The Need for a New Telemedicine Insurance Product Is Here. So Where’s the Product?
With the outbreak of COVID-19, the use of telehealth services for health diagnoses and treatment surged in 2020.
In fact, according to the Centers for Disease Control and Prevention, during the first three months of 2020, the number of telehealth visits increased by 50%.
While the pandemic has caused a spike, we have observed that telehealth has been gaining traction for several years.
Take for example a 2017 study that found digital health care was already the preferred approach for millennials, with 74% saying they would prefer a remote consultation over face-to-face. For this generation of health care users, the future is almost certainly digital.
Telemedicine has become more normalized during the pandemic, and growth is substantial among a wider group of users.
With McKinsey estimating that 20% — or $250 billion — of current U.S. health care spend could be virtualized, the stage is set for a fundamental shift in the way we engage with our health care professionals.
Dr. Risk Will See You Now
Before there is a rush into this brave and profitable new future, however, we need to recognize that operating in the telehealth sector comes with considerable and, to a large extent, unrecognized risks.
We saw this clearly in December 2019, when Dexcom, a provider of glucose monitoring systems for diabetics, which alerts users via smartphone to changes in their blood sugar levels, hit the headlines for the wrong reasons after the app experienced a system outage.
The result of the outage was that patients and caregivers were left in the dark as to the state of their blood sugar levels, which could have resulted in extremely serious and life-threatening situations.
Thankfully, there were no reported illnesses or deaths associated with the outage, but the incident highlights the risk of expensive and perhaps debilitating bodily injury claims that can arise if technology used in digital health care fails.
As in this Dexcom case, many new entrants that are attracted to and that are helping to revolutionize the health care sector are, first and foremost, technology companies.
They don’t bill themselves as a health care, provider but their monitoring role means they are exposed to many of the risks that a traditional health care company would carry on top of their traditional tech risks.
The reality for any provider of telehealth — whether they emerge from the health care or the tech sectors — is that in delivering health care digitally, they are adopting the risk profiles of both sectors, be that medical malpractice or general, cyber or tech liability.
Or more likely, a combination of all four.
And when you factor in the huge expense associated with medical malpractice and cyber risks, it makes for a potent and potentially crippling combination with serious reputational consequences if an incident is mismanaged.
New Approach Needed
With the rise of usage and risk, it is clear we now need a new approach to insuring this sector.
The standard approach of stitching together existing medical malpractice and cyber policies in the hope they will respond adequately to a new risk landscape is understandable, but it’s simply not fit for purpose.
Not only does such an approach risk a doubling-up of coverage and cost, it almost certainly leaves gaps in the coverage, leaving providers exposed.
Any operator in this field, even if they are far removed from the medical end of the delivery spectrum, can face the risk of bodily injury claims.
Without adequate cover, unprotected claims of this nature could severely damage or cripple even the largest providers.
Despite facing this potent combination of risks, much of the conversation in telehealth has been focused upon whether or not practitioners and patients will be comfortable with the approach.
We feel that debating whether or not people and practitioners will adopt digital health care misses the point.
Our experience in 2020 has shown that the majority of practitioners and patients are comfortable with digital health care but that acceptance will be for nothing if current and emerging providers cannot operate in a way that protects them from all the risks they face, not just the ones they assume exist.
The COVID crisis has taught us that we can’t take anything for granted; fundamental change to everyday life can happen overnight.
But it has also shown us that there are better, faster and even cheaper ways to do many things, including health care.
As society shifts to an ever more digital daily life, we cannot assume that our responses to living in an analogue world will work in a new, fast-developing digital world.
If insurance is to continue to play a crucial role in a post-COVID society, we must be prepared to look at new issues in new ways and create products that answer the problems of today and tomorrow, rather than yesterday. &
October 2020 Centers for Disease Control and Prevention https://www.cdc.gov/mmwr/volumes/69/wr/mm6943a3.htm
December 2019 New York Times https://www.nytimes.com/2019/12/02/well/live/Dexcom-G6-diabetes-monitor-outage.html