Telemedicine: A Healthy Investment?

By Sophie Wright

The world has suffered a battering ram of epidemics in recent years: Ebola, Zika virus, MERS-CoV (Middle East Respiratory Syndrome Coronavirus) and SARI (the causative agent of a severe acute respiratory illness – similar to SARS-CoV). Now the world is in the midst of the COVID-19 pandemic. Piggybacking the crest of these epidemics and pandemics is the technological concept of ‘telemedicine.’

A short history

So, what is telemedicine? According to the World Health Organisation, telemedicine (or telehealth) is ‘the diagnosis of treatment, and prevention of disease and injuries, research and evaluation, and education of health care providers.’ While the COVID-19 crisis has accelerated this technological innovation of ‘socially-distanced’ healthcare, telemedicine was not born in the eye of the COVID-19 storm; instead, the roots of modern telemedicine can be traced to early 20th century Europe.

In 1905, Dutch physician, Willem Einthoven, transmitted electrocardiograms using a string galvanometer and telephone wires to record the electrical cardiac signals of patients in a hospital 1½ kilometres away. Telemedicine gathered momentum throughout the 1920s, 30s and 40s with Norwegian, Italian and French clinicians using radio consultations to reach patients aboard ships or in remote corners of the world. The United States extended remote healthcare by popularising the transmission of radiographic images in the 1950s. Nonetheless, despite transforming the typical waiting room of maladies into a remote network of patients and doctors, cuts to extramural funding meant telemedicine lay dormant for many years thereafter.

Telemedicine makes a comeback

The use of telemedicine has become widespread in recent months due to the alarmingly fast increase of COVID-19 cases coupled with a disproportionately low availability of personal protective equipment (PPE). Before the outbreak, video appointments made up 1% of an estimated 340 million annual NHS consultations. Now, AccuRx, a telemedicine company offering video call and messaging services, has been adopted by over 90% of primary healthcare centres in the UK. This trend has been echoed in the United States and mainland Europe. Telemedicine giant, Teledoc, reported more than 100,000 weekly appointments in the United States in March, while on 3rd June, a German Grand Coalition in Berlin agreed to a multibillion-euro financial package to support German infrastructure with telemedicine being a significant beneficiary.

Teledoc Health closed the financial year 2019 with reports of $533.3 million in revenues, a 32% year-on-year increase. Although the share value took a nosedive in July 2020 following the announcement of $800 million in convertible senior unsecured notes* in 2027, the global telemedicine (or, more broadly, telehealth) market shows no sign of slowing down with the industry projected to be worth a staggering $266.8 billion by 2026.

*convertible senior notes – these notes essentially mean lower interest rate returns for investors, as these interest rates must be accrued overtime with shares becoming worthless should the company file for bankruptcy.

Where areas become grey…

The popularity of telemedicine certainly has its perks, offering clinicians and patients greater flexibility while driving down overcrowding of healthcare buildings and lowering the risk of infection transmission. Nevertheless, there is palpable concern surrounding the issue of intercontinental data sharing and regulation, particularly in consideration of Brexit and European-North American relations.

Since 2000, the movement of data from the EU to the US has been a focus of the European Commission. However, a ruling by the European Court of Justice (ECJ) on 16th July invalidated the EU-US Privacy Shield Agreement, declaring the US to be an unsafe holding pen for EU citizen data due to greater government surveillance of personal data. This casts a shadow over the fluidity of digital and economic trading and could cause issues with the operation of telemedicine across borders and the global expansion of small-medium telemedicine companies. Indeed, over 5,300 US-based companies, including Zoom and Gmail communication, have been subjected to strict EU codes of conduct when trading under the now invalidated Privacy Shield.

The ECJ’s decision has jeopardised Britain’s pursuit of data adequacy being granted by the EU to continue the flow of data traffic between both parties. Considering Britain’s aspirations to act as the middleman between the EU and US data sharing, this ruling protects EU citizen data through preventing the UK from acting as a toll booth for shuttling EU data to the US. If the UK’s plans for seeking data adequacy are thwarted, large and small data regulators face the expensive and bureaucratic exercise of mass signing many newly amended contracts. These new contracts would include ‘Standard Contractual Clauses’ if such companies wish to maintain their data sharing with Britain. This poses a severe risk of long-term damage to UK services sector, especially to the digital and life sciences bubbles in which the telehealth industry is included, should concerned companies refuse to enter into new contractual arrangements.

Whatever the next course of action, telemedicine venture capitalists must remain vigilant of the political landscape which threatens to sabotage the incorporation of telemedicine into modern life.

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