Why Video Telehealth Service Can’t Make its Leap in China?

In recent years, online consultation, as an early-developed segment of internet healthcare, has seen the emergence of numerous startups with varying market positionings. In the United States, the model of online medical consultation is more mature, enabling the complete process of routine primary care visits that do not require physical examinations—from health inquiries and disease diagnosis to issuing electronic prescriptions—to be conducted online. To ensure more thorough doctor-patient communication and higher diagnostic reliability, many U.S. online consultation service providers offer video consultation services. Examples include Teladoc, which is currently filing for an IPO, MDlive, the second-largest player by market share, and HealthTap. However, video consultations have not yet gained popularity in China. Why is this the case? Will online video consultations become popular in China?Video consultations lack flexibility in physicians' time allocation.To clarify this issue, it is first necessary to understand the various approaches online consultation platforms employ to manage doctor-patient communication. Released by VCBeat’s Internet Healthcare Research Institute,"Report on Innovative Business Models in Online Medical Consultations"It is pointed out that the primary methods of online medical consultation include email, online Q&A, instant messaging chat, SMS, telephone/voice calls, and video. These various methods can be categorized into two major types: synchronous communication and asynchronous communication. Email, SMS, and online Q&A are typical examples of asynchronous communication models, where both parties do not necessarily need to be online simultaneously; the questioner submits their inquiry, and the responder can reply at a later time. In contrast, telephone and video consultations represent synchronous communication models, where both parties are online simultaneously once the connection is established, requiring the physician to provide immediate answers to the patient.The key distinction between synchronous and asynchronous communication lies in the mandatory occupation of physicians' resources. In asynchronous models, physicians have greater flexibility in managing their time, allowing them to choose when to respond based on their availability, as long as the response time remains within an acceptable range. However, for video consultations, which operate under a synchronous model, physicians must set aside all other tasks at a specified time to dedicate their attention exclusively to the patient. This results in limited flexibility regarding the start time of the consultation, and the end time may also be unpredictable. Clearly, compared to other asynchronous consultation models, video consultations are significantly more costly in terms of physicians' time.To ensure effective synchronous communication between physicians and patients, particularly via video, higher requirements are imposed on the physician's current availability and even the surrounding conditions of their work environment. In China, independent medical practice is still in its early stages of reform, with the majority of physician resources remaining under the control of public healthcare institutions. Domestically, most physicians offering services on online consultation platforms do so on a part-time basis, prioritizing their responsibilities at their affiliated hospitals. Even if hospital administrations do not explicitly prohibit physicians from providing services on external online platforms, they generally do not encourage it. Under such circumstances, the feasibility of offering video consultation services is evidently low. In contrast, in the United States, many physicians operate their own clinics or join large healthcare organizations through partnerships, granting them greater control over their schedules and thus better conditions for providing video consultation services.Policy Not Lifted: Medical Providers Have Neither Authority Nor LiabilityIn the United States, physicians practicing on online consultation platforms are granted prescribing privileges, which concurrently implies that they must assume corresponding diagnostic responsibilities. If text-and-image communication is insufficient to support a diagnosis, doctor-patient interactions can utilize video conferencing to further facilitate diagnostic accuracy. In other words, to verify the patient’s actual condition, physicians have an incentive to employ video tools, despite the higher time costs associated with video services. Furthermore, in the U.S., given the certain degree of openness of the health insurance payment system toward telemedicine, medical services delivered via remote online channels are eligible for insurance reimbursement. From the payer’s perspective, it is necessary to verify the patient’s true identity, making the video mode appear more reliable.In China, however, policy stipulates that non-medical institutions are prohibited from providing telemedicine services. Online consultation platforms can only offer services under the guise of health counseling; physicians are not permitted to issue prescriptions online, and such services are not covered by medical insurance. For physicians, the lack of prescribing privileges means there is no corresponding diagnostic liability, thereby further diminishing their willingness to adopt video-based communication.Video Format Offers No Benefit to Existing Profit ModelsIn Western countries, outpatient fees for visiting a family doctor at a clinic are many times higher than in China. Even with insurance covering part of the cost, patients often still pay tens or even hundreds of dollars out-of-pocket for consultations. In contrast, online consultation models offer significantly lower prices than visiting a clinic. Beyond convenience, many patients, insurers, corporate employers, and other payers remain motivated to purchase online consultation services due to cost-saving considerations. Although video consultations consume more IT resources and thus incur higher costs, online consultation platforms still maintain profit margins. Notably, video consultations are more intuitive and credible, helping to alleviate some users’ concerns, further expanding the user base, and reducing marginal costs. Additionally, to better control costs, some overseas video consultation services charge by duration; for example, American Well, which specializes in video consultations, charges $49 per 10 minutes.However, in China, standard outpatient fees at hospitals amount to only around ten to twenty yuan. Currently, mainstream online consultation platforms in China struggle to collect fees from consumers for general consultations and find it difficult to motivate other payers to cover online consultation costs based on cost advantages alone. Consequently, higher-cost video consultations are ill-suited for this market.Chinese online consultation platforms, unable to generate revenue from healthcare payers, are still exploring viable business models. One approach involves attracting a large user base through low-cost or free services, leveraging vast amounts of user health data, and aiming to monetize the consultation information accumulated on their platforms. However, the cost of mining data retained via video is significantly higher than that of text-based messages, clearly offering no benefit to this monetization strategy.Even in the United States, not all online consultation platforms advocate for video consultations. For instance, Sherpaa, a B2B online consultation service provider, has explicitly stated that it does not plan to introduce video consultations. Sherpaa’s core value lies in helping employers reduce employee healthcare expenditures. Employers pay $10–30 per employee per month, granting employees unlimited access to medical and health consultations via email and text message through Sherpaa. Sherpaa’s CEO claimed that text messaging aligns better with people’s communication habits than video—a rationale I find rather nonsensical. Service data from Sherpaa indicates that it addresses 70% of healthcare needs, avoiding numerous unnecessary and costly in-person visits and emergency room trips, thereby reducing overall healthcare spending. Evidently, Sherpaa’s most critical function is triaging patients to identify those who do not require in-person care, thus lowering expenses; uncomplicated conditions can indeed be assessed without video. Furthermore, within this framework, both Sherpaa and its payer clients (employers) prioritize cost efficiency. Sherpaa operates using employed physicians to serve users, reportedly allowing each doctor to handle the needs of 3,000 users—provided communication is limited to text or email. There is no need for Sherpaa to add video functionality, which would increase costs. Whether employees, as end-users, prefer video services becomes less important, given that they do not pay directly; satisfying the payers is paramount.Can video consultations be implemented?In fact, from the perspective of consumer acceptance, the format of remote video consultations is generally well-received.American Well once conducted a survey among U.S. consumers64% of consumers are willing to use video consultations, particularly for late-night illnesses, where video consultations have become the second most popular option after visiting emergency rooms. It is believed that Chinese consumers will also demonstrate a certain level of acceptance. The key to the widespread adoption of video consultations lies in online service platforms and physician resources—specifically, whether video services can contribute to a viable profit model and whether physician resources can be effectively liberated.VCBeat identifies several potential future scenarios for video consultations:1. High-end telemedicine. While video consultation services are considered relatively inexpensive in the United States, they may need to follow a high-end trajectory in China. Given the low fees and limited profit margins associated with ordinary outpatient visits, there is potential for providing premium services tailored to specific market demands. Examples include psychological counseling and special-needs outpatient clinics, which already command higher fee structures.2. Online platforms formally transforming into medical institutions. This involves establishing their own physician teams, controlling physician resources, and complying with regulatory policies. Indeed, some leading players in China’s online consultation sector are planning to pursue this path. In such cases, video consultations are more likely to become a standard offering.3. Tapping into flexible medical resources. In fact, reports emerged last year that 9158, a video social networking site, would launch video consultation services and enter the internet healthcare sector, sourcing its physician resources from Hong Kong. Beyond Hong Kong, numerous domestic service agencies are introducing overseas medical resources. These agencies may also leverage video-based models to remotely introduce overseas medical services.To read more articles by this author, please viewGu Beini ColumnWe extend our gratitude to TMTPost for translating this article into English, as presented below.Why Video Telehealth Service Can’t Make its Leap in China?In the past few years, Internet medical industry has been evolving quickly and has developed into a few specific segments. Telehealth service is one of the early segments that were brewed by this particular industry and there are already plenty of start-up companies on the market. In the US, online medical inquiry has now reached a relatively mature state. Whether is consulting with a doctor and getting a diagnosis afterwards or receiving a digital prescription from a doctor, everything can be achieved online without the physical presence of a doctor. To ensure sufficient communication between patients and doctors and improve the accuracy of diagnoses, many American telehealth companies are now offering real-time video telehealth service to their clients, yet such service hasn’t made much of a stir in China. How so? Can video telehealth service ever take off in China? A lack of flexibility To fully elaborate on this problem, first we need to know how telehealth services work. According to the report of Innovative Business Model for Telehealth released by vcbeat.top, telehealth services are mainly delivered through emails, online Q&A board, instant messaging, short message service, phone calls and video calls. All these approaches can be divided into two groups, synchronous communication and asynchronous communication. Email, texting, and online Q&A are typical ways of asynchronous communication，whereby patients and doctors do not need to be in lockstep. Patients can leave their questions on the platform and come back to check out the replies later. As for the synchronous ways of inquiry communication models such as video and phone calls, it’s quite the opposite. Doctors need to provide medical service to their patients instantly. The key difference here is what degree of flexibility the doctors can enjoy when serving their patients. In the first scenario, doctors are able to schedule their time as long as they can reply in an acceptable time period. But in the second scenario, doctors will be fully occupied by the work. Apparently, compared to the first model, real-time video telehealth service appears to be more time-consuming for the doctors. Additionally, to ensure the quality of video teleheath service, more requirements shall be met in terms of availability and working environment of the doctors. So far there is a lack of private practitioners since medical reform, which has just taken off in China and results in the situation that doctors’ being tied to their posts and employment relations. In China, doctors generally take telehealth service as a part-time job, which means handling their shifts in the hospitals they work in is the priority. Even though hospitals do not officially prohibit their doctors to practice online medical service, they don’t encourage them to do so either. Under these circumstances, offering real-time video telehealth service just doesn’t seem feasible in China. In the US, private practices are common among doctors. Many doctors have their private clinics, and many work in major medical institutions as partners. These doctors have more say in scheduling their time and are more suitable for providing real-time video telehealth service. Why Video Telehealth Service Can’t Make its Leap in China? A lack of supporting policies In the US, doctors who provide telehealth services have the right to prescribe medicine. It means they are responsible for the diagnoses they make. If pictures and text aren’t enough for themto make accurate diagnoses, then they could choose to use real-time video communication to further observe the patients and make better diagnoses. In other words, doctors are motivated to use video communication even though it’s more time-consuming, Apart from that, American medical insurance system also supports this service in a way. Costs incurred by telehealth services could be covered by medical insurance. Yet that required strict identity approval process, whereby video service comes in handy. However, in China, the policy doesn’t allow non-medical institutions to provide telehealth services. That’s why Chinese telehealth service providers can only operate as health advisors. Their doctors can’t prescribe medicine and medical insurance don’t pay the patients’bills either. For doctors, having no right to prescribe medicine means having no responsibilities for their patients, which makes them even less willing to use videocams. Why Video Telehealth Service Can’t Make its Leap in China? Video telehealth service doesn’t benefit the current profit model In Western countries, going to a private clinic will cost up to over a hundred dollars for outpatient charges despite the part covered by medical insurance, times higher than that in China. Telehealth service, by contrast, is a much cheaper alternative. Besides being convenient, telehealth can also help reduce the costs for patients, insurance companies and other business entities who purchase such services. Although running a telehealth service means more costs on IT resources, still there is room for profits. Plus, video provides visibility and liability that are important in winning over users’ trust. Besides, it can also reduce marginal costs. Some overseas video telehealth service providers charge their users based on time duration. For instance, American Well who features such services charges its users US$49 per 10 minutes. In China, the outpatient consultation fees are generally less than 20 RMB. At present, the most popular telehealth firms in China can’t really make profits from their patients, let alone appealing to other service payers by its cost advantages. Thus, it’s even harder for pricey video telehealth service to crack open the market in China. Chinese telehealth firms are still seeking possible ways to make profits. Since they cannot cash in from those who pay their services. One possible approach to make money is amass a great number of users through cheap or even free services and gather big data on healthcare inquiries. The twist here is that video is more expensive than text messages during the process of collecting information and it doesn’t help to make profits either. Even in the US, video telehealth service can’t win it all. Sherpaa, which is a B2B telehealth service company, confirmed that they would not launch video services. The solution that Sherpaa offers to its customers, which are mostly enterprises, is valuable for reducing the medical expenditure of the staff. Employers will pay 10 to 30 dollars for every staff member monthly and the staff members can send messages or emails to Sherpaa to seek professional advice on medical care and health whenever they want to. According to Sherpaa’s CEO, sending text messages is more convenient and it’s the communication method that people are used to. In my opinion, this theory doesn’t really make sense. According to Sherpaa’s statistics, its services can satisfy 70% of the demands and avoid high-cost visits to out-patient department or emergency rooms. Sherpaa no doubt saves a great amount of money for its clients. Apparently, Sherpaa’s core function is satisfy the medical needs that don’t require the presence of a doctor though triage, thus reducing cost. That’s why Sherpaa’s clients don’t really need video telehealth service to get diagnoses on their conditions. Additionally, the cost is the center that Sherpaa and medical payers focus on. Sherpaa hires physicians to provide medical services for its clients. Allegedly, every doctor can meet the needs of 3000 users through emails and text messages. For Sherpaa, it sees no reason to implement video telehealth service that would increase the cost. Therefore, whether the company staff, which is Sherpaa’s users, wants video telehealth service or not just doesn't seem to be that important. After all, it’s the company that pays for Sherpaa’s service, not its staff. Keeping the payers satisfied is Sherpaa’s priority. Why Video Telehealth Service Can’t Make its Leap in China? So, does video telehealth service have the potential to take off in China? As a matter of fact, everyday consumers are quite willing to accept video telehealth service. American Well had done a relevant survey and the result showed 64% of the survey participants were willing to use video telehealth service. And if they needed medical service at night, video telehealth service’s the choice they would go for besides going to the hospital. I believe such service will also be welcome by Chinese consumers in some degree. The game-changer that will make video telehealth service popular lies in the online platform and doctor resource. In other words, the profit model of video telehealth service depends on whether we can find a business model for telehealth services and lift the restrictions on the doctors. What follows are the possible directions telehealth service industry could go for, according to vcbeat.top: 1. High-end telehealth service. In the US telehealth service is quite affordable by far but to succeed in China it might need to become high-end. Going to a hospital to get diagnosis in China doesn't cost much, which leaves no room for telehealth service to squeeze in to make any profit. In this case, providing high-end service for consumers in specific areas might be the way out. For instance, psychological counseling, which is relatively expensive in China, can be covered in the high-end telehealth services. 2. Telehealth platforms can transform themselves to actual medical institutions to remove the restrictions that policies and regulations impose on them. They have their own medical team, which is consistent with the rules. Many first tier telehealth service providers in China are already considering this possibility. Under these circumstances, video telehealth service might become popular. 3. They can look for private medical resources. In fact, last year there have been rumors saying that 9158.com, a social networking video site in China, was planning to launch video telehealth service in an attempt to enter the Internet medical industry. It’s said that its doctors were from Hong Kong. Besides Hong Kong, other domestic service providers are also importing services from overseas. In the future, they might use video telehealth service as a way to import oversea medical services. Translated by Garrett Lee (Senior Translator at ECHO), working for TMTpost.