(Chinese Version)

In the past few years, Internet medical industry has been evolving quickly and has developed into a few specific segments. Telehealth service is one of the early segments that were brewed by this particular industry and there are already plenty of start-up companies on the market. In the US, online medical inquiry has now reached a relatively mature state. Whether is consulting with a doctor and getting a diagnosis afterwards or receiving a digital prescription from a doctor, everything can be achieved online without the physical presence of a doctor.

To ensure sufficient communication between patients and doctors and improve the accuracy of diagnoses, many American telehealth companies are now offering real-time video telehealth service to their clients, yet such service hasn’t made much of a stir in China. How so? Can video telehealth service ever take off in China?

A lack of flexibility

To fully elaborate on this problem, first we need to know how telehealth services work. According to the report of Innovative Business Model for Telehealth released by vcbeat.net, telehealth services are mainly delivered through emails, online Q&A board, instant messaging, short message service, phone calls and video calls. All these approaches can be divided into two groups, synchronous communication and asynchronous communication. Email, texting, and online Q&A are typical ways of asynchronous communication，whereby patients and doctors do not need to be in lockstep. Patients can leave their questions on the platform and come back to check out the replies later. As for the synchronous ways of inquiry communication models such as video and phone calls, it’s quite the opposite. Doctors need to provide medical service to their patients instantly.

The key difference here is what degree of flexibility the doctors can enjoy when serving their patients. In the first scenario, doctors are able to schedule their time as long as they can reply in an acceptable time period. But in the second scenario, doctors will be fully occupied by the work. Apparently, compared to the first model, real-time video telehealth service appears to be more time-consuming for the doctors.

Additionally, to ensure the quality of video teleheath service, more requirements shall be met in terms of availability and working environment of the doctors. So far there is a lack of private practitioners since medical reform, which has just taken off in China and results in the situation that doctors’ being tied to their posts and employment relations. In China, doctors generally take telehealth service as a part-time job, which means handling their shifts in the hospitals they work in is the priority. Even though hospitals do not officially prohibit their doctors to practice online medical service, they don’t encourage them to do so either.

Under these circumstances, offering real-time video telehealth service just doesn’t seem feasible in China. In the US, private practices are common among doctors. Many doctors have their private clinics, and many work in major medical institutions as partners. These doctors have more say in scheduling their time and are more suitable for providing real-time video telehealth service.

A lack of supporting policies

In the US, doctors who provide telehealth services have the right to prescribe medicine. It means they are responsible for the diagnoses they make. If pictures and text aren’t enough for themto make accurate diagnoses, then they could choose to use real-time video communication to further observe the patients and make better diagnoses. In other words, doctors are motivated to use video communication even though it’s more time-consuming,

Apart from that, American medical insurance system also supports this service in a way. Costs incurred by telehealth services could be covered by medical insurance. Yet that required strict identity approval process, whereby video service comes in handy.

However, in China, the policy doesn’t allow non-medical institutions to provide telehealth services. That’s why Chinese telehealth service providers can only operate as health advisors. Their doctors can’t prescribe medicine and medical insurance don’t pay the patients’bills either. For doctors, having no right to prescribe medicine means having no responsibilities for their patients, which makes them even less willing to use videocams.

Video telehealth service doesn’t benefit the current profit model

In Western countries, going to a private clinic will cost up to over a hundred dollars for outpatient charges despite the part covered by medical insurance, times higher than that in China. Telehealth service, by contrast, is a much cheaper alternative. Besides being convenient, telehealth can also help reduce the costs for patients, insurance companies and other business entities who purchase such services.  Although running a telehealth service means more costs on IT resources, still there is room for profits. Plus, video provides visibility and liability that are important in winning over users’ trust. Besides, it can also reduce marginal costs. Some overseas video telehealth service providers charge their users based on time duration. For instance, American Well who features such services charges its users US$49 per 10 minutes.

In China, the outpatient consultation fees are generally less than 20 RMB. At present, the most popular telehealth firms in China can’t really make profits from their patients, let alone appealing to other service payers by its cost advantages. Thus, it’s even harder for pricey video telehealth service to crack open the market in China.

Chinese telehealth firms are still seeking possible ways to make profits. Since they cannot cash in from those who pay their services. One possible approach to make money is amass a great number of users through cheap or even free services and gather big data on healthcare inquiries. The twist here is that video is more expensive than text messages during the process of collecting information and it doesn’t help to make profits either.

Even in the US, video telehealth service can’t win it all. Sherpaa, which is a B2B telehealth service company, confirmed that they would not launch video services. The solution that Sherpaa offers to its customers, which are mostly enterprises, is valuable for reducing the medical expenditure of the staff. Employers will pay 10 to 30 dollars for every staff member monthly and the staff members can send messages or emails to Sherpaa to seek professional advice on medical care and health whenever they want to. According to Sherpaa’s CEO, sending text messages is more convenient and it’s the communication method that people are used to. In my opinion, this theory doesn’t really make sense.

According to Sherpaa’s statistics, its services can satisfy 70% of the demands and avoid high-cost visits to out-patient department or emergency rooms. Sherpaa no doubt saves a great amount of money for its clients. Apparently, Sherpaa’s core function is satisfy the medical needs that don’t require the presence of a doctor though triage, thus reducing cost. That’s why Sherpaa’s clients don’t really need video telehealth service to get diagnoses on their conditions.

Additionally, the cost is the center that Sherpaa and medical payers focus on. Sherpaa hires physicians to provide medical services for its clients. Allegedly, every doctor can meet the needs of 3000 users through emails and text messages. For Sherpaa, it sees no reason to implement video telehealth service that would increase the cost. Therefore, whether the company staff, which is Sherpaa’s users, wants video telehealth service or not just doesn't seem to be that important. After all, it’s the company that pays for Sherpaa’s service, not its staff. Keeping the payers satisfied is Sherpaa’s priority.

So, does video telehealth service have the potential to take off in China?

As a matter of fact, everyday consumers are quite willing to accept video telehealth service. American Well had done a relevant survey and the result showed 64% of the survey participants were willing to use video telehealth service. And if they needed medical service at night, video telehealth service’s the choice they would go for besides going to the hospital. I believe such service will also be welcome by Chinese consumers in some degree. The game-changer that will make video telehealth service popular lies in the online platform and doctor resource. In other words, the profit model of video telehealth service depends on whether we can find a business model for telehealth services and lift the restrictions on the doctors.

What follows are the possible directions telehealth service industry could go for, according to vcbeat.net:

1. High-end telehealth service. In the US telehealth service is quite affordable by far but to succeed in China it might need to become high-end. Going to a hospital to get diagnosis in China doesn't cost much, which leaves no room for telehealth service to squeeze in to make any profit. In this case, providing high-end service for consumers in specific areas might be the way out. For instance, psychological counseling, which is relatively expensive in China, can be covered in the high-end telehealth services.

2. Telehealth platforms can transform themselves to actual medical institutions to remove the restrictions that policies and regulations impose on them. They have their own medical team, which is consistent with the rules. Many first tier telehealth service providers in China are already considering this possibility. Under these circumstances, video telehealth service might become popular.

3. They can look for private medical resources. In fact, last year there have been rumors saying that 9158.com, a social networking video site in China, was planning to launch video telehealth service in an attempt to enter the Internet medical industry. It’s said that its doctors were from Hong Kong. Besides Hong Kong, other domestic service providers are also importing services from overseas. In the future, they might use video telehealth service as a way to import oversea medical services.

[The article is published and edited with authorization from the author @vcbeat.net, please note source and hyperlink when reproduce.]

Translated by Garrett Lee (Senior Translator at ECHO), working for TMTpost.