Optum’s telehealth expansion is bad news for Amwell, Teladoc

UnitedHealth Group’s health IT arm Optum is expanding its virtual care business, Optum Virtual Care, to all 50 US states, according to its CEO, Andrew Witty. For context, Optum’s telehealth offerings include access to specialized virtual care, home care, mental healthcare, and integrated physical care.

UnitedHealth Group is building up its virtual care services in-house, so it may no longer need to lean on tie-ups with third-party telehealth vendors:

  • UnitedHealthcare (UHC) offers its members access to services from vendors like Teladoc, Amwell, and Doctor on Demand. In January, UHC launched a virtual primary care plan for employers in partnership with Amwell in 11 states including Texas and Washington.
  • But UnitedHealth Group execs say one of the company’s strategic goals is to increasingly leverage the combined capabilities of its UHC and Optum arms. That means UHC could now push its members toward Optum’s telehealth service instead of external partners like Doctor on Demand.
  • Losing UHC's massive member base would be a huge blow to business for telehealth vendors like Teladoc. Payer partnerships are a major way telehealth vendors get their virtual care services in the hands of patients, and losing a partnership like UHC’s could prove to be a major revenue loss: UHC provides benefits for over 50 million members alone.

And even though health execs are going all in on telehealth, there’s still a lot to be done to make virtual care stick among doctors and patients post-pandemic:

  • Many providers say telehealth compounds their admin burden—which could dissuade some docs from using the tech once the pandemic is out of the picture. Over 39% of providers say virtual care has increased their admin burden, per an October 2020 CoverMyMeds survey. Payer and telehealth execs will need to figure out how to better integrate virtual care visits into docs' everyday workflows—or burnt out docs with piles of paperwork will likely stay away from using it long-term.
  • The cost of telehealth prevents a wider range of consumers from getting on board. Over 11% of consumers indicate high costs prevent them from accessing virtual care, per Rock Health’s 2020 Consumer Adoption Report. Payers will have to broaden their plans to include low-cost virtual care to reach more consumers, and some payers are already doing just that: For example, Kaiser Permanente's Virtual Forward plan costs up to 20% less than traditional plans.