While telehealth is a powerful revolution according to basically everyone on the planet right now, and one that’s likely to be here and dominant long after the coronavirus pandemic has gone the way of swine flu, in the US, regulations have opened up at the federal level, but states are a different story.
Investors looking to speculate in the space need to be wary of state level rules that could limit how the aforementioned revolution plays out in terms of genuine addressable market.
With that said, we would highlight ISW Holdings Inc (OTCMKTS:ISWH) today because the company recently launched a telehealth subsidiary that’s already making waves, and that venture is only dependent on the state of Texas for its growth context over the next two quarters – which is advantageous given recent news from the lone star state, which is gearing up to be a leader in pushing telehealth adoption through a parity payoff incentive that isn’t seeing the same support elsewhere.
In Ohio, for example, similar measures were recently rejected.
Stars and Stripes
According to a recent announcement from the Texas state government, state-regulated health plans in Texas will continue to reimburse for telehealth services at the same rate as in-person care through the end of the year.
This stands to benefit ISW Holdings Inc (OTCMKTS:ISWH) because the company’s Telecare subsidiary recently announced plans to expand operations across Texas.
An article published in the online publication, mhealthintelligence.com, noted a few days ago that Texas Governor Greg Abbott announced the payment parity deal last Friday, a move designed to help care providers dealing with a surge of cases brought about by the coronavirus pandemic.
According to the piece, Abbot said the state’s Employee Retirement System and Teacher Retirement System would also continue payment parity for telehealth through 2020.
“Since the COVID-19 pandemic began, the State of Texas has expanded telehealth options and availability so that Texans can continue to access the health care services they need,” Abbott said in a press release. “Millions of Texans have chosen to use telemedicine over the past several months, and this new agreement with Texas network health insurers will help ensure that Texans can continue utilizing telehealth options. I thank the health plans for stepping up to meet the needs of our state during the COVID-19 pandemic.”
The Next Horizon
The announcement, according to the article, continues one of several emergency measures enacted in by state and federal governments to expand coverage for and access to telehealth during the pandemic.
ISW Holdings Inc (OTCMKTS:ISWH) recently formed Telecare to work in conjunction with its established and rapidly growing home healthcare business. According to its latest release, “the Telecare referral intake process is fully electronic, with provider referrals opening a client relationship, coordinating care with providers, logging all consents, and assigning a home health caretaker, all achieved entirely electronically. Within twelve hours, an on-site assessment with a registered nurse is conducted, and full care services begin within 24 hours. The Telecare team is growing, and the Company intends to ramp up service across the state and to extend its service area into additional states over coming months.”
The context here is a steady fight between private health insurers and care providers. The health plans want reimbursement rates to drop for telehealth care because it should, in theory, be less costly to manage. However, those in the space and advocates of the future path for care over a digital platform basis argue that a period of parity is necessary to foster universal consideration of adoption of telehealth.
It’s basic behavioral economics: added incentive structures influence behavior.
However, for investors looking at companies like ISWH, the move by the governor simply means wider margins and more cash flowing to the bottom line.
“Private insurers have recognized the promise of telehealth and have already shown a willingness to expand telehealth coverage, but they are still learning where the true potential and value for telehealth really lies,” the paper’s author, James Woodward, PhD, says. “A payment parity requirement at this early stage would prematurely signal that telehealth treatment options are interchangeable with in-person visits in terms of cost and quality. Medical studies, however, do not warrant this conclusion or pricing structure inasmuch as there are still many areas in which telehealth’s medical value is not yet established.”
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