Dive Brief:

• Telehealth use overall has stabilized at levels 38 times higher than before the COVID-19 pandemic, ranging from 13% to 17% of visits across all specialties, according to new data from McKinsey released roughly a year since the first major spike in COVID-19 cases.
• Of all the office visits and outpatient care the consultancy originally projected would be done virtually last year, more than two-thirds are actually being conducted virtually.
• And though usage has dropped slightly since its peak in spring 2020, patient and physician attitudes toward telehealth have improved. About 40% of surveyed consumers said they planned to continue using telehealth moving forward, up from 11% prior to COVID-19.

Dive Insight:

Telehealth surged last year during COVID-19 as consumers sought a way to access care in the safety of their homes, oiled by lax regulations from Washington enabling broader access and reimbursement. In April last year, overall telehealth utilization was a whopping 78 times higher than in February, according to a McKinsey analysis of telehealth claims volumes.

But after that initial spike, utilization levels have dipped and been largely stable since June last year, the consultancy said. McKinsey in 2020 estimated up to $250 billion of the country's annual healthcare spend could be digitized — but that's "not a foregone conclusion," the new report warns, as it necessitates continued consumer demand, clinician usage and sustained adoption of virtual modalities.

McKinsey surveyed consumers over the first half of this year and found ongoing consumer interest in the modality. Between 40% and 60% of patients expressed interest in broader virtual health tools beyond simple telehealth visits, including a "digital front door" to the healthcare system, or a cheaper virtual-first health plan.

But a gap has historically existed between consumers' expressed interest in digital health products and actual utilization, McKinsey pointed out.

"Continuing to focus on creating a seamless consumer interface, breaking down silos in care provision (across virtual and in-person) with improved data integration and insights, and proactive consumer engagement will all be important to sustaining and growing consumer use of virtual health as the pandemic wanes," the consultancy wrote.

On the provider side, 58% of physicians continue to view virtual care more favorably than before the pandemic, though that's down slightly from September, when 64% of physicians were in support. As of April this year, 84% of doctors were offering telehealth, and 57% said they'd prefer to continue offering it.

However, that's largely dependent on reimbursement: 54% of doctors said they wouldn't provide virtual care if it was paid at a 15% discount to physical services.

Providers are closely tracking reimbursement levels. Federal regulators and private payers are still ironing out how much they'll pay for virtual care after the public health emergency expires, expected at the end of this year, but it's unlikely virtual visits will be paid at parity to in-person care.

CMS has already significantly expanded reimbursable telehealth codes, adding 144 telehealth services in 2020 temporarily covered by Medicare and codifying nine permanently in a December payment rule. However, the new additions only apply to patients in rural areas in a medical facility, and any more meaningful changes would require congressional approval.

But those looming regulatory question marks haven't stymied historic levels of investment in the red-hot digital health space. The first half of 2021 has already smashed a previous record for venture capital funding in digital health set just last year, bringing in $14.7 billion compared to 2020's full-year total of $14.6 billion, per data collected by Rock Health.

The unprecedented influx of cash is spurring the creation of new virtual models spanning a range of services and clinical needs, McKinsey said, with particular growth in the traditionally underserved mental health arena. But the sector is still facing acute growing pains, including better data integration and smoother integration of virtual offerings into existing workflows, and greater alignment with value-based models, according to the consultancy.