Telemedicine is no longer just for millennials.
The coronavirus pandemic is fueling an increase in the number of companies offering online medical consultations, as patients and healthcare professionals are forced to look for new ways to interact.
And the big winners will be the private equity and venture capital firms that have already identified the subsector as a lucrative target for increasing returns for investors.
In the past few weeks, dozens of companies across Europe offering patients a range of services ranging from virtual checks to payments, through prescriptions and giving doctors easy access to medical records have seen an increase in the number of registrations and income.
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These include Doctolib supported by General Atlantic, Kry International of Sweden, who recently raised funds from Ontario Teachers' Pension Planand the United Kingdom PushDoctor, which counts Celeres Capital and Oxford Capital among its investors.
For some investors, the concern will be whether these companies can support revenue growth once the bottlenecks are lifted and patients choose to see their doctor in person.
But for now, the numbers seem encouraging. In just four weeks, Doctolib based in France, which started as a programming platform before offering online consultation services, saw the number of video consultations go from 1,000 to 100,000 per day. As of April 22, patients had booked 2.5 million Doctolib consultations.
In Sweden, Kry saw the total number of inquiries increase by 163% from February 1 to April 27 in all of its markets. The company has also recently expanded to the United States. USA
In Britain, PushDoctor increased the number of partnerships launched with NHS providers by 62% in April.
"The European healthcare market is at a digital turning point," said Chris Caulkin, managing director and chief technology officer for the EMEA region at General Atlantic. "We believe that technology is in the early stages of transforming the way patients and doctors interact with healthcare, and that there is significant potential to improve the service delivery model and # 39; global access to health care. " he added.
General Atlantic invested in Doctolib in March 2019. The company offers its technology and services to all doctors and other health professionals authorized by the French and German medical chambers to practice medicine.
Doctors pay a monthly fee of € 79, but the service is free during the crisis. All health professionals, from midwives to pediatricians, can offer video consultations.
Caulkin said that since offering its telehealth platform for free during the crisis in early March, the team has recruited more than 30,000 doctors.
“Before our partnership, we were very impressed with the progress of Doctolib in just five years. His approach to the digitization of medical care has produced concrete results. "
Stanislas Niox-Chateau, co-founder and president of Doctolib, said the video consultations had been widely adopted and are now becoming "essential".
"It will never replace physical consultation, it will probably represent between 15% and 20% of the activity of medical users, as it is already the case in the Scandinavian countries and certain Asian countries, where the practice is more common. It should be a tool available to clinicians to allow them to monitor their patients through the traditional route of health care. "
Doctolib has made several additional acquisitions, including the acquisition in 2018 of its main competitor, My Doctor, to develop its activity. You will explore similar offers that will help you expand your geographic reach and services. An internal Doctolib survey found that 80% of patients and 74% of general practitioners would like to continue using the online consultation service after the end of the pandemic.
Even before the crisis, telemedicine was gaining popularity. Businesses say they can help reduce wait times, provide access to specialists when travel is expensive or inconvenient, and reduce health care costs. As more and more startups launch these services, those that have received the biggest investment include Doctolib, Kry International and Babylon Health in the UK, which raised $ 500 million last year in a led round by Saudi sovereign sovereign fund PIF.
"Early indications have shown that demand for digital medical services has increased in recent weeks in Europe due to the highly infectious nature of Covid-19 in medical facilities," data provider PitchBook said in a memo. ;analyst.
"If demand continues to increase and hospitals and general practice surgeries remain out of reach for other patients, these new digital healthcare companies could quickly see significant revenue growth. "
Venture capital firms have invested more than £ 1 billion since 2014 in new telemedicine companies in Europe, according to PitchBook. According to Bain & Co., private equity purchases in the health sector reached the highest settlement value ever revealed in 2019: 313 transactions valued at $ 78.3 billion, compared to 316 transactions worth $ 63.6 billion. million in 2018.
These figures could quickly be exceeded.
"More physical education companies will go into this area," said Franz-Robert Klingan of Bain & Co. "You can see by the multiples and how well some of these assets have been maintained more recently. , that the durability is very good, there is a lot of resistance ”.
As the appetite for transactions in the sector grows, some startups and investors could speed up auction rounds to quickly capture assets in front of their competitors, PitchBook analysts said.
"Currently, the duration of locks is unknown, and once lifted, the public can demonstrate its rigor with virtual services, as the main benefits include ease of use, saving travel time and, ultimately, Par For example, there is no risk of spreading or contracting diseases. We believe that the rounds could focus on telemedicine as a subsector over the next year, "said analysts.
One hurdle is a myriad of regulatory hurdles that hinder the purchase of funds that attempt to grow these businesses and generate high returns.
The General data protection regulations Introduced in 2018 in the EU, it carries a significant penalty for violation. This means that online healthcare companies that are just starting out should be very careful not to follow the rules that protect patient privacy and should make sure that they have robust systems that prevent breaches. of data.
In addition, not all EU countries have the same reimbursement rules for telemedicine. If the services are not 100% covered by the state, being able to pay for this service can easily keep patients at bay.
According to Bain’s Klingan, telemedicine companies may have problems expanding to different countries when they have to change language and reimbursement systems.
"In Europe, they suffered from the issue of scale. The regulations are different in each country, and they have been quite protective, ”said Klingan. "What the crisis tells us and sets a precedent is that many of these services can be provided safely and consistently, despite the fact that some elements of historic regulation had to be abandoned due to the crisis."
These restrictions can be relaxed because the pandemic is prompting some governments to relax existing regulations, which gives a boost to the sector.
The French government has relaxed the reimbursement rules for patients using telemedicine to facilitate the use of online consultations during the pandemic. During this period, the consultation will be fully reimbursed by National Health Insurance, unlike the usual 70%, and patients will no longer need to consult a doctor at least once in the year preceding the teleconsultation to request a refund. .
In Germany, the new legislation which came into force at the beginning of the year allowed the reimbursement of online consultations. In addition, healthcare providers can now actively promote their digital services to patients on their website.
In the American policy makers and insurers USA Copays, franchises and other barriers to telemedicine nationwide are removed for patients trapped at home who need to see a doctor.
Buyer groups hope that even if some telemedicine companies see a decline in demand from elderly patients who prefer internal visits once countries begin to loosen closure restrictions, they may be dependent on a wider generation change for consumers. future income.
Most millennials, generally defined as those born between 1982 and 1996, expect the convenience, speed and transparency of the services they buy, and healthcare is no exception. This should support the purchase of healthy investments for the foreseeable future.