OD5775 Telehealth Services Industry Report

8/9/2019 OD5775 Telehealth Services Industry Report

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WWW.IBISWORLD.COM Telehealth Services in the US March 2014 1

IBISWorld Industry Report OD5775

Telehealth Services in the USMarch 2014 Stephen Morea

On call: A shortage of physicians and the agingpopulation will rapidly boost industry revenue

2 About this Industry

2 Industry Definition

2 Main Activities

2 Similar Industries

3 Additional Resources

4 Industry at a Glance

5 Industry Performance

5 Executive Summary

5 Key External Drivers

7 Current Performance

9 Industry Outlook

12 Industry Life Cycle

14 Products & Markets

14 Supply Chain

14 Products & Services

16 Demand Determinants

16 Major Markets

18 International Trade

19 Business Locations

21 Competitive Landscape

21 Market Share Concentration

21 Key Success Factors

21 Cost Structure Benchmarks

23 Basis of Competition

23 Barriers to Entry

24 Industry Globalization

25 Major Companies

25 GlobalMed

26 InTouch Technologies Inc.

28 Operating Conditions

28 Capital Intensity

29 Technology & Systems

29 Revenue Volatility

30 Regulation & Policy

30 Industry Assistance

31 Key Statistics

31 Industry Data

31 Annual Change

31 Key Ratios

32 Jargon & Glossary

www.ibisworld.com | 1-800-330-3772 | [email protected]


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This industry delivers health-relatedservices and information viatelecommunications technologies. Servicesinclude transmission of diagnoses,exchanging health services or education,

monitoring patients and providing healthadvice. Telecommunication methodsinclude the use of electrical devices, such astelephones, web cameras, videoconferencesystems and the internet.

The primary activities of this industry are

Providing communication between patients and health care providers

Providing provider-to-provider communications

Providing videoconferencing services

Providing remote patient monitoring

Transmitting digital medical imaging information

Transmitting digital medical data

Providing healthcare education communications

33451b Medical Device Manufacturing in the US

This industry includes manufacturers of electromedical and electrotherapeutic apparatus, such as magneticresonance imaging equipment, pacemakers and electrocardiographs.

33911a Medical Instrument & Supply Manufacturing in the US

This industry researches, develops and produces nonelectronic medical, surgical and opthalmic instruments,such as syringes, blood transfusion equipment, catheters and medical thermometers.

62111a Primary Care Doctors in the US

This industry comprises practitioners that have a Doctor of Medicine (MD) or Doctor of Osteopathy (DO)degree. These doctors primarily work using a broad understanding of illnesses.

62111b Specialist Doctors in the US

This industry includes MDs and DOs that practice specialized medicine, such as anesthesiology, oncologyand ophthalmology or surgery. This industry does not include primary care physicians.

Industry Definition

Main Activities

Similar Industries

About this Industry

The major products and services in this industry are

Exchange of medical and health information

Medical education

Remote patient monitoring and follow-up

Transmission of medical data and images for diagnosis


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About this Industry

For additional information on this industry

www.americantelemed.orgAmerican Telemedicine Association

www.cms.govCenters for Medicare & Medicaid Services

www.telehealth.va.govVeteran Affairs telehealth services

Additional Resources

IBISWorld writes over 700 USindustry reports, which are updated

up to four times a year. To see allreports, go to www.ibisworld.com


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% c

h a n g e

12

−6

−3

0

3

6

9

1907 09 11 13 15 17Year

Private investment in computers and software

SOURCE: WWW.IBISWORLD.COM

% c

h a n g e

80

−20

0

20

40

60

2006 08 10 12 14 16 18Year

Revenue Employment

Revenue vs. employment growth

Products and services segmentation (2014)

40%Transmission of medical

data and images for diagnosis

35%Remote patient

monitoring and follow-up

13%Exchange of medical

and health information

12%Medical education


Key StatisticsSnapshot

Industry at a GlanceTelehealth Services in 2014

Industry Structure Life Cycle Stage GrowthRevenue Volatility Very High

Capital Intensity Low

Industry Assistance Low

Concentration Level Low

Regulation Level Medium

Technology Change High

Barriers to Entry Medium

Industry Globalization Low

Competition Level Medium

Revenue

$320.2mProfit

$52.8mWages

$136.3mBusinesses

417

Annual Growth 14-19

49.7%Annual Growth 09-14

30.7%

Key External DriversPrivate investment incomputers and software

Number of adultsaged 65 and older

Federal funding forMedicare and Medicaid

Demand from medicaldevice manufacturing

Number of people withprivate health insurance

Prime rate

Market Share

GlobalMed12.0%

InTouchTechnologies Inc.10.0%

p. 25

p. 5

FOR ADDITIONAL STATISTICS AND TIME SERIES SEE THE APPENDIX ON PAGE 31



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Key External Drivers Private investment incomputers and softwareThe level of private investment incomputers and software reects thegeneral implementation of informationtechnology within the private sector.Growth in the Telehealth Services industryis largely determined by technologicalexpansion. For example, advancements incommunications, such as mobile devicesand high-speed networks, have improvedaudio and video transmission betweenpatients and healthcare providers.

Therefore, an increase in privateinvestment in computers and softwarecorresponds with a rise in industryrevenue. Private investment in computersand software is expected to increaseduring 2014.

Number of adults aged 65 and older As baby boomers age and the average lifeexpectancy in the United States increases,the number of people aged 65 and older

will rise. Individuals in this group are morelikely to require medical assistance, which

ExecutiveSummaryThe Telehealth Services industry uses digitaltechnology to deliver medical services andhealth education by connecting multipleusers in dierent locations. Telehealthservices include diagnosis, treatment,assessment, monitoring, communicationand education. The industry includes a widerange of information, networking and digitalimaging technologies, delivered primarily inthree ways: videoconferencing, whichprovides real-time patient-providerconsultations and provider-to-providerdiscussions; remote patient monitoring, in

which electronic devices transmit patienthealth information to healthcare providers;and store-and-forward technologies, whichtransmit digital images, such as X rays,computerized tomography (CT) scans and

video clips between primary care providers

and medical specialists. Technology servesas the backbone of this industry, andtherefore, advancements in medicaltechnology and telecommunications willdrive industry performance.

The Telehealth Services industry israpidly expanding. Advances in

communication technology and medicaltechnology, such as wearable self-monitoring devices and digitized medicalscans, have propelled the industry forward.Furthermore, industry growth has beensupported by a healthcare system sueringfrom skyrocketing costs, a looming doctorshortage and an aging populationsusceptible to chronic disease. As a result,industry revenue is expected to increase byan annualized 30.7% to $320.2 million inthe ve years to 2014, including revenuegrowth of 23.1% in 2014. These revenue

estimates are based on Medicarereimbursements for Telehealth Servicesand a 2014 IHS report on the world marketfor Telehalth.

From 2014 through 2019, the industry will continue to benet from thedemographic and structural factors aectingthe healthcare industry as telehealth willemerge as a cost-eective solution tomeeting the medical needs of an expandingand aging population. Existing legislation,such as the Aordable Care Act, andpending legislation will raise federal support

for telehealth services, beneting patients,healthcare providers and industry operators.Last, future innovations will likely increasethe scope and availability of telehealthservices. As a result, industry revenue isexpected to increase at an annualized 49.7%to $2.4 billion in the ve years to 2019.

Industry PerformanceExecutive Summary | Key External Drivers | Current Performance

Industry Outlook | Life Cycle Stage

Advances in communication technologyand medical technology have drivenindustry revenue


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Industry Performance

Key External Driverscontinued will promote demand for telehealthservices. The number of adults 65 and olderis expected to increase during 2014.

Federal funding for Medicareand Medicaid

An aging population will likely lead to anincrease in the number of individuals withchronic diseases, such as congestive heartfailure (CHF), chronic obstructivepulmonary disease (COPD), diabetes,hypertension and end-stage renal dialysis.For individuals 65 and older, Medicare

commonly reimburses a high percentage ofthe costs associated with treating theseconditions. As federal funding for Medicareand Medicaid increases and doctorsincreasingly use telehealth services forpatients with these diseases, industryrevenue and protability will rise. Federalfunding for Medicare and Medicaid isexpected to increase during 2014,representing a potential opportunity forthis industry.

Demand from medical

device manufacturing Advancements in medical technology, suchas wearable monitoring devices anddigitized medical scans, have created newopportunities for telemedicine, supportingindustry revenue growth. As a result, whennew devices are brought to the market and

revenue in this industry expands, demandfor the Telehealth Services industry alsoincreases. Revenue for the Medical DeviceManufacturing industry (IBISWorld report33451b) is expected to increase in 2014.

Number of people with

private health insurance As studies continue to validate the ecacyof telehealth and telemedicine services,private health insurers are more likely tocover industry-related services. Therefore,increased insurance acceptance of

telehealth services and a rise in the numberof privately insured individuals will lead toan increase in industry revenue. Thenumber of people with private healthinsurance is expected to increase in 2014.

Prime rateThe level and movement of interest rateshave a formidable inuence on spendingand investment decisions. When interestrates are high, it is more expensive fornot-for-prot and for-prot health careproviders to raise capital and invest in

technological upgrades, includinginvestments in telehealth andtelemedicine equipment. While the primerate is expected to remain at during2014, expected increases in the next ve

years will represent a potential threat tothe industry.

% c

h a n g e

3.5

1.0

1.5

2.0

2.5

3.0

1907 09 11 13 15 17Year

Number of adults aged 65 and older


% c

h a n g e

12

−6

−3

0

3

6

9

1907 09 11 13 15 17Year

Private investment in computers and software


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Technology advancesindustry

Technology has strongly driven growth forthe Telehealth Services industry and iscrucial to the industry’s success.Technological innovations have beenimplemented in a vast array of areasincluding patient records, diseasediagnoses, consultation, treatmentdelivery and self-care. Technologicaladvances have taken services from theconnes of hospitals and into homes.Mobile health is freeing healthcare devices

of cords and wires and allowing remoteaccess for both patients and physicians.

There has been a proliferation ofself-monitoring tools that allow patients tomonitor conditions like pacemakeractivity, blood sugar level, blood pressure,

blood oxygen level, respiration and heartrate. With these tools, patients can alsoremotely transmit their results tohealthcare providers. There has also beena dramatic rise in wearable devices, which

were rst created for consumers andsports enthusiasts, but later developed formedically-oriented purposes. Theseinstruments, referred to as Medical Body

Area Network (MBAN) devices canmeasure electrocardiogram (EKG)readings, respiratory rate and insulinlevels; detect breast cancer by readingchanges in cellular structure; transmit analert if a person falls down; and detect,through a bandage, skin pH levels todetermine if a cut has become infected.

Smartphones and tablets areincreasingly replacing conventionalrecord-keeping systems, oering

healthcare providers greater ease inaccessing, storing and sendinginformation. Advancements in store-and-forward technology has allowed X rays,MRIs, CT scans, CAT scans and audioand visual observations to be digitallystored and instantaneously shared.

Advancements in telecommunicationsand videoconferencing equipment havealso enhanced real-time communication,allowing physicians and specialists toconfer across great distances, promotingproper patient diagnosis and treatment.

Additionally, peripheral devices can beattached to computers, mobile roboticsand other equipment to aid in diagnoses.Direct two-way audio and videostreaming between health centers has ledto lower costs in these critical areas ofhealth treatment.

Self-service kiosks have also beenimplemented in some hospitals. Thesekiosks can expedite processes like hospital

CurrentPerformanceFueled by a surge in technologicaladvances in the eld of communicationsand a torrent of new wireless self-monitoring healthcare devices, operatorsin the Teleheath Services industry arecurrently enjoying a period of rapidexpansion. From 2009 through 2014,industry revenue is expected to expandat an average annual rate of 30.7% to$320.2 million, including a 23.1% jumpin 2014 alone, based on informationregarding Medicare reimbursements for

telehealth services and a 2014 IHSreport on the world market fortelehealth. Industry operators havedemonstrated that they can providesound healthcare to a greater number ofpatients at lesser cost. As a result, theTelehealth Services industry ismaximally positioned to help providesolutions for a healthcare systemsuering from skyrocketing costs, anaging population susceptible to chronicdiseases and a looming doctor shortage.

Self-monitoring toolsallow patients totransmit their results tohealthcare providers


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Technology advancesindustrycontinued

registration without having to involvehospital personnel. Automated kiosks canassist patients with copays, checkingidentication and other registrationrequirements. Such services have helpedhealthcare providers save on stang costs.However, these industry services designed

to cut administrative costs represent onlya small portion of the telehealth market. Advancements in healthcare technologyand the use of this digital technologies todeliver medical care, health education andaid have been and will continue to be theprimary driver for this industry.

Research validatesefficacy of telehealth

Growth in the Telehealth Services industryhas been augmented by numerous clinicalresearch studies, validating the ecacy of

telehealth treatment. A 2013 analysis bythe Commonwealth Fund examinedndings from three early telehealthadopters: the Veterans Health

Administration, Partners HealthCare andCentura Health at Home. The studyconcluded that telemedicine andtelemonitoring reduced hospitalizations,readmissions and healthcare costs, whileimproving patient satisfaction andengaging patients in their own healthcare.In 2011, a United Kingdom, Whole SystemDemonstrator (WSD) program revealed

similar results. The program evaluated6,191 telehealth patients, focusing on threeconditions: diabetes, chronic obstructivepulmonary disease (COPD) and coronaryheart disease and concluded that, ifdelivered properly, telehealth couldsubstantially reduce mortality, reduce theneed for hospital admissions and lowerthe number of patient overnight stays.

A 2010 study of tele-intensive care units(ICU) at the Massachusetts MemorialMedical Center found that 50.0% morepatients could be treated at facilities withtele-ICU capabilities; these patients wouldotherwise require a transfer to anotherhospital, saving an average of $10,000 perpatient. Similar positive outcomes were

found in other studies involvingcongestive heart disease, diabetes,dermatology and psychiatric treatment.Taken as a whole, these studies conrmthat telehealth improves access tohealthcare, boosts quality of care andincreases cost eciency, factors whichhave been instrumental in drivingindustry sales.

Industry structure Advancements in technology and themedical community’s acceptance oftelehealth services has driven robustindustry growth during the past ve

years. Like industry revenue,employment has also expanded at arampant pace; the number of workers isexpected to increase an annualized20.1% to 3,739 in the ve years to 2014,as greater demand for telehealth servicesfacilitates the need for skilled workers.

However, due to the wide-array ofproduct and service oerings in theTelehealth Services industry, companiesthat specialize in telecommunications,health information technology, softwareand analytics, digital imaging, as well asmedical diagnostics and devicemanufacturing, all contribute to thisindustry. Variety in these companies’cost structures makes it hard to assessaverage industry prot margins.

Studies have validated

the cost-eectivenessand overall success oftelehealth services


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Affordable Care Acthelps industry

The passing of the Aordable Care Act(ACA) in March 2010 and itsimplementation in October 2013 will likely

be a boon for the Telehealth Servicesindustry. The Congressional Budget Ocehas estimated that by 2023, 25.0 millionotherwise uninsured people will gainhealthcare coverage. As a result, the ACA

will substantially enlarge the telehealthconsumer base. In addition, the ACAincorporates several incentives for theTelehealth Services industry: it directs theCenter for Medicare and MedicaidInnovation (CMI) to explore the facilitatingof local hospital inpatient care by the use ofelectronic monitoring by outsidespecialists; it allows the CMI to developpatient-care models using remote-basedmonitoring systems to coordinate care overtime and across settings; it permitsphysicians to use telehealth to determine

the need for home healthcare and in-homemedical equipment; and it directs the CMIto provide medically underserved areas

with telehealth services in order totreat behavioral health problems andstroke patients.

The ACA also makes doctors andhospitals more accountable by movingmedical care providers away from fee-for-service medicine, shifting reimbursementstructures toward the value of care ratherthan the volume of services. This provision

will pressure doctors and healthprofessionals to keep patients out ofhospitals, where care is more expensive.Therefore, the use of telehealth servicesshould strongly increase, as research hasdemonstrated that, in many cases,telehealth services are more cost-ecient,result in less hospital visits and are aseective as hospital treatment.

IndustryOutlook

From 2014 to 2019, the TelehealthServices industry will continue to benetfrom shifting demographics andstructural factors aecting the healthcaresystem, namely, an aging population that

will increasingly demand medical care, a

shortage of doctors and rapidly risinghealthcare costs. Various studies havesupported the idea that the industry canprovide quality care to a large number ofpatients with greater cost-eciency. Inaddition, existing legislation and pendinglegislation will increase federal supportand aid for telehealth services, benetingpatients, healthcare providers andparticipants in this industry. As a result,industry revenue is expected to continueits skyward trajectory, expanding at an

average annual rate of 49.7% to $2.4 billion in the ve years to 2019.

Industry structurecontinuedNevertheless, IBISWorld estimates thataverage prot for a company in theTelehealth Services industry is 16.5% in2014. In addition, from 2009 to 2014,

the number of companies that specializein telehealth services is expected toincrease at an average annual rate of15.1% to 417 enterprises.

% c

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e

80

−20

0

20

40

60

2006 08 10 12 14 16 18Year

Industry revenue



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Pending legislation tobenefit industry

Three pending federal bills will create

added opportunity and revenue for theTelehealth Services industry. TheTelehealth Modernization Actintroduced in December 2013 wouldcreate a federal denition for telehealthand provide principles that states coulduse for guidance when developing newtelehealth policies. The proposed bill

would provide clarity regarding thescope of healthcare services that can besafely delivered via telehealth servicesand would spur innovation and researchin the delivery of healthcare.

The Telehealth Promotion Act of 2012 would increase federal support andpayments for telehealth servicesnationwide. This bill would establish afederal reimbursement policy, making itimpossible to exclude health coveragesolely because it is furnished via atelecommunications system. If passed, the

bill would increase access to telemedicine within Medicare, Medicaid, the Children’s

Health Insurance Program and the

Department of Veterans Aairs. It would be a major step forward in Congressionalsupport for telemedicine and wouldextend telehealth benets to nearly 75.0million Americans.

Finally, the Telemedicine for Medicare Act of 2013 or TELE-MED Act wasintroduced in September 2013. If passed,it would amend Title XVIII (Medicare) ofthe Social Security Act and permit certainMedicare providers licensed in a state toprovide telemedicine services to Medicare

beneciaries in a dierent state.This groundswell of Congressional

support in telehealth and its potential tomeet pressing US health issues bodes

well for the future of the industry. Withan increase in anticipated demand forindustry services, employment in theTelehealth Services industry is expectedto expand by an annualized 41.2% to20,969. Industry prot margins willremain high, however, prot expansion

An aging populationboosts revenueThe number of adults 65 and older isexpected to grow at an average annual rateof 3.2% from 2014 to 2019, and accordingto Nippon Telegraph and Telephone(NTT), people in this age bracket areexpected to comprise 19.0% of the USpopulation by 2030. An aging population

will likely encounter increased incidencesof chronic diseases including congestiveheart failure (CHF), chronic obstructivepulmonary disease (COPD), diabetes,hypertension and end-stage renal dialysis.

Accordingly, treatment of these chronic

diseases will sharply accelerate the overallcost of US healthcare.

Greater demand for medical services,combined with an expected shortage ofdoctors, will drive demand for telehealthservices. The Association of AmericanMedical Colleges (AAMC) has longpredicted a physician shortage in theUnited States. Most recently, in February

2014, the AAMC predicted the situationcould worsen; there will be a shortage ofabout 63,000 doctors by 2015 and ashortage of 130,600 doctors by 2025. TheTelehealth Services industry is well-positioned to help alleviate this lapse incare. By incorporating telehealth services,

fewer physicians can treat more patients.Remote wearable monitoring devices, theuse of smartphones and tablets totransmit self-monitored patient data andthe ability of local physicians to confer

with specialists remotely via videoconferencing will assist the deliveryof adequate care and compensate for aphysician shortage.

Industry services willoset the projectedshortage of physicians


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Pending legislation tobenefit industrycontinued

will occur at a more tepid pace becausecompetitive pressures will increase asmore companies enter the industry. Inthe ve years to 2019, the number of

companies specializing in telehealthand telemedicine is expected to riseat an average annual rate of 30.2% to1,558 enterprises.


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Industry PerformanceIndustry value added is expected to grow at amuch higher rate than the overall economy

Technological innovation is underpinning

growth in the Telehalth Services industry

Industry employment and establishmentgrowth is occurring at a rapid pace

Life Cycle Stage


20

15

10

5

0

-5

-10

% G r o w t h i n s h a r e o f e c o n o m y

% Growth in number of establishments

-10 -5 0 5 10 15 20

DeclineShrinking economic

importance

Quality GrowthHigh growth in economicimportance; weaker companiesclose down; developedtechnology and markets

MaturityCompanyconsolidation;level of economicimportance stable

Quantity GrowthMany new companies;minor growth in economicimportance; substantialtechnology change

Key Features of a Growth Industry

Revenue grows faster than the economy

Many new companies enter the market

Rapid technology & process change

Growing customer acceptance of product

Rapid introduction of products & brands

Medical Device Manufacturing

Health & Welfare Funds

Telecommunication Networking Equipment Manufacturing

Medical Instrument & Supply Manufacturing

Physical Therapists

Telehealth Services


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Industry Life Cycle The Telehealth Services industry is in thegrowth stage of its life cycle. Theindustry’s revenue and mix of servicesare constantly augmented byadvancements in medical technology andtelecommunications. In addition, theindustry is poised to benet from itsinherent cost-eciencies, which make ita viable alternative to traditional in-patient care and from the growingnumber of individuals 65 and older,

whose increasing need for medicalattention will drive industry demand. As

a result, industry revenue has beenexpanding rapidly.

Industry value added (IVA), a measureof the industry’s contribution to theoverall economy, is expected to grow at astaggering average annual rate of 34.3% inthe 10 years to 2019. This growth rate isover 10 times the growth rate of US GDPover the same 10-year period, estimated atan annualized 2.7%. This disparity is one

indication that the industry is in thegrowth phase of its life cycle.Industry products and services are far

from established. Technologicalinnovation has been crucial to theindustry’s success; new products andservices, such as self-monitoring devicesand Medical Body Area Network devices,have enabled patients to measure heartand respiratory rates, measure insulinlevels, detect skin PH levels and transmitdata to a medical professional orhealthcare provider.

Furthermore, the number ofcompanies in the industry is growing,indicating there is an increasing marketfor telehealth services. The number ofenterprises has grown an annualized22.4% in the 10 years to 2019.Employment is also expected to spikeover this period as more businesses andgreater demand for industry services willnecessitate more workers.

This industryis Growing


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Products & Services Transmission of medical dataand images for diagnosisTransmission of medical data and imagesfor diagnosis or disease managementaccounts for the majority of industryrevenue. Primary care physicians andspecialist doctors providing patientconsultation or diagnosis account forabout 40.0% of industry revenue. This is

typically done with the use of videoconferencing, streaming media, wireless communications andtransmitted diagnostic data and images.Telehealth services software requires thecapability to connect patients and theirmedical records, including images, toproviders. Over the past ve years, thissegment has declined slightly, as there is

Products & MarketsSupply Chain | Products & Services | Demand Determinants

Major Markets | International Trade | Business Locations

KEY BUYING INDUSTRIES52512 Health & Welfare Funds in the US

Establishments in this industry provide medical, surgical, hospital, vacation, training and otherhealth- and welfare-related employee benefits for telehealth services.

62111a Primary Care Doctors in the USPrimary care doctors accept patient referrals from telehealth services.

62111b Specialist Doctors in the USDoctors that specialize in a particular branch of medicine accept patient referrals fromtelehealth services.

62134 Physical Therapists in the USPhysical therapists accept patient referrals from telehealth services.

62161 Home Care Providers in the USCompanies that provide skilled nursing services in the home accept patient referrals from, and

contract with, telehealth services.62211 Hospitals in the US

General medicine and surgical hospitals accept patient referrals from, and contract with,telehealth services.

62221 Psychiatric Hospitals in the USPsychiatric and substance abuse hospitals accept patient referrals from, and contract with,telehealth services.

62311 Nursing Care Facilities in the USFacilities that provide inpatient nursing and rehabilitative services accept patient referrals fromtelehealth services.

KEY SELLING INDUSTRIES

33421 Telecommunication Networking Equipment Manufacturing in the USLarger telehealth services firms build their own data centers with equipment purchased fromthis industry.

51121 Software Publishing in the USOperators in this industry provides software used by telehealth services to create and publishtheir content.

51711c Wired Telecommunications Carriers in the USTelehealth services firms pay operators in this industry for telephone access.

51711d Internet Service Providers in the USTelehealth services firms pay operators in this industry for internet access.

51821 Data Processing & Hosting Services in the USOperators in this industry provide website hosting services for telehealth services.

Supply Chain


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Products & Markets

Products & Servicescontinued

a lag in outtting consumers with thetechnology on their end to accommodatesuch treatment.

Remote patient monitoringand follow-upRemote patient monitoring and follow-up is expected to account for 35.0% ofindustry revenue. Services in this

segment include the remote collectionand sending of data to a remotediagnostic testing facility for analysis.These services can be used as a substituteor to supplement visiting nurses for datasuch as blood pressure, blood glucose orheart ECG. This segment is expected toincrease over the current period, withhospital beds consistently being at ornear capacity for patients requiring moreintensive care.

Exchange of medical and

health informationThe exchange of medical and healthinformation is estimated to account for13.0% of industry revenue in 2014. Such

information includes patients receivingonline medical and health data fromdoctors and online discussion groupsfacilitated by a medical professional.Physicians also provide support topatients. Over the past ve years, thissegment has remained rather steady, asmany support groups are face-to-face orpeer-to-peer. However, this segment is

expected to increase over the next ve years with changes in technology becoming available to more consumers.

Medical educationMedical education accounts for anexpected 12.0% of industry revenue. Thissegment is composed of continuingmedical education credits for physiciansand others working in healthcare andseminars for special medical education inrural areas. Continuing medicaleducation credits are mandatory forthose in the medical profession;therefore, over the past ve years,this segment has also remainedrelatively constant.

Products and services segmentation (2014)

Total $320.2m

40%Transmission of medical data

and images for diagnosis

35%Remote patient

monitoring and follow-up

13%Exchange of medical

and health information

12%Medical education



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Products & Markets

Major Markets Congestive heart failureCongestive heart failure (CHF) is a conditionin which the heart is unable to pump asucient ow of blood to the rest of the

body. Symptoms of CHF include shortnessof breath, swollen legs and the inability toexercise. The condition, caused by variousforms of heart disease, is typically diagnosed

by a physician using blood tests and anechocardiography. Industry operators are

able to remotely monitor CHF patients fromtheir home, thereby eliminating unnecessary

visits to doctor’s oces and hospitals. CHFaccounts for an estimated 43.7% of industryrevenue in 2014. Over the past ve years,this segment has remained relativelyconstant as more Americans are better attreating their diabetes, high blood pressure,high levels of stress and obesity, all of whichcan lead to CHF.

DemandDeterminantsResearch and development spendingRevenue for the Telehealth Servicesindustry primarily depends on demandfrom medical establishments (e.g.hospitals, clinics and doctors’ oces) thatprovide remote care for patients. As aresult, any economic downturn thatadversely aects these markets wouldalso have a negative eect on industryrevenue. For example, a decrease in thenumber of consumers with healthinsurance could potentially result in adecline in prot, as consumers nd

themselves foregoing expensive medicaltreatment and opting for less expensivealternatives. This, in turn, would lead to acutback in research and developmentspending, causing cash-strappedtelehealth services companies to focus onexisting product lines.

Increased consolidation in biotechnology and medical devicemanufacturing could also negativelyaect revenue for the Telehealth Servicesindustry. In periods of consolidation andlow competition, these companies could

spend more on marketing andmaintaining existing treatments. Fewernew treatments would result in a lowerinstance of technological change,ultimately hurting revenue for telehealthservices system providers.

DemographicsIndustry revenue is also driven by a

variety of demographic and

socioeconomic factors, such as patientaccessibility to healthcare, increased lifeexpectancy rates and the aging of theoverall population. A majority ofhealthcare expenses come toward the endof a person’s lifespan and the UnitedStates is experiencing an agingpopulation. From 2009 to 2014, thenumber of adults aged 65 and older isexpected to increase at an annualized2.8%. As a result, the incidence ofage-related illnesses such as mentalhealth, heart disease and diabetes are

rising. Fortunately, elderly Americanshave more disposable income whencompared with the previous decade,and these factors have increased thedemand for medical services thatprovide remote treatment for commonmedical conditions.

Government regulationsThe Patient Protection and AordableCare Act is bolstering health insurancecoverage for Americans and, therefore,demand for industry services. As more

Americans are being covered by healthinsurance, there will be a greater numberof patients demanding medical attention.Telehealth services enable physicians tocare for more patients through remote

visits during daily rounds. Additionally,Medicare and Medicaid cover manymental health services, increasingdemand for covered Americans forsuch treatment.


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Products & Markets

Major Marketscontinued

DiabetesDiabetes is a chronic disease in which aperson has a high amount of glucose intheir blood. There are three primary typesof diabetes: Type 1 or insulin-dependentdiabetes is a result of the body notproducing insulin and is treated withinsulin injections; Type 2 diabetes is aresult of the body being resistant to the

insulin that the body produces; andgestational diabetes can occur in pregnant

women who develop a high level of sugarin their blood. These women have had noprior diagnosis of diabetes; however,gestational diabetes can be a precursor ofType 2 diabetes. Telehealth services allowdiabetes patients to have insulin levelsmonitored by their doctor from a remotelocation. Diabetes is expected to accountfor 27.1% of industry revenue. Over thepast ve years, this segment has increasedas Americans have been eating diets highin sugar.

Chronic obstructive pulmonary diseaseChronic obstructive pulmonary disease(COPD) is common lung disease in which

breathing becomes dicult. The two mainforms of COPD are chronic bronchitis andemphysema. While smoking is the maincause, heavy exposure to secondhandsmoke, pollution and gases or fumes also

place nonsmokers at risk. Symptoms ofCOPD include coughing, fatigue,respiratory infection and wheezing. Thechronic illness is best diagnosed using aspirogram to test lung function. COPDpatients employ industry services to bemonitored remotely by their physician.COPD accounts for an expected 15.9% ofindustry revenue and has been steady over

the past ve years due to antismokingcampaigns directed toward teenagers.

HypertensionHypertension or high blood pressure is achronic condition that occurs when thereis elevated blood pressure in the arteries,typically at or above 140/90. In themajority of hypertension cases, there isno underlying medical cause; however, asmall percentage of cases are caused byother conditions aecting arteries, theendocrine system, the heart or kidneys.Those with hypertension are at a greaterrisk for stroke and aneurysms. Industrycompanies are able to easily monitorhypertension patients remotely,decreasing the need for on-site visits.In 2014, hypertension accounts for anestimated 7.4% of industry revenue.This segment has increased over theperiod as Americans are eating foodshigh in sodium.

Major market segmentation (2014)

Total $320.2m

43.7%Congestive heart failure

1.8%Other

27.1%Diabetes

15.9%Chronic obstructivepulmonary disease

7.4%Hypertension

4.1%Mental health



18/34


Products & Markets

International Trade Industry operators primarily provideservices to the domestic market due tothe service-based nature of the Telehealth

Services industry. As a result, importsand exports are not applicable tothis industry.

Major MarketscontinuedMental healthMental health problems include anxietyand depression. With telehealth, patientsare able to meet with their doctors via videoconferencing, in lieu of an oce visit. Thissegment accounts for 4.1% of industryrevenue in 2014. Mental health cases haveincreased over the past ve years as manymental health treatment costs are nowcovered by Medicare and Medicaid.

OtherOther telehealth services account for1.8% of industry revenue. This segmentincludes skin diseases, nutrition, oralhealth and reproductive health. Remotemonitoring and conferencing withproviders allows patients and doctorsgreater exibility. Over the past ve

years, this segment’s share of revenuehas declined.


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Products & Markets

Business Locations 2014

MO1.5

VT0.2

MA1.7

RI0.4

NJ4.0

DE0.3

NH0.3

CT1.2

MD2.1

DC0.2

1

5

3

7

2

6

4

8 9

Additional States (as marked on map)

AZ2.3

CA13.9

NV1.0

OR1.1

WA1.5

MT0.2

NE0.5

MN0.7

IA0.6

OH3.4

VA2.2

FL8.5

KS0.7

CO1.5UT0.8

ID0.5

TX8.9

OK1.3

NC2.3

AK0.2

WY0.2

TN2.1

KY1.4

GA3.1

IL3.7

ME0.3

ND0.1

WI1.1 MI

3.1PA4.0

WV0.6

SD0.1

NM0.5

AR0.9

MS0.8

AL1.4

SC1.2

LA1.6

HI0.5

IN1.6

NY7.8 5

6

78

321

4

9


Establishments (%)

Less than 3%

3% to less than 10%

10% to less than 20%

20% or more


20/34


Products & Markets

Business Locations The distribution of industryestablishments closely follows the USpopulation. Most industry players arelocated in urban areas, often nearhospitals and doctors’ oces. Accordingto the American Medical Association(AMA), 75.0% of physicians are locatedin metropolitan areas, while theremaining 25.0% are located in ruralareas. Although, patients in ruralcommunities greatly benet fromtelehealth services, they are able to havemany health conditions monitored from

afar without having to commute to seetheir physician.

The Southeast region holds the largestconcentration of telehealth services rms

with an estimated 26.1% of industryestablishments and 25.4% of thepopulation. The demographics andspecic needs of communities dictate theneed for industry services. The elderly,the immobile and those living in ruralareas, all prevalent in this region,typically require frequent medicalattention. Telehealth services allows

them to receive such assistance from thecomfort of their own home. Floridaaccounts for the most signicant share of

both population and industry presence;the state has several large cities, whichare hubs for many medical professionals.

The Mid-Atlantic also holds a largeshare of the nation’s population and ofthe industry’s establishments at 15.5%and 18.4%, respectively. The region’shigher share of establishments signiesthat the Mid-Atlantic has the highestphysician-to-population ratio, accordingto the AMA. Furthermore, US News and

World Report ranks ve of the top 10medical schools in the nation in thisregion and the nearby New Englandregion: Harvard University, JohnsHopkins University, University of

Pennsylvania, Yale University andColumbia University. While ColumbiaUniversity, Johns Hopkins Universityand the University of Pennsylvania arelocated in this region, students from

Harvard and Yale are likely to migrate tothe Mid-Atlantic for opportunities in New

York (7.8% of total establishments) andNew Jersey (4.0% of establishments).

Other regions with a signicant shareof industry establishments are the West(18.2%), Southwest (13.0%) and GreatLakes (12.8%). In the West, Californiaholds the largest share of industryestablishments at 13.9%. There are manymajor medical facilities and teachinghospitals in the state which necessitatethe need for industry services. Texas,located in the Southwest, also accountsfor a large portion of industryestablishments. Despite being home toseveral large teaching hospitals, the GreatLakes region has one of the lowestphysician-to-population ratios.

P e r c e n t a g e

30

0

10

20

S o u t h

w e s t

W e s t

G r e a t L a k e s

M i d - A t l a n t i c

N e w E n g

l a n d

P

l a i n s

R o c k y M o u n

t a i n s

S o u t h e a s t

Establishments

Population

Distribution of establishments vs. population



21/34


Cost StructureBenchmarks

Due to this industry’s wide-range ofproducts and services, companies involvedin telecommunications, health informationtechnology, software and analytics, digitalimaging and medical diagnostics and devicemanufacturing all contribute to thisindustry. As a result, industry cost structure

varies depending upon the service oeringsof each individual company. There are,however, many industry operators thatprovide broad-based telehealth solutions.These companies serve as a good barometerfor industry costs.

ProfitIndustry prot, calculated as earnings

before interest and taxes, is expected toaccount for 16.5% of revenue in 2014.Prot margins tend to be relatively high

because companies oer a unique serviceand have little competition. In the pastve years, prot margins have increasedfrom an estimated 13.5% in 2009, astelehealth services have gained increasingacceptance in the medical community. Asthe US population ages and the incidenceof complicated medical conditions

Key Success Factors Access to highly skilled workforceEmployees in this industry are highlyknowledgeable with expertise in software.

Attracting and keeping highly skilledsoftware developers is a key to continuedsuccess in this industry.

Must comply with

government regulationsIndustry operators must comply withsignicant legislation on federal and statelevels regarding patient data security,accuracy and traceability.

Ability to quickly adopt new technologyThis industry is subject to fast changes intechnology. Adopting new technologies

faster than competitors oerscompanies a competitive advantage,and a failure to change may result ina loss of business and market share.

Ability to vary services tosuit different needsTelehealth software can be used as aproductivity-enhancing tool in a variety ofapplications. Tailoring an industryproduct to a specic customer’s need canlead to new clients and increased revenue.

Proximity to key marketsIndustry operators must be located nearhospitals and doctors who aid in the careof patients.

Market ShareConcentrationThe Telehealth Services industry has a lowlevel of market share concentration. The topfour companies are estimated to account for27.3% of industry revenue in 2014. Barriersto entry in this industry are moderate andpotential entrants may have dicultysourcing talent for product and softwaredevelopment. Additionally, this industry hasa moderate degree of patent protection andnew companies must develop telehealth

services systems that are not in violation ofexisting patents. Nevertheless, thisdeveloping industry is rapidly expanding,

with the number of industry enterprisesexpected to increase at an annualized 15.1%over the ve years to 2014 and 30.2% in theve years to 2019. For example, InTouchHealth now serves more than 1,000hospitals and claims to introduce one newtelehealth services device per day.

Competitive LandscapeMarket Share Concentration | Key Success Factors | Cost Structure Benchmarks

Basis of Competition | Barriers to Entry | Industry Globalization

Level

Concentration inthis industry is Low

IBISWorld identifies250 Key SuccessFactors for abusiness. The mostimportant for thisindustry are:


22/34


Competitive Landscape

Cost StructureBenchmarkscontinued

increases, industry revenue and prot will rise. In addition, existing legislation,such as the Aordable Care Act andpending legislation, will increase federalsupport and aid for telehealth services,

boosting industry sales and sustainingprot growth.

Wages Wages constitute the greatest share ofindustry revenue, accounting for anexpected 42.6% in 2014. Industryoperators need skilled workers from a

variety of elds, including medicalsoftware, systems management andinformation and imaging technology. Inaddition, employees in this industry mustpossess knowledge of pathology andmedical terminology. Wage costs are alsoconnected to sales commissions, and theindustry is in a high-growth phase, withcompanies pushing sales and trying toincrease market share.

PurchasesPurchase costs in the industry are alsohigh, accounting for an estimated 25.9%of industry revenue in 2014. Purchasecosts include the costs related toprocuring software, video,communications and medical equipment.These purchases tend to remain constantas a share of revenue because they factorinto regular industry operations.

Other costsMarketing costs are minimal and expected

to comprise only 1.5% of total industryrevenue in 2014. Depreciation for theindustry is low, estimated at 2.2% ofindustry revenue in 2014, and aside fromcomputer systems, there is little equipmentto maintain and replace. Other costs includerent, utilities, administrative costs, businessand legal expenses as well as amortization,

which is the depleting value of nontangibleassets like copyrights and patents.

Sector vs. Industry Costs

■ Profit

■ Wages

■ Purchases

■ Depreciation

■ Marketing

■ Rent & Utilities

■ Other

Average Costs of

all Industries in

sector (2014)

Industry Costs

(2014)

0

20

40

60

P e r c e n t a g e

o f r e v e n u e

80

1008.6

18.5

6.22.32.8

18.1

43.4

16.5

8.42.9 1.5

2.2

25.9

42.6



23/34



Barriers to Entry There are moderate barriers to entry forthe Telehealth Services industry. On a

technical basis, there are few barriers toentry for software publishing start-ups.Typically, most software companies begin

with a little more than a handful ofprogrammers and computers. However,patents of intellectual property can limitcompetition while the industry’s largestcompanies are able to rely on brandrecognition, strong networks andconnections to downstream healthindustries. Companies in the TelehealthServices industry also receive recurringrevenue from contracts with existingclients, which increases the barriersto entry to this industry. Although,these contracts are often in shorterduration, oering opportunity forpotential entrants.

The market for skilled employees createsan additional barrier to entry to the

industry. Telehealth service providerscompete with all other software companiesfor the same pool of software engineeringtalent. A broad skill set is also necessary forindustry employees. Client-facing positionsmust be versed in understanding thesoftware’s abilities, as well as in medicalknowledge. Therefore, potential entrantsmay nd it dicult or costly to attract askilled and talented workforce.

Basis of Competition The Telehealth Services industry ismoderately competitive. Providerscompete on the basis of product quality,

which is often determined by factors likeproduct functionality and the speed,performance and ease of product use. Thisindustry is especially subject to changes intechnology, and the ability to developinnovative products that enhance usabilityand interoperability can assist operatorsin gaining market share againstcompetitors. Therefore, industry operatorsdedicate a substantial segment of revenue

toward research and development. Additionally, industry operators

compete on the value of the serviceoered. Marketing and customer servicesis of key importance in this industry, asknowledgeable sales personnel withexpertise in software are necessary.Training is typically oered to clients, as

applications can require customersupport, especially in the early stages ofproduct use.

Industry operators also compete onthe breadth of product oerings, andproviders often tailor data managementsolutions to the specic needs of theirclients. Industry operators cancustomize a data management systemfor a specic eld of medicine, deliveryoption or transmittal.

Other factors, such as data security,are important to the industry and serve

as benchmarks for productdierentiation. Operators gather, storeand analyze sensitive information. Thus,securing data is essential. Any breach incondential medical data or patientinformation can result in lost revenue forindustry operators or potentially subjectoperators to litigation.

Level & Trend

Competition inthis industry isMedium and thetrend is Steady

Barriers to Entry checklist Level

Competition Medium

Concentration Low

Life Cycle Stage Growth

Capital Intensity Low

Technology Change High

Regulation & Policy Medium

Industry Assistance Low


Level & Trend

Barriers to Entryin this industryare Medium andIncreasing


24/34



IndustryGlobalizationThe Telehealth Services industry has alow level of globalization. The vastmajority of industry operators areUS-owned and earn revenuedomestically. Signicant globalization isprevented by a number of factors: thepersonal nature of services (i.e. between

the physician and patient); theprevalence of doctor-owned practices;the tendency for doctors’ oces to besmall, with limited benets to achievinglarge size; and the ability of localoperators to access government andprivate third-party payment systems.

Level & Trend

Globalization inthis industry isLow and the trendis Increasing


25/34


Player Performance GlobalMed is a telehealth softwarecompany located in Scottsdale, AZ thatfocuses extensively on improving

healthcare technology systems. Thecompany manufactures mobiletelemedicine stations used for

videoconferencing and sellstelecommunications software tohealthcare professionals through itstrademarked CapSure, CapSure Cloudand EasyShare systems. GlobalMed’s

video conferencing systems are used byhospitals throughout remote areas in

which in-person hospital visits areespecially difficult. In 2013, GlobalMed

was ranked third on Modern

Healthcare magazine’s Healthcare’sHottest Companies List, whichrecognizes the healthcare industry’sfastest-growing US companies that

generate $20.0 million or more inannual revenue.

Financial performanceGlobalMed is a privately owned andoperated company and therefore doesnot release its nancial information tothe public. However, based on thecompany’s press releases, IBISWorldanticipates continued growth over thenext ve years. Currently, the companyemploys an estimated 114 workers. Theincreasing popularity of videoconferencing among medicalprofessionals and their patients will leadto continued growth for the company;

IBISWorld anticipates GlobalMed hasgrown at an average rate of 16.5% per

year since 2009, generating an estimated$40.7 million in total revenue in 2014.

Major CompaniesGlobalMedia Group LLC | InTouch Technologies Inc. | Other Companies

78.0%Other

GlobalMed 12.0%

InTouch Technologies Inc. 10.0%


Major players(Market share)

GlobalMed – financial performance*

YearRevenue

($ million) (% change)Operating Income

($ million) (% change)

2009 19.0 N/C 2.8 N/C

2010 22.4 17.9 3.3 17.9

2011 26.3 17.4 4.0 21.2

2012 32.2 22.4 5.1 27.5

2013 36.5 13.4 5.9 15.7

2014 40.7 11.5 6.7 13.6

*EstimatesSOURCE: IBISWORLD

GlobalMedMarket share: 12.0%Industry Brand NamesGlobalMed


26/34


Major Companies

Other CompaniesTeledoc Inc.Estimated market share: 1.8%Founded in 2002, Teladoc Inc. is aDallas-based telehealth provider thatoers health services to its membersthrough online video consultations.Teledoc provides services throughcontracts with professional associationsand licensed physicians. TeladocPhysicians, PA, the company’s in-houseassociation of practitioners, provides

additional operational and administrativesupport with telephone and videoconsultations. The company earnsrevenue through one-time consultationfees and monthly network plans.Customers are expected to providemedical forms prior to joining but areentitled to around-the-clock consultationaccess via telephone or video conference.Practitioners cannot prescribe certaindrugs, and consultations are typically

Player Performance Founded in 2002, InTouch Health is atelehealth service provider and medicalsystems manufacturer that serves morethan 1,000 hospital locations across 20countries. Located in Santa Barbara, CA,the company develops, manufacturersand markets various remote conferencingsystems and wireless systems that enablepractitioners to remotely communicate

with patients. Through its cloud-basedinfrastructure and trademarkedSureConnect patient care, the companyallows doctors to perform consultations

with patients in real-time, and thecompany estimates over 6,500consultations are performed per monthusing its technology. InTouch CEO Yulun

Wang recently expressed concern overthe long-term growth prospects of thecompany in the United States due to

increasing regulatory barriers that thecompany must continually overcome.Physician licensing and credentials haveslowed the company’s adaptation acrossadditional hospital locations, and thecompany must continually engageprospective users in understandingthe time-saving advantages oftelehealth capabilities.

Financial performanceInTouch Health is a private company anddoes not disclose nancial information to

the public. However, IBISWorldanticipates the company will generate$32.1 million in total revenue over 2014.This increase represents substantialannualized growth of 33.7% since 2009,

when company revenue was an estimated$7.5 million.

InTouch Health – financial performance*

YearRevenue

($ million) (% change)Operating Income

($ million) (% change)

2009 7.5 N/C 1.1 N/C2010 15.8 110.7 2.4 118.2

2011 26.5 67.7 4.1 70.8

2012 28.5 7.5 4.8 17.1

2013 29.1 2.1 4.7 -2.1

2014 32.1 10.3 5.3 12.8

*EstimatesSOURCE: IBISWORLD

InTouchTechnologies Inc.Market share: 10.0%


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Major Companies

Other Companiescontinuedlimited to minor diagnoses such as sinusinfections, bronchitis, respiratoryinfections, us, allergies and othercommon ailments. Teledoc has grownsteadily over the past ve years, andIBISWorld estimates the company willgenerate $5.8 million in revenue over2014, representing 1.8% of totalindustry revenue.

Carenet Healthcare ServicesEstimated market share: 2.8%Carenet Healthcare Services is a San

Antonio company that specializes inmedical process outsourcing, healthcaresupport services, call center resourcesand telehealth services for healthcarecompanies, hospitals and governmentagencies. The company was formed in1988 and initially provided advice to

patients and nurses. Over the past ve years, the company has rapidly expandedalongside other telecommunications-

based healthcare service providers toinclude professional medical telephoneservice through health plans, employergroups and pharmacies. The companyoperates a team of registered nurses andhealth professionals to provide additionalservices not included within thetelehealth industry, such as hospitaladministrative outsourcing, patientadvocacy programs and hospital post-

discharge assistance. Carenet has beenconsistently ranked as one of America’sfasted growing companies according to Inc. magazine over the past ve years,and IBISWorld estimates Carenet’sindustry-relevant revenue will reach $8.9million in 2014.


28/34


Capital Intensity The Telehealth Services industry has a lowlevel of capital intensity. IBISWorldestimates that for every dollar spent on

wages, industry operators will spend $0.05in capital investment. Capital investment ismainly in equipment, such as computersand software and hardware components.Over the past ve years, capital intensityincreased slightly; in 2009, for every dollarspent on wages, industry operators spentabout $0.04 in capital investment. Capitalexpenditure is mostly incurred at the startof the business and as assets are replaced.

The rise in capital expenditure was partlydue to innovating upgrades as a result ofthe implementation of the PatientProtection and Aordable Care Act, whichprovide additional resources to covertelehealth treatments.

Furthermore, this industry is laborintensive. Duties undertaken byemployees include product generation,

Operating ConditionsCapital Intensity | Technology & Systems | Revenue Volatility

Regulation & Policy | Industry Assistance

Tools of the Trade: Growth Strategies for Success


L a b o r I n t e n s i v e

C a pi t al I n t en s i v e

Change in Share of the Economy

New Age Economy

Recreation, Personal Services,Health and Education. Firmsbenefit from personal wealth sostable macroeconomic conditionsare imperative. Brand awarenessand niche labor skills are key toproduct differentiation.

Traditional Service Economy

Wholesale and Retail. Relianton labor rather than capital tosell goods. Functions cannotbe outsourced therefore firmsmust use new technologyor improve staff training toincrease revenue growth.

Old Economy

Agriculture and Manufacturing.Traded goods can be producedusing cheap labor abroad.To expand firms must mergeor acquire others to exploiteconomies of scale, or specializein niche, high-value products.

Investment Economy

Information, Communications,Mining, Finance and RealEstate. To increase revenuefirms need superior debtmanagement, a stablemacroeconomic environmentand a sound investment plan.

Medical DeviceManufacturing

Health & Welfare FundsMedical Instrument &Supply Manufacturing

Physical Therapists

TelehealthServices

Capital intensity

0.5

0.0

0.1

0.2

0.3

0.4


Dotted line shows a high level of capital intensity

Capital units per labor unit

TelehealthServices

Healthcare andSocial

Assistance

Economy

Level

The level of capitalintensity is Low


29/34


Operating Conditions

Revenue Volatility Revenue volatility in the TelehealthServices industry is very high. Industryrevenue has increased in each of the pastve years, ranging from a 10.4% increase

in 2012 to a rise of 63.5% in 2010.

Revenue growth has slowed but remainsstrong, with expected growth of 23.1% in2014. This is a result of increased health

Technology& Systems

Telehealth software is developed from afusion of audio, high-denition video,third-party medical programs andcollaboration tools. The time and costsassociated with this data integration

process varies on the amount andcomplexity of data. The latest systems oer

web delivery, such as Cisco’sHealthPresence, which allows clients tomore easily control remote patientmanagement, collaboration and demandfor services. Increased exibility andinteroperability enhance telehealthsystems. Furthermore, high data

encryption is necessary to ensure datasecurity. Despite the many recent strides inindustry technology, telehealth services arestill not to be used in emergency situations.

Additionally, this industry is subject to

frequent changes in technology. Adoptingnew technologies faster than competitorsprovides a competitive advantage tocompanies. Industry operators are

vigilant in updating their products in aneort to increase interoperability andenhance data security. Failure to provideclients with improvements such as thesefeatures may result in a loss of business.

Capital Intensitycontinuedprocessing purchases, sales and customerservice. Unlike capital costs which vary

between operators, labor costs are anintegral part of operating expenditureand are an annual expense which cannot

be depreciated and spread over time.Therefore, labor costs for thisindustry and other service industriesare substantially larger thancapital expenditure.

Level

The level ofTechnologyChange is High


Volatility vs Growth

R e v e n

u e v o l a t i l i t y * ( % )

1000

100

10

1

0.1

Five year annualized revenue growth (%)

–30 –10 10 30 50 70

Hazardous

Stagnant

Rollercoaster

Blue Chip

* Axis is in logarithmic scale

TelehealthServices

A higher level of revenuevolatility implies greaterindustry risk. Volatility cannegatively affect long-termstrategic decisions, such asthe time frame for capitalinvestment.

When a firm makes poor

investment decisions itmay face underutilizedcapacity if demandsuddenly falls, or capacityconstraints if it risesquickly.

Level

The level ofVolatility isVery High


30/34


Operating Conditions

Industry Assistance The Telehealth Services industry doesnot receive assistance in the form oftariffs; industry services are provideddomestically to Americans. Theindustry does, however, receive indirectfunding from Medicare and Medicaid.Medicare and Medicaid cover sometreatments for telehealth patients,

predominantly for mental healthservices. Demand for industry servicesis thereby boosted when insurance, and

not patients, is responsible fortreatment fees.

The industry also receives indirectassistance from industry associations,such as the American Telemedicine

Association and the InternationalSociety for Telemedicine and Health.These organizations promote industry

business by providing resources andadvocating for and supporting the useof remote medical technologies.

Regulation & Policy Software used in industry systems issubject to the Federal Health

Administrations’ (FHA) standards. Theindustry’s computerized systems mustmeet broad guidelines with regards toaccuracy and traceability. These systemsmust also meet regulations concerning

data security. Standards issued by the

Health Insurance Portability and Accountability Act (HIPAA) are alsorelevant to industry operators. As aresult, rms undertaking trial processesmust comply with federally mandatedstandards on issues such as privacy andsecurity with regard to a subject’s

health information.

Revenue Volatilitycontinuedinsurance coverage for Americans withthe implementation of the PatientProtection and Aordable Care Act,

which allows more Americans to receivenecessary medical treatment, driving upindustry demand.

Level & Trend

The level ofRegulation isMedium and the

trend is Increasing

Level & Trend

The level of IndustryAssistance is Lowand the trend

is Increasing


31/34


Key StatisticsRevenue

($m)

IndustryValue Added

($m)Establish-

ments Enterprises Employment Exports ImportsWages($m)

DomesticDemand

Number of adultsaged 65 & older

(%)

2005 37.0 24.9 89 87 603 -- -- 18.9 N/A 36.8

2006 64.6 38.9 129 126 868 -- -- 28.5 N/A 37.3

2007 67.0 47.0 173 170 1,180 -- -- 36.4 N/A 37.92008 63.5 50.4 177 170 1,228 -- -- 40.8 N/A 38.9

2009 84.0 62.4 214 206 1,498 -- -- 49.0 N/A 39.6

2010 112.6 80.8 266 258 1,867 -- -- 62.1 N/A 40.4

2011 184.2 112.2 312 300 2,438 -- -- 81.0 N/A 41.5

2012 203.4 127.9 336 326 2,807 -- -- 93.0 N/A 42.7

2013 260.2 154.6 355 345 3,048 -- -- 109.0 N/A 44.0

2014 320.2 196.2 430 417 3,739 -- -- 136.3 N/A 45.3

2015 478.5 278.5 558 535 5,223 -- -- 188.1 N/A 46.7

2016 723.8 399.1 726 689 7,364 -- -- 261.5 N/A 48.2

2017 1,153.3 603.1 983 922 10,884 -- -- 380.3 N/A 49.7

2018 1,703.0 861.1 1,297 1,207 15,318 -- -- 530.4 N/A 51.3

2019 2,405.5 1,190.8 1,686 1,558 20,969 -- -- 723.4 N/A 52.9

IVA/Revenue(%)

Imports/Demand

(%)

Exports/Revenue

(%)

Revenue perEmployee

($’000)Wages/Revenue

(%)Employees

per Est.Average Wage

($)

Share of theEconomy

(%)

2005 67.30 N/A N/A 61.36 51.08 6.78 31,343.28 0.00

2006 60.22 N/A N/A 74.42 44.12 6.73 32,834.10 0.00

2007 70.15 N/A N/A 56.78 54.33 6.82 30,847.46 0.00

2008 79.37 N/A N/A 51.71 64.25 6.94 33,224.76 0.00

2009 74.29 N/A N/A 56.07 58.33 7.00 32,710.28 0.00

2010 71.76 N/A N/A 60.31 55.15 7.02 33,261.92 0.00

2011 60.91 N/A N/A 75.55 43.97 7.81 33,223.95 0.00

2012 62.88 N/A N/A 72.46 45.72 8.35 33,131.46 0.00

2013 59.42 N/A N/A 85.37 41.89 8.59 35,761.15 0.00

2014 61.27 N/A N/A 85.64 42.57 8.70 36,453.60 0.00

2015 58.20 N/A N/A 91.61 39.31 9.36 36,013.79 0.00

2016 55.14 N/A N/A 98.29 36.13 10.14 35,510.59 0.00

2017 52.29 N/A N/A 105.96 32.97 11.07 34,941.20 0.00

2018 50.56 N/A N/A 111.18 31.15 11.81 34,625.93 0.00

2019 49.50 N/A N/A 114.72 30.07 12.44 34,498.55 0.01

Figures are inflation-adjusted 2014 dollars.

Revenue(%)

IndustryValue Added

(%)

Establish-ments

(%)Enterprises

(%)Employment

(%)Exports

(%)Imports

(%)Wages

(%)

DomesticDemand

(%)

Number of adultsaged 65 & older

(%)

2006 74.6 56.2 44.9 44.8 43.9 N/A N/A 50.8 N/A 1.4

2007 3.7 20.8 34.1 34.9 35.9 N/A N/A 27.7 N/A 1.6

2008 -5.2 7.2 2.3 0.0 4.1 N/A N/A 12.1 N/A 2.6

2009 32.3 23.8 20.9 21.2 22.0 N/A N/A 20.1 N/A 1.8

2010 34.0 29.5 24.3 25.2 24.6 N/A N/A 26.7 N/A 2.0

2011 63.6 38.9 17.3 16.3 30.6 N/A N/A 30.4 N/A 2.7

2012 10.4 14.0 7.7 8.7 15.1 N/A N/A 14.8 N/A 2.9

2013 27.9 20.9 5.7 5.8 8.6 N/A N/A 17.2 N/A 3.0

2014 23.1 26.9 21.1 20.9 22.7 N/A N/A 25.0 N/A 3.0

2015 49.4 41.9 29.8 28.3 39.7 N/A N/A 38.0 N/A 3.1

2016 51.3 43.3 30.1 28.8 41.0 N/A N/A 39.0 N/A 3.2

2017 59.3 51.1 35.4 33.8 47.8 N/A N/A 45.4 N/A 3.1

2018 47.7 42.8 31.9 30.9 40.7 N/A N/A 39.5 N/A 3.2 2019 41.3 38.3 30.0 29.1 36.9 N/A N/A 36.4 N/A 3.1

Annual Change

Key Ratios

Industry Data



32/34


Jargon & Glossary

BARRIERS TO ENTRY High barriers to entry mean thatnew companies struggle to enter an industry, while lowbarriers mean it is easy for new companies to enter anindustry.

CAPITAL INTENSITY Compares the amount of money

spent on capital (plant, machinery and equipment) withthat spent on labor. IBISWorld uses the ratio ofdepreciation to wages as a proxy for capital intensity.High capital intensity is more than $0.333 of capital to$1 of labor; medium is $0.125 to $0.333 of capital to $1of labor; low is less than $0.125 of capital for every $1 oflabor.

CONSTANT PRICES The dollar figures in the KeyStatistics table, including forecasts, are adjusted forinflation using the current year (i.e. year published) asthe base year. This removes the impact of changes inthe purchasing power of the dollar, leaving only the“real” growth or decline in industry metrics. The inflationadjustments in IBISWorld’s reports are made using theUS Bureau of Economic Analysis’ implicit GDP price

deflator.

DOMESTIC DEMAND Spending on industry goods andservices within the United States, regardless of theircountry of origin. It is derived by adding imports toindustry revenue, and then subtracting exports.

EMPLOYMENT The number of permanent, part-time,temporary and seasonal employees, working proprietors,partners, managers and executives within the industry.

ENTERPRISE A division that is separately managed andkeeps management accounts. Each enterprise consistsof one or more establishments that are under commonownership or control.

ESTABLISHMENT The smallest type of accounting unitwithin an enterprise, an establishment is a single

physical location where business is conducted or whereservices or industrial operations are performed. Multipleestablishments under common control make up anenterprise.

EXPORTS Total value of industry goods and services soldby US companies to customers abroad.

IMPORTS Total value of industry goods and servicesbrought in from foreign countries to be sold in theUnited States.

INDUSTRY CONCENTRATION An indicator of thedominance of the top four players in an industry.Concentration is considered high if the top playersaccount for more than 70% of industry revenue.Medium is 40% to 70% of industry revenue. Low is

less than 40%.INDUSTRY REVENUE The total sales of industrygoods and services (exclusive of excise and sales tax);subsidies on production; all other operating incomefrom outside the firm (such as commission income,repair and service income, and rent, leasing andhiring income); and capital work done by rental orlease. Receipts from interest royalties, dividends andthe sale of fixed tangible assets are excluded.

INDUSTRY VALUE ADDED (IVA) The market valueof goods and services produced by the industry minusthe cost of goods and services used in production. IVAis also described as the industry’s contribution toGDP, or profit plus wages and depreciation.

INTERNATIONAL TRADE The level of internationaltrade is determined by ratios of exports to revenueand imports to domestic demand. For exports/revenue: low is less than 5%, medium is 5% to 20%,and high is more than 20%. Imports/domesticdemand: low is less than 5%, medium is 5% to 35%,and high is more than 35%.

LIFE CYCLE All industries go through periods ofgrowth, maturity and decline. IBISWorld determinesan industry’s life cycle by considering its growth rate(measured by IVA) compared with GDP; the growthrate of the number of establishments; the amount ofchange the industry’s products are undergoing; therate of technological change; and the level ofcustomer acceptance of industry products andservices.

NONEMPLOYING ESTABLISHMENT Businesses withno paid employment or payroll, also known asnonemployers. These are mostly set up by self-employed individuals.

PROFIT IBISWorld uses earnings before interest andtax (EBIT) as an indicator of a company’sprofitability. It is calculated as revenue minusexpenses, excluding interest and tax.

Industry Jargon

IBISWorld Glossary

DIAGNOSTIC EQUIPMENT Peripheral hardware orequipment, such as scopes and cameras that cangather medical data.

MEDICAL BODY AREA NETWORK (MBAN)Technology that provides a platform for the wirelessnetworking of body transmitters used for measuringand monitoring patient health information.

REMOTE MONITORING A healthcare service whichuses mobile or peripheral devices, such as a glucosemeter to perform routine health test and transmit thedata to a healthcare professional in real-time.

TELE-ICU The use of telehealth technology andservices to provide care for critically ill patients.


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Jargon & Glossary

IBISWorld Glossarycontinued

VOLATILITY The level of volatility is determined byaveraging the absolute change in revenue in each of thepast five years. Volatility levels: very high is more than±20%; high volatility is ±10% to ±20%; moderate volatilityis ±3% to ±10%; and low volatility is less than ±3%.

WAGES The gross total wages and salaries of allemployees in the industry. The cost of benefits isalso included in this figure.


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Documents

OD5775 Telehealth Services Industry Report