AcuteCare Telemedicine Blog


Looking Backwards to See Ahead – Part 3: Revenue & Sustainability

This is another in a series of blogs chronicling the development of AcuteCare Telemedicine (ACT). Much of this reflection involves lessons learned at 2011’s Annual Meeting of the American Telemedicine Association (ATA). What follows is an amalgam of facts, experience and opinions culled from that fantastic symposium and honed by hindsight. Today’s blog will focus on telemedicine revenue and sustainability.

The business of medicine is a unique challenge for physicians used to focusing on clinical practice. Fee for service is now a relic in the changing healthcare landscape;  the days of physicians hanging up their “shingle” and watching patients flock to their doorstep are waning. An entrepreneurial spirit is required and is certainly not taught in medical school. A telemedicine startup may be costly in many ways. Besides “sweat equity,” it demands a large time investment dedicated to learning the marketplace, self-initiated marketing & sales, and direct client interaction. For doctors used to years of medical school, long residencies and fellowships, and 24+ hours of emergency call, this may be a natural investment. However, for long term sustainability, that patience must shift to the financial burden of expanding staff. An executive director, a sales force and marketing support are required, yet may not immediately lead to increased revenue. Balancing long term sustainability with short term revenue generation is the challenge.

Before taking the leap into the realm of venture capitalism, one must take a very critical look at economic realities. Healthcare delivery is changing, and ventures that offer reduced costs and improved outcomes, such as telestroke, are poised to grow exponentially – exactly what an investor is looking for. However, accepting capital early in business development may severely limit income if profit margins are small. That is, venture capitalists will expect a return on their investment regardless of your income. In contrast, investors may provide the guidance and experience not readily garnered from a career in medicine. Ultimately, pursuit of venture capital must meet a specific goal towards sustainability that is otherwise unattainable.

Other sources of revenue are available and should be investigated. Grants or other government funding help rural or safety net patients gain access to best possible care. For example, the state of California provided a $200 million grant to create a statewide broadband network resulting in an “eHealth Community.” They used telemedicine as a means towards a bigger goal of improved access, quality, and efficiency in underserved areas. Georgia Bill 144; The Distance Learning and Telemedicine Act of 1992, was the first mandate by any state for telemedicine. It led to development of the Georgia Partnership for Telehealth, a not-for-profit web of statewide access points based on strategic partnerships with successful existing telemedicine programs. Partnering with government and not-for-profits reduces overhead and increases client base for a telemedicine startup. In turn, the startup becomes their reliable source of clinical expertise and business acumen. In this case, it is important that businesses advocate for the common goal rather than simply for business success, and be prepared to give credit to all those involved.

Many remote presence technology companies are also working diligently to improve patient access to healthcare. By externalizing the technology component, a telemedicine startup significantly reduces overhead while giving their clients increased options for technology to meet their needs and budgets. This avoids the requirement of significant venture capital at the outset, and also ensures that the technology is handled by remote presence experts, allowing telemedicine practitioners to focus on providing cutting edge healthcare service.

Sustainability is inextricably linked to a company’s financial stability, but also derives from integration with the marketplace. While the aforementioned partnerships have obvious financial incentives, they also help make one relevant in the market. That relevance is not measured strictly in size or profit, but in the reputation of the level of service.

Goods and services can be obtained through a variety of outlets, from boutiques to so-called “superstores.” Finding one’s niche in the market will result in both profitability and sustainability.