Tele-ICU Opportunity: Myth or reality?
"At a macro level in Telehealth, it appears like there is a huge market opportunity because of the shortage of critical care doctors in many countries relative to their population. We must still consider that there are a lot of challenges that entrepreneurs have to overcome to build a large and viable business in the sector. Can these businesses be built like SaaS businesses?"
There is a lot of interest in Telehealth, driven in fact by the recent Covid-19 pandemic. Telehealth is a broad subject, from the basic Teleconsultations to vertically focused solutions like Teleradiology, Telepathology, and Tele-ICU (Remote Monitoring of critically ill)
Even though some of the large global players like GE, Philips etc have sophisticated eICU solutions; it looks like the acceptance of these by emerging markets hospitals is not much. Some of the players are not actively marketing their solutions in the market due to a lack of traction. Also even in the most exciting new markets, there has yet not been a funding for startups in this field.
While at a macro level it appears like there is a huge market opportunity because of the shortage of critical care doctors in many countries relative to their population, there are a lot of challenges that entrepreneurs will have to overcome to build a large and viable business. Can these businesses be built like SaaS businesses?
To start with, the challenges of integrating the Tele-ICU software with various devices like bedside monitors, ventilators, infusion/syringe pumps, etc, and the hospital information systems (HIS) exist. There are a plethora of solutions from different vendors and unfortunately, the APIs unlike the SaaS world haven't evolved yet (implying IT Cycles and delays). 100% uptime and bandwidth assume paramount importance in lieu of the nature of the service.
The regulatory barriers play spoilsport as well. Many service providers can’t offer these services across borders because of the need for clinicians to have a local license. In fact, because of the data privacy and security laws, one has to be aware and compliant with respect to data movement beyond borders.
Also, unlike typical SaaS models, which are high gross margin businesses, Tele-ICU business dependency on high people costs associated with critical care doctors/skilled nurses, margins are very low and closer to hospital EBITDA margins. Again, unlike a SaaS business, their growth can’t be non-linear. It depends both on the availability of the critical care doctors/highly skilled nurses and the hospitals' willingness to pay for the service. Sales cycles tend to be very long with the need for feet on the street approach.
The remuneration for a critical care doctor is dependent on the procedures they perform in an operational environment rather than the expert opinion they provide. Also, a majority of medical professionals like to be in the midst of the action rather than being confined to command centers to offer their opinion. The ability to retain the skilled manpower in a non-hospital environment is a big challenge.
Will, the patients go to a hospital that doesn’t have onsite critical care specialists and the optics surrounding it may be a challenge from the perspective of midsize hospital owners to outsource the mission-critical operations to a service provider? And the possible legal liability issues which can come up when the gap arises between the opinion of the Tele-ICU provider and the capacity of the local hospital to implement the same because of logistic issues.