We forecast that expenditure on telemedicine and AI will be around $7.8bn and $4.7bn respectively by 2035, representing 39% and 24% of total spending on unreferred medical services in primary health. The remaining expenditure will be traditional face-to-face consultations which currently accounts for almost all the market. We estimate that telemedicine and AI will reach 50% of total expenditure around 2029
We believe that health consumers will be the champion for adoption of telemedicine and AI based on their desire for lower cost and more flexible access to health services. Health consumers behaviours (democratisation) and demand for services will ultimately dictate that health be delivered in a way consistent with modern day ‘tools’ such as smart phones and mobility
Health practitioners and governments might take longer to ‘get behind’ telemedicine but ultimately, it’s the economics that will require them to support the migration from traditional face to face consultation towards telemedicine and ultimately AI services. GPs offering higher quality (accurate) and accessible services will have a superior and differentiated service to those offering only face-to-face consultations. Health inflation implies that Governments will ultimately need to adopt better more efficient services, though they will be slow and appropriately want to ensure that these services are secure, safe and auditable before providing their funding
The process of adoption is likely to take a similar pathway to other services such as branchless banking, adoption of smart phones, internet, computer tablets and after a period of modest adoption will go through rapid change. Telemedicine is likely to be widely over the next five years with AI taking longer, say 5 to 15 years, before receiving widespread adoption
In this report, we provide a brief overview of ‘telemedicine’ including a 2035 forecast of the impact of telehealth tools, both human and artificial intelligence, in relation to ‘unreferred medical services’2 in the primary health market.
This report does not assess or analyse the full potential for telemedicine which derives from other applications, such as remote surgical operations, sharing of digital health records or remote patient monitoring. These activities clearly would have significant additional benefits to the those explored in this report.
The report outlines the importance of primary care in shaping Australian health and seizing ever-increasing health costs.
Venture Insights outlook for telemedicine
Key observations and underlying assumptions are as follows:
Along with wearables, mobile tracking and online health information, telemedicine provides customers with access to a GP without leaving their home. This is particularly important for people living in remote, rural and regional areas.
Key drivers of telemedicine include: empowering patients through self-directed, digital offerings; improving access to care; enabling health data ownership; government incentives and behavioural drivers of consumers and health practitioners.
By 2035 telemedicine will be a $7.8bn market, highly dependent on sophisticated features embedded in the specialised platform. In a recent survey from the U.S., 92% of respondents were satisfied with the telemedicine services they had received after an in-person visit to a GP. In addition, 25% of people are unable to see a doctor in 24 hours when they need urgent medical care . Similar factors will contribute to the emergence of telemedicine.
Telemedicine is less expensive than traditional consultations. This fact will further increase the number of GP visits, as patients will use the enabling platform more often.
AI consultations, on the other hand, will challenge both telemedicine and conventional consultations by creating direct competition with a lower value and high reliance on Big Data diagnostics.
Face-to-face consultations will take longer over time because patients, who need to get a quick snapshot of the causes of the symptoms, will refer to online telemedicine or AI platforms. Face-to-face consultations will be conducted in the case of complicated events.
Face-to-face consultations will be challenged by telemedicine tools, while the establishment of AI consultations will drive down the costs of consultations.
Today average Australian visits a GP 6 times a year, which we estimate will grow to 10 visits per year by 2035, driven by convenience and effectiveness of online platforms. This will further reduce the expenditure on primary care, as GPs will detect illnesses at earlier stages of their progression.
Why will telemedicine appeal to GPs and consumers?
Venture Insights believes that telemedicine will assist in identification and management of many of health problems experienced by patients. Currently, 42% of the reasons behind GP visits are related to symptoms and communication of complaints. Venture Insights believes, that those issues can be resolved with the help of digital health tools, primarily telemedicine and AI consultations. Telemedicine platform will allow the doctors to instantly access the patient’s health record and facilitate analysis of the symptoms. Diagnostics and preventative procedures will also be possible through telemedicine to some extent. GPs will easily prescribe medication to a patient after completing the analysis of health indicators. Venture Insights believes that such technological advancements will play a vital role in shaping the primary care market in Australia.
Figure 1. Main reasons to visit a GP (%)
SOURCE: General Practice Activity in Australia 2015-2016
We believe that once established, telemedicine will penetrate the market driven by government incentives. In today’s world, technology is being adopted at a lot faster pace than ever expected; for example, it took a computer tablet around six years to reach 50% of the US households.
Figure 2. Technology adoption among the U.S. households
How will telemedicine and AI change GP-like services (unreferred medical services)?
Venture Insights believes total expenditure on unreferred medical services will rise to $20bn in 2035 from $12bn in 2017 with estimated 32mn people living in Australia by that time. It is estimated that starting from 2025 the growth rates in unreferred medical services will escalate driven by adoption of AI consultations. We have estimated the expenditure on unreferred medical services by splitting the total expenditure into three groups:
Traditional face-to-face consultations costing around $80 for a 20-minute consultation. We believe this service will continue to grow over the next 3-5 years before competing with telemedicine and AI services in the medium to longer term. The duration of traditional in-person consultation will gradually rise given that people will physically visit a human doctor when having serious symptoms, requiring a human opinion. Venture Insights believes that face-to-face consultations will last more than 30 minutes by 2035. The importance of nurses will rise on the other hand, as the concept of preventative health will prevail- for example, chronically ill people will require constant care and health monitoring, enabled either by human nurses, digital health tools or robotics;
Telemedicine consultation costing around $45 for a 15-minute consultation. We anticipate that the market will be worth around $100m in 2019 and 2020 before growing rapidly after that. A key driver for growth will rely on government’s inclusion of telemedicine consultations to attract bulk billing. We believe this is inevitable given the ‘payback’ in terms of efficiency of the health system. Driven by the rise of artificial intelligence and Big Data, telemedicine consultation will take shorter over time, as more information will be automatically processed before the actual consultation. Venture Insights estimates that telemedicine will have a disruptive effect on unreferred medical services by lowering the overall expenditure on GPs while serving ever-increasing number of people and enabling more regular consultations. The expenditure on unreferred medical services will stagnate for a few years driven by the adoption of telemedicine tools; and
We believe that AI consultation will change the scope of primary care by creating a disrupting effect and increasing access to medicine. Given the increasing and aging population, and the adoption of preventative health tools, the expenditure on unreferred medical services will subsequently rise, as rising importance of GP-like services will drive efficiency and reduce costs in overall healthcare market.
Fully automated Artificial Intelligence (AI) consultation costing around 70$ for an annual subscription. These consultations are likely to be run via voice recognition and do not require any human interface. In some cases, consultations may be referred to a telemedicine GP but more likely referred to specialists. AI consultations will allow for aggregation of patient feedback (anonymised) to deal with common symptoms and outbreaks. We forecast that this only becomes a meaningful market from around five years’ time – and will take time for patients to get comfortable with the services. It is estimated that annual subscription price will double in amount driven by the fact that more sophisticated technological features will be added to the platform. We believe that AI consultations offered through the devices will be a universal tool for health consumers to get instant feedback about their conditions.
Figure 3. Total expenditure on unreferred medical services ($bn)
SOURCE: Venture Insights
Telemedicine and outlook for GPs
GPs have and are likely to remain a key ‘gate keeper’ for primary health services. As such, the adoption of telemedicine is only likely to take off if it’s in their interests to do so. We believe the cost-effectiveness of remote consultations, i.e. telemedicine (shorter consultations for certain types of visits) will drive up the revenue on an hourly basis for GPs. Over time, say 2025 to 2030, we expect that AI services will put pressure on the ‘human’ interface whether face-to-face or via telemedicine and that GPs will grower slower in the number and will be earning less overall.
Given that face-to-face consultations will take longer, telemedicine GPs will earn more than traditional GPs. This will be enabled by the shorter length of online visits and better accessibility. Additionally, increasing power of technologies will allow doctors to promptly diagnose the patients, thus achieving efficiency and reducing the waste in expenditure in the primary care market. We believe that in 2025 (when technology behind AI consultations will reach a mature stage), the annual growth rate in per hour revenue of human telemedicine doctors will drop. However GPs will still earn more working through teleconferences rather than providing services in person.
Telemedicine and the outlook for consumers
We believe that consumers will get a ‘better deal.’ They will enjoy reduced costs, increased convenience and more precise track of their health record, driven by frequent visits. People will visit a doctor more often, either face-to-face or through telehealth tools. Venture Insights projects that by 2035 Australians will spend 88mn hours visiting a GP while making almost 190mn visits per annum. We believe that AI consultations seize the ever-increasing number of visits and hours spent at a doctor, although the population will grow, and it is estimated that people over 65 will make up to 20% of the total Australian demographics.
The outlook for total visitations and cost per visit for consumers are as follows:
Figure 4. Total number of hours allocated to face-to-face and telemedicine consultations
SOURCE: Venture Insights
The consultations by services are as follows:
Figure 5. Total health consumer visitations split between face-to-face and telemedicine consultations and the number of people subscribed to AI consultations
SOURCE: Venture Insights
Telemedicine and the outlook for medical specialists (referred medical services)
According to the latest Australian Health expenditure report, $18.4bn was spent on referred medical services in 2016-2017. The adoption of digital health tools like human telemedicine services and AI consultations will lower overall costs of referred services, as preventative health will detect illnesses at early stages and help resolve issues once they appear. Also, continuous monitoring of health conditions will prevent people to refer to medical specialists, as fewer and fewer health consumers will require the services of specialised medical practitioner. In the base case, we believe that with establishment of telemedicine and AI consultations referred medical services costs will drop by at least 30%.
Figure 6. Expenditure on referred medical services following the adoption of digital health tools ($bn)
SOURCE: Venture Insights
In this report we have projected the telemedicine market will grow to $7.8bn by 2035 and telemedicine will change the scope of primary care in Australia. Our key takeaways include reduced expenditure on face-to-face consultations, driven by more, regular telemedicine and AI visits. Adoption of telemedicine and AI will likely drive market competition between GPs. Driven by high customer satisfaction in the telemedicine market, GPs will likely receive a continuous number of visits through an automated online platform. GPs will also earn more per hour working as a telemedicine doctor as opposed to a conventional GP consultation- the reasons include shorter visits and increased price for an online consultation. AI consultations will challenge human interaction in primary care, shifting the treatment and detection of illnesses to earlier stages- the concept known as “preventative health.” We believe preventative health has a great potential to lower the health costs in Australia significantly. Over time, current barriers to widespread adoption of telemedicine and AI consultations will fade away with technological improvements, favourable governmental policies and increasing consumer awareness.
 CSIRO: Future of Health
 Rock Health (2018), Healthcare consumers in a digital transition
 Australia’s Health 2018
 General Practice Activity in Australia 2015-2016
 Deloitte (June 2016), Australia’s aged care sector: economic contribution and future directions