fortunate enough to be given the right, with some of our clients, to build networks and train physicians on how to do telehealth right. We’ve started certification and training programs. We’ve learned a lot over the years. For example, we found the level of intimacy that happens when a patient is sitting in their home, with a good chunk of uninterrupted time with a physician, is actually sometimes better than being chased through exam rooms, and having the physician brought in for three minutes ... . Today, a lot of medical schools are doing courses or introducing telehealth and telemedicine into the curriculum. There are medical schools that have created telemedicine labs for medical students to train in, including the use of biometrics. This is really amazing when you think about the new generation of physicians. They know how to
  7. 7. ROY SCHOENBERG, AMERICAN WELL SYSTEMS do this and they’re ready for it. That’s why this is a perfect storm brewing; we have so much need and we’ve stretched the healthcare system so thin that we have got to start embracing new technologies in the delivery of care. NF: The drivers for telehealth are certainly strong and that’s one reason we are seeing so many vendors jumping into this space. RS: A lot of people are mistaken to think that telehealth is just videoconferencing–that it’s a glorified Skype or something like that.The truth is that, when you start peeling the onion of what it takes to actually have a healthcare encounter, this is not about getting two talking heads together. This is also about the full clinical documentation that encompasses Electronic Health Records (EHRs),coding solutions,care plans, identification, authentication, and so on. It’s endless; but this is the spaghetti that needs to be in place in order to allow quality healthcare to take place. What’s happening now in the market is that investors are pouring money in and there are a lot of Tom, Dick, and Harrys out there saying they can do telehealth. But it’s not just about buying WebRTC or something, adding a little bit of technology that has videoconferencing, and then you’ll have a telehealth system. That’s the same mistake that happened with EHRs,the same naiveté that thinks just because you have Microsoft Word you can be an EHR. You really have to understand that, if you are trying to stretch the health system into the patient domain, it has to speak healthcare, not videoconferencing. The challenge (for a successful telehealth service) is that not only does it have to speak that language, but it also has to speak the consumer language. Blending the two together is a major challenge. One of the things we are seeing here at ATA is that we are beginning to cross that line where we now have systems with maturity that can do both and blend that, delivering unbelievable, unfathomable value. I think one of the great developments that we’ve seen literally in the last year is that people from every area of the healthcare system are coming out and saying it’s now time for us to put our arms around telehealth. NF: What is the trajectory for vendors in this market? Will we see lots of players jump in and then we see rapid consolidation? RS: Weareattheexplosivegrowthpoint.Deloittepredictsthat this market will stabilize at a state of 300 million transactions per year. We don’t even have a million transactions per year now. So there is potentially a huge growth curve to the market. That’s why we are seeing so many vendors wanting to enter this market. But investors have to be very careful because once you start realizing that telehealth is part of healthcare, every one of those systems can’t just be a glorified Skype, but it has to tie into reimbursements and EHRs, etc. Once you have to tie all these pieces together, the lifting is much heavier. So today, we see a lot of new companies coming in, bidding at our fees, and winning because they say they can deliver on a variety of things. Then six months into the process they are being thrown out and we see the contracts coming back to more established players. In terms of the future, I don’t know if the telehealth market is going to consolidate around a few key vendors like with what the EHR market has done with Epic, Allscripts, etc. But you are going to rapidly see a lot of dissatisfaction from the flurry of newcomers,and that will result in a growing understanding of what it actually takes to make telehealth a part of healthcare delivery and see the ROI. That’s when the market will recognize and value serious, established companies that have the experience of working with delivery systems, health plans, employers, and governments.Telehealth is a very serious extension of healthcare, so I expect we will see this market consolidate very quickly. NF: Final thoughts? RS: There is no question that the growth of the telehealth industry has affected American Well in a very favorable and exciting way. We try to take a conservative course in the sense that we work very closely with the medical boards, with medical associations, and other organizations from everything like ATA,American Medical Association (AMA), and others. That strategy has paid back dividends in a great way because we are the telehealth operator of the very largest systems. Between the new ATA certification for the telehealth services, the pillars of good healthcare like the medical boards coming on board, numerous bills advocating various telehealth endeavors before Congress, and what we are seeing at this conference with the investment community coming in–we are truly at the inflection point of this industry, without a doubt.
  8. 8. ABOUT FROST & SULLIVAN Frost & Sullivan, the Growth Partnership Company, works in collaboration with clients to leverage visionary innovation that addresses the global challenges and related growth opportunities that will make or break today’s market participants. For more than 50 years, we have been developing growth strategies for the Global 1000, emerging businesses, the public sector and the investment community. Is your organization preparedfor the next profoundwave ofindustry convergence,disruptive technologies, increasing competitive intensity, Mega Trends, breakthrough best practices, changing customer dynamics and emerging economies? Contact Us: Start the Discussion For information regarding permission, write: Frost & Sullivan 331 E. Evelyn Ave. Suite 100 MountainView, CA 94041 SILICON VALLEY 331 E. Evelyn Ave. Suite 100 MountainView, CA 94041 Tel 650.475.4500 Fax 650.475.1570 SAN ANTONIO 7550 West Interstate 10, Suite 400, San Antonio,Texas 78229-5616 Tel 210.348.1000 Fax 210.348.1003 LONDON 4 Grosvenor Gardens London SW1W 0DH Tel +44 (0)20 7343 8383 Fax +44 (0)20 7730 3343