It is no secret that during 2020 and into 2021 the COVID-19 pandemic has created massive disruptions for a variety of industries. One such example is the movement of health care services online in order to adhere to social distancing guidelines. A wide variety of technology and applications to facilitate this, referred to as telehealth or telemedicine technology, are gaining momentum. This technological shift in health care has resulted in a boom of the telehealth industry and offers the possibility of sustainable growth opportunities for companies in 2021 and farther into the future.
What is telehealth technology?
Market analysts explain that telehealth technologies are platforms, applications and tools that allow service providers to offer more efficient health care virtually. For example, as these technologies progress they may allow remote monitoring of patients with chronic conditions using at home smart devices and data collection. By doing so, telehealth will save time and money by decreasing visits to the doctor. Another advantage is the ability to offer mental health care and behavioral medicine virtually. These services are said to be particularly suitable for telehealth and have already seen massive increases in the use of online platforms to engage with patients and provide “teletherapy” services.
The emergence of telehealth technologies was contemplated prior to the pandemic. Discussions suggest health care would have eventually transitioned to virtual platforms sometime in our future. However, the COVID-19 pandemic’s seismic disruption forced this transition to occur far sooner and more rapidly than originally projected. An article by McKinsey & Company (McKinsey) forecasts that the future of health care will rely heavily on telehealth technologies as they become fully integrated into the system. This opportunity should be, and has already begun to be, seized by companies in this space and those who may be looking to expand into the industry.
The Telehealth Market Boom
Market analysts project that telehealth could become a $175 billion industry as soon as 2026. Near the end of 2020, discussions about the massive expansion of telehealth were already underway and suggest there is more to come in both the United States (US) and Canada.
In the US the expansion is happening rapidly. Regulatory barriers were removed earlier in the pandemic, which is credited for an already massive increase in the use of virtual visits to health care providers. According to Financialnewsmedia.com, large deals have already been completed and others are underway in the US. This “explosion” of M&A activity will allow companies to consolidate telehealth offerings and improve access to virtual medicine. As well, a variety of telehealth companies are taking advantage of this surge and announcing plans for growth into 2021. As acquisitions begin heating up in the US, this trend in M&A activity is projected to continue long after the pandemic concludes.
The story in Canada is also emerging at a slower but steady pace. BNN Bloomberg explains that Canada is in the early stages of a telehealth boom. Investors are noticing and the shares of Canadian telehealth companies have begun to increase significantly. Similar to the US, the federal government in Canada has taken note and is reported to have designated $13.4 million to a few Toronto-based telehealth companies and an “innovation hub” in the industry. Canada’s health care industry spending last year was around $264 billion and is poised for disruption moving through 2021.
What does this mean for investors and companies interested in telehealth?
Telehealth companies themselves should work diligently to use the pandemic as an opportunity to attract support from investors and find ways to grow their business. As well, beyond telehealth companies, Mergermarket reports that the industry is ripe for investors, large technology companies and pharmaceutical companies to break into the space and acquire smaller telehealth companies with the technology to offer. McKinsey offers suggestions for investors and companies in its recent article including:
- look forward to what virtual health care services might look like beyond the pandemic;
- focus on the development of strategies to integrate telehealth technology in ways that bridge the in person and virtual health care experience;
- identify assets that will provide value in telehealth services; and
- take advantage of these rapid changes and disruption in the industry.
Health care has long seemed poised to move into the digital and online world, and the COVID-19 pandemic has increased the speed at which the industry has evolved. Technology and health care companies should look for ways to take advantage of this market boom. M&A in this area is a key way that companies can add to their technology repertoire and stay relevant.
The author would like to thank Lauren Rennie, Articling Student, for her significant contribution to this blog post.
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