We believe that telemedicine will play a large roll in reshaping Australia’s health model in the medium term from one of ‘curing illnesses’ towards a full blow pre-emptive health and wellbeing model. Telehealth which is fully within our current technology capabilities will assist health consumers with earlier detection and consultation on health matters by being more accessible. It is also in the interest of health practitioners and governments to get behind this though they have been relatively slow to adopt technology and modern practices historically
There is a strong incentive for governments to support telemedicine as it will reduce overall costs while improving quality and access to health services. Governments will first, however, need to be convinced that the platforms that provide such services are both secure and auditable before providing full funding support
Patients will have access to a GP at a lower cost and with improved convenience, as they will visit a doctor more regularly, which reduces the likelihood of Illness progression. This will contribute to an overall reduction in health expenditure driven by better diagnostics and early prevention tools
GPs that elect to provide telemedicine services will also benefit from the transition that will allow them to earn more through more efficient consultations. We review two models for telemedicine to conclude that a “GP friendly” model will prevail over a “call center” alternative – though these are not mutually exclusive
Telemedicine will positively affect the overall health market, reducing expenditure and enhancing efficiency in the provision of general practitioner services. Government spending on emergency services will fall as consumers will engage GPs more often. More regular consultations will contribute to the improved well-being of society and reduced costs of healthcare
In this report, we provide a brief overview of ‘telemedicine’ and business models associated with provision of telemedicine services along with barriers that may slow down adoption of the online tool.
Venture Insights believes that telemedicine will play an important tool in scoping the primary care in Australia- changing the way GPs deliver their services. We believe that the inefficiencies in healthcare, growing health costs and rising demand for quality care lead to a rising need for disruption: tools that can reduce costs while driving access to care.
Primary care in Australia today
Breakdown of the market
Primary care annual expenditure in Australia is currently around $62bn, representing 34% of the total $181bn annual expenditure on health. Given that health stands for 10.3% of GDP and is growing faster than GDP, it represents a major funding issue for the Australian Government. To reduce the tax burden on our society, the government needs to embrace and support telemedicine. Telemedicine has the potential to significantly reduce the costs of healthcare while also improving quality and enhancing access for all constituents in Australia.
Figure 1. Health expenditure breakdown in Australia 2016-2017, ($bn)
SOURCE: Australian Health Expenditure
Primary care expenditure is mainly funded by government (60%) and individuals (33%) and has been growing at around 4% per annum over the past 2-4 years.
Of the total expenditure on primary care, around 20% or $12bn is spent on unreferred medical services, which effectively represents the cost of all primary health visitations to a qualified general practitioner. Australians visit general practitioners more often than ever- there were almost 36,000 GPs in Australia in FY17 and this is up 53% from around 23,500 GPs 10 years ago. On average, 406,000 visits are made to general practitioners every day. Venture Insights believes that preventative health will further grow in Australia encouraging people to check their health indicators regularly. Primary care will play a vital role in the application of “preventative health” and will drive improved health outcomes. We believe that increasing emphasis on primary care results in better health, lower costs of hospitalisation and related healthcare expenses.
Figure 2. Total expenditure on unreferred medical services [$bn] and the number of GPs
SOURCE: Australian Health Expenditure, GP Workforce Statistics
Telemedicine models and barriers to adoption
What is Telemedicine?
Telemedicine allows health care professionals to evaluate, diagnose and treat patients at a distance using telecommunications technology. It has the potential to profoundly lower cost, drive better access and create market competition between GPs. Telemedicine started in the 1950’s when several hospital systems and university medical centres sought to try to find ways to share information and images via telephone. In the 1940s, radiology images were sent 24 miles between two townships via telephone line in the world’s first example of an electronic medical record transfer.
Key facts in GP-like services
Below we set key factors relating to Australia’s unreferred medical services market:
More than 4 in 5 people (83%) had consulted a GP at least once in the previous 12 months
About 1 in 11 (8.7%) saw an after-hours GP in the previous 12 months
The number of GPs has increased by 40% in the last ten years totaling 36,000 in 2017
Almost 1 in 5 (18%) saw 3 or more health professionals for the same health condition
GPs tend to join and establish GP clinics which increase in size
The median length of a GP consultation is 13 minutes
Majority of patients (61%) have just one problem when making an appointment
Most frequently managed problems at a GP are diagnostics and symptoms
Business models for telemedicine in primary health care
We have outlined below two alternative business models for Telemedicine – one that is driven by GPs seeking to enhance their services by offering remote consultations (Model A) and the other where new entrants seek to disrupt the market by providing an ‘alternative’ solution to the traditional GP model (Model B). We believe that those models will inevitably lead to positive outcomes to health consumers while affecting GPs in different ways. In disruption model, building relationships with health consumers won’t be as important as in GP friendly alternative. Health consumers will rate the service of entities and select the best companies that offer GP services while in the friendly model the relationship between GP and patient is important. These models are not mutually exclusive, and some GPs or GP practices may participate in both models.
Figure 3. Telemedicine business models
SOURCE: Venture Insights
Issues that slow the adoption of telemedicine
The benefits of digital health tools, including telemedicine and AI advisor, are appealing- hospitals are expanding their reach, improve customer satisfaction and loosen up emergency departments. However, widespread adoption of the platforms requires a mutual collaboration of governments, businesses and communities. We believe that there are a few barriers that show how clinics/GPs and patients can’t easily access telemedicine and reap off its advantages. Those pitfalls will be solved throughout the time, as technology develops, governments incentives widespread adoption, and telemedicine awareness grows among the population. The barriers may be financial, technological, legal and can also involve strategy and consumer behaviour. In the below table we summarise the barriers to telemedicine and potential solutions:
Figure 4. Barriers to widespread adoption of online platforms (telemedicine and AI) and possible solutions
SOURCE: Venture Insights
In this report, we have shown the expenditure on unreferred medical services and how the overall health costs have grown over the past ten years. We believe that disruptive technologies will enable government, communities and health consumers to get positive outcomes while providing lower costs and convenience.
Venture Insights projects that telemedicine will play a vital role in scoping the primary care- GPs will utilise the benefits of the digital health tool by accessing patients through the telemedicine. Telemedicine will help to reduce current inefficiencies in GP-like services, which in turn will contribute to decreasing costs of hospitalisation and medical specialist services. We describe how telemedicine can emerge into two different business models- GP-friendly and corporate disruptive model, although these scenarios are not mutually exclusive. Any pathway will lead to efficiency, convenience and accessibility of primary care while reducing the overall health costs and adding value to society. Telemedicine will be one of the pioneers of the concept known “preventative health”- health customers will be able to identify the problems at early stages of illnesses, thus reducing the likelihood of progression.
Governments, communities and health consumers may be reluctant to adopt the digital health tool in early stages driven by several technological, financial, legal and behavioural barriers. We believe that the adoption of telemedicine is inevitable, and the barriers will fade away as incentives to transfer to telemedicine will emerge.
Overall, telemedicine is a valuable tool for Australian healthcare that may contribute to reduced growth rates in healthcare expenditure.
 Primary care is often the first point of contact people have with the health system. Primary care is provided in community settings by a number of different health professionals.
 Australian Health Expenditure 2016-2017 report
 Unreferred medical services is defined to be a medical service provided to a person by, or under the supervision of, a medical practitioner, being a service that has not been referred to that practitioner by another medical practitioner or person with referring rights.