Is telehealth a market or a feature?

Analyst firms have re-discovered telehealth – and it’s big, big, big.  So trumpets Information Week’s coverage of a new study from market researcher InMedica. They size the global market at $6.28 billion by 2020, up from its current cited size of shipments at $163 million in 2010.  This must mean that we have a tipping point of uptake within vendor marketer lines of sight. And no wonder, so many other markets driven by seized-up consumer spending are tepid or shrinking. If you believe this forecast, certainly it’s about time for a market that has languished for years, not to say decades, despite the Veteran Administration validation and rollout, and numerous reports that verified effectiveness at keeping patients out of the hospital. Hmm, though, maybe the tipping point is sooner.  BCC Research, another analyst group already valued the ‘telehome’ subset of telemedicine at $2.9 billion in 2010, rising to $7.9 billion by 2015.

Vaguely defined markets beget large and murky forecasts.  The last time a market was this murky was another anticipated and vague boom, eCommerce in the late 90’s. The telehealth market (and its e, m, and c brethren) is reminiscent of those days – when analysts threw around mind-boggling market predictions. Forecasts were driven from a few baseline published revenue numbers, tossed with some future adoption assumptions, married to a formula for growth over time and voilà! We were coy and unclear about whether we were talking about a market size that might have been the sum of its parts (B2B plus B2C at $6.8 trillion by 2004 from an article dated 2001), and so the same dollar could have been counted multiple times. Further, the first days of ‘eCommerce’ were more similar to putting two tin cans together than much of ‘e’.  Industry veterans will remember the days of printing an EDI transaction out, walking over and hand-entering an order on another terminal. And last, but not least, in 2011 does an eCommerce market really exist?  Or is eCommerce capability simply a feature of being able to participate in any market?

Telehealth has a similar optimistic vagueness that invites variable predictions. A market that uses the same term to describe apps on cell phones used by doctors (see Information week sidebar), apps on cell phones used by patients, biometric devices (blood pressure cuffs and the like) to enable self-care at home, remotely managed surgeries, medication dispensing devices, point of care testing, etc. And then there’s the old stalwart and the original telehealth -- chronic disease monitoring of patients discharged from the hospital with weight scales, blood pressure cuffs and the like, plus a telehealth nurse to check on them. So this time, let’s calm ourselves and remember the starting shipment number from InMedica -- $163 million in 2010, and take forecasts with the grain of salt they deserve – building new businesses based on the most conservative.

Telehealth will become a feature of healthcare delivery, not a market.  Analyst firms have to pick a date for ending forecast sizing models. So let’s right away toss out as totally unconvincing any forecasts that specify 2015.  For one thing, that’s only three years away, and we know that this year is a year of experimentation, grants, pilot projects, more startups, more demos, free mobile apps, but very little broad-based commitment within non-vertically integrated health delivery processes that span hospital-rehab-home-family clinician and back. In other words, lots of talk, not much action. But just as a blood pressure cuff is a staple of diagnostics, so too will all of the sub-categories of telehealth become the tools of healthcare delivery, no longer remarkable as a market, the way the healthcare market does not report its spending on other tools (like chairs, bandages, or telephones).  How will we know? Because the rate of growth of the cost of providing healthcare will have slowed significantly. Because the barriers of resistance from fixed infrastructure hospitals and threatened doctors will be overcome by appropriate incentives, facility consolidation and the ability to more appropriately calibrate care to need. Because the technology will have become tiny, cheap, and wireless, and because the server side applications and data analysis services and processes will be robust, consolidated, and less like the current tin can era of data transfer that passes for telehealth across the value chain.

Sorry not clear on the rationale.

You're saying telehealth is a feature, not a market.

I'm not clear on the rationale for that conclusion: Are you saying it is not a "market" just because the definition of what is in that market is vague? Are you saying that it's not a market because those that ARE treating it as a market and trying to estimate its size are lacking a clear methodology?

I agree with you on both points but don't think either of these will kill the concept of telehealth being a market.

It's a question of semantics for sure, and I don't really care one way or another (nor do I know this space well enough to posit any opinion), but I'm trying to understand the argument and the purpose for it. If telehealth is not a market. What ARE the markets?

Re: Vagueness, murky forecasts and variable predictions

How do estimate the size of an industry that hasn't previously existed? You must grab some numbers, extrapolate and guess. You try to make a cogent argument to address a new and difficult problem. In the end these estimates might be plus or minus huge percentages, i.e. inaccurate ... but together they help paint the picture at an "orders of magnitude level" How rapidly is the defined subset of submarkets going to grow? 1.5X, 7X, 25X?

You're right that there were alot of unfounded predictions about Dotcom... but you can't deny that there was reason for excitement. eCommerce has changed so much of what business is. Of course, people tried to take a stab at describing the size of the opportunity with hard numbers. To paint a picture and make a point, people try to hang a number on it.

Last point:
"in 2011 does an eCommerce market really exist? Or is eCommerce capability simply a feature of being able to participate in any market?"

This is what inspired me to post. The answer is "Yes, eCommerce exists and it is not simply commerce." Some companies have no other commerce besides eCommerce others do. Some companies don't do eCommerce at all - Ice Cream stores don't do eCommerce. Universities don't do eCommerce. The rules of the game are different in eCommerce. There are specific skills needed to do well in eCommerce, e.g. "website analytics", "UI" and scores of other disciplines. Moreover there are thousands of companies that self identify as being in the eCommerce industry. It is a useful word. It would be an odd semantic argument to say that eCommerce does not exist akin to saying that Manufacturing doesn't exist. Are you saying that there is no eCommerce market?

Spot On

Laurie,
I love this post. As a veteran of the eCommerce (can you say distributed ecommerce?) 90's boom, I find it so incredible the same thing keeps happening over and over. But, I guess history will repeat itself. Thank you for calling the game as it is.

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