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Zoom saw its revenue grow by nearly 400% in Q3 of 2020
While most entrepreneurs want to be the one to discover the next Amazon or Twitter, oftentimes major technological shifts are coming from the big companies, the players that have been on the scene for years, if not decades. Those companies have survived because they know how to pivot. They're the ones who either seed new ideas or acquire them and distribute them.
In this column, we talk to those companies and their innovators who are preparing them for what's coming.
In our latest interview, we spoke to Ron Emerson, Global Healthcare Lead at Zoom, about some of the innovations the company has been making in the areas of virtual and telehealth.
Emerson joined Zoom in June of this year; prior to that he was Global Director of Strategic Development at AMD Global Telemedicine, and he spent more than 10 years as Global Director of Healthcare at Polycom.
He is a former member of the board of Directors for the American Telemedicine Association and Chair of the Industry Council. Emerson was also the previous recipient of the American Telemedicine Association Industry Council Award for his leadership in the advancement of Telehealth.
Zoom's recent moves in the healthcare space include signing Cardinal Health as a client in August. In November, the company enhanced its features for its healthcare clients, giving them the same experience as all Zoom customers, while still maintaining privacy and security. Earlier this month, the company revealed in its Q3 earnings report that it had seen revenue grow by nearly 400 percent year-over-year to $777.2 million, while it also now has 433,700 customers with more than 10 employees, up 485 percent year-over-year
VatorNews: Tell me about your background and your responsibilities at Zoom.
Ron Emerson: I’m originally from the upper peninsula of Michigan and I now live in the state of Maine. Out of high school I went into the United States Marine Corp; I was marine for four years and got to travel around the world and do some interesting things. I was in FAST Company, which is Fleet Antiterrorism Security Teams. Then I got out and did something on the opposite side: I got my Bachelor’s Degree in nursing, so I’m a registered nurse and I do keep my nursing license up. Then I worked in acute cardiopulmonary and it was interesting because I wanted to learn the inpatient setting, but also learn the outpatient setting, like skilled nursing facilities and home health, because when you think of health care it's this whole continuum of reaching across all of these different environments. That really has helped me a lot in my career.
After that, I worked for a nonprofit organization in Maine called Maine Telehealth Services, and I became the executive director for that and we set up telemedicine across the state of Maine. This is back in the day, and we'll talk about reimbursement and some of the drivers of telehealth today, but we were working through a lot of those issues to get them to where they're at today just at the Medicare level, state level with Medicaid and private insurance. From there, I ran healthcare for a company called Polycom; everyone knows those star shaped conference phones but we were very heavily involved in telehealth because of the video conferencing portion of that. I did that 12 years and had an opportunity to do telemedicine in 46 countries. Then I worked for AMD Global Telemedicine, which is a pure play telemedicine company; they focus specifically on hardcore telehealth and I've had an opportunity to be at Zoom since June, where I’m the global healthcare lead.
VN: Before you joined Zoom in June, was healthcare a significant portion of Zoom’s business?
RE: Yes, healthcare has always been one of the faster growing segments of Zoom’s business but I don't think any of us, of course, were really prepared. Just as you see with the daily numbers of Zoom utilization: if you look back to December of 2019, Zoom had about 10 million daily meeting participants, and then if you go to just four months later, Zoom had about 300 million meeting participants per day. So, as you can see, there was escalation in the general public for all different organizations and enterprises, and healthcare cut that same curve. Some areas grew faster because of the need for virtual health to connect patients to their clinician because they want to decrease the level of exposure or the opportunity to be exposed to COVID.
VN: What was your initial response to the pandemic and more organizations turning to telehealth solutions? What did you do to make your platform a good option for that use case?
RE: If you look historically, Zoom is being used in a lot of different organizations and healthcare organizations for multiple reasons and we'll talk about that later on, but you’re specifically talking more about video assisted virtual visits, basically connecting a clinician to a patient so they don't have to come into an organization. Just like we did in other segments, we had to be able to scale appropriately and the Zoom platform was developed to be able to scale, as Zoom showed during that huge steep increase in a very, very short amount of time. So, scale was one thing.
The other thing that Zoom did was, of course, just keeping in line from a security, privacy and administrative process perspective, to ensure that we're still doing everything possible to protect patient health information at large scale and still keep everything controlled. Zoom did a good job of that because we had a lot of the same systems in place and the system was scalable. So, when you think of privacy, security, like HIPAA in the United States, it's not just the technology but it's also administrative safeguards you can have in place, it’s physical safeguards you can have in place, so there are processes within an organization that actually help you to do that. So, we just ensure that we kept those same sound principles that we've been using and then just scaled them accordingly as the pandemic grew and we just relied on just the basic technology features, the cloud-based solution, that allowed us to do that.
VN: Talk to me about how you scaled so quickly. What were some of the initiatives that you put in place to make sure that you could scale along with the demand that was coming on?
RE: The first thing is, from a scale perspective, let’s start off with technology. Zoom uses 19 co-locations, so we have redundancy, and we can load balance different amounts of information when needed. So, we have a scale to be able to do that. The other part of the scale, from a healthcare perspective, is when you look at regulatory policy like HIPAA, business associate agreements, to be able to do that. A lot of that is just ensuring and building on a lot of those internal administrative and automated processes that we have in place. A lot of things were already there and so the skill was just much more of it, but all those basic functionalities and everything were in place to allow us to meet the new demand and need.
VN: I think what Zoom was able to do was to really enable a number of smaller businesses, healthcare businesses, drive their businesses but also really just support the healthcare ecosystem. It’s just an amazing story. So, we want to focus on healthcare, even though I know Zoom is used a lot by the education system. I know because I have four sons, all on Zoom, and they're pretty savvy. But I want to talk about how big healthcare is today: you mentioned that you were doing 300 million daily calls in March, what is that today? And then, what percentage of that is healthcare?
RE: Just to dig a little bit deeper and into the overall healthcare picture would be helpful, and then we can dig a little bit more into Zoom. So, if you look back at virtual health, and there's been many studies that have done been done in the past, if we had an opportunity to basically get on a phone and see a provider, and we know this from self insured employers, we know this from insurance companies, that sometimes the user rate would be less than 3 percent. So, people that could access their doctor over a virtual visit, but the numbers were lower in the past. One of the statistics is 11 percent of consumers used telehealth in 2019 and now 46 percent of Americans in 2020 have actually used telehealth, so that's a very, very steep increase. Providers during COVID, actually they were seeing 50 to 175 times more patients virtually than they were before. Steve, you did a nice job in your opening statements about it: a lot of it was out of necessity, we didn't want exposure.
The interesting thing is, if you look at some of the data, like from Forrester, they predict that there will be 481 million visits this year that are done virtually, and then next year 441 million, but a very small percentage of them were actually related to actually treating COVID patients; a lot of it was, ‘how do we keep everything going just for general visits, urgent care visits, all the things that we need? All the normal elements that we have on a day-to-day basis.’ Then the other percentage was basically chronic care and a very small percentage of that was actually COVID. So, just in general, we've seen just seen this huge uptick.
To put a little more color on that: 1.3 million Medicare beneficiaries received care virtually the week ending April 18 of 2020. And if you look at the statistics of Medicare recipients actually using telehealth in the past, it was quite low. So, as the business grew, we grew. Instead of giving specific percentages, Zoom’s healthcare would grow anywhere 7.5 to 8 percent in a very, very short time.
VN: Just to clarify those numbers, you said something about 400 million or nearly 500 million. Is that Zoom’s number?
RE: No, that's virtual visits. They predict 481 million virtual visits for 2020 and then, not a huge drop, they predict 441 million virtual visits for 2021. Now that's the minimal and best case scenario, depending on where the pandemic goes.
VN: Did they break out what percentage that Zoom has of that?
RE: No. As you can imagine, those numbers are very, very difficult to get. There are some data points that we have, there have been multiple studies, HIMSS did a study, and it was mostly unified collaboration platforms. It was Zoom, it was Microsoft, it would have been WebEx. When they interviewed all of their members, 43 percent of their members were actually using Zoom. So, in that space we had a large proponent but I think the reason a lot of people like Zoom is it's this unique concept that I can actually see my doctor on a brand that I'm familiar with and something that I know, rather than some sort of obscure something out there that they’re not familiar with.
VN: What is different about Zoom For Healthcare versus a typical Zoom subscription? What do those organizations receive that is catered specifically for them?
RE: With Zoom, first and foremost, it’s privacy and security, and not just within healthcare, but across all of our segments. That's very, very important, as we all know. But, specifically, the area that I am involved in healthcare; when we started many years ago, when we developed our business associate agreement and HIPAA, we listened to our customers and it was basically, ‘Hey, we want you to basically serve as a conduit so that you can be used as a high level interaction between the provider and a patient, but we don't want you to be able to store patient health information. We don't want to be able to do recordings that might have patient information on it. We don't want to be able to use even Zoom Phone.’ They basically wanted to lock it down so they could use this for virtual care.
But, as time went on, and as healthcare is changing, it's not just about doctors and patients, as we all know: it's about the multi-purpose use. As we move towards value-based care, it's about care coordination, collaboration, discharge planning, all the things that you folks are familiar with. You need more touch points, you need to be able to reach out to people where they're located, which is patients' primary care providers, and then bigger centers of excellence and others throughout that whole continuum. We call it the virtual care continuum. So, one of the things that Zoom recently did is we basically took that off, and we provide all of our healthcare customers that manage patient health information under their business association, we provide them basically the exact same feature set as any other customer would get, but it's covered by the business associate agreement. So, you have the privacy, the security, the administrative and physical safeguards, using protections for data at rest, data in motion, ensuring that we have authentication pieces for users when they come in, and then you can authenticate when you want to let certain people in the room. You can decide who's in a room, you can walk rooms, so there's all these different features in there that enable health organizations to provide security. The real benefit of that, when you say, ‘what's the difference in the package?’ is that they can still decide at an organization level, a group level or an individual level, if they want to lock those specific features down. So, if you have a group of doctors where all they're doing is just telemedicine, and they’re like, ‘You know what? We really don't want them to be able to record a clinical session between them and a patient. We want them just to document in the medical and the EMR as they normally would.’ They can group those doctors together and they can lock those features down, but it still gives them the full flexibility of all the other benefits of the solution that others have.
VN: It sounds like that's what you built in, sort of the flexibility into your platform, which is why the health care organizations are starting to build upon Zoom. I noticed on your LinkedIn that Trihealth moved over to the Zoom platform. I'm curious why, besides the flexibility, why are these companies choose Zoom versus say more of an integrated healthcare platform, versus Zoom being a horizontal platform.
RE: When we look at Zoom, as I said earlier, it's really how can we serve across the care continuum? So, that'll be administration, unified collaboration, collaborative health care, education, wellness and prevention, using our technology to educate patients. One of the reasons that organizations love Zoom is that you can use it within the walls of the hospital system or the healthcare system, but when you want to reach outside, Zoom is very easy to use. So, you can reach those touch points into patients' homes and people can actually use it. The third area is telemedicine and we can talk about diagnosis and then this kind of care coordination.
One of the reasons a lot of organizations are moving to Zoom, first of all, is the simplicity of it. It's very easy to use. The other is the quality and low bandwidth environments, and the other is that you can actually, as I said, reach outside touch points to non-affiliated healthcare organizations or others in the patient's home. One of the other big reasons is that healthcare organizations already have electronic medical records, they have health information technology systems that they utilize every day. The ability to integrate Zoom into that traditional workflow that clinicians use every single day is very, very important. So, what you're doing, instead of you walking in a room and seeing a patient in person, when they look at their schedule, there's a little video button there so that they know it's a telemedicine consultation. They click it and those workflow processes are built in and then Zoom can stick with it’s core competency, which is what we do. And then they can stick with their core competency, but it allows healthcare professionals and clinicians to use the exact same solution. That's one of the biggest reasons that organizations are using Zoom. That's very cost effective, for a very low price to be able to get a BAA; in the United States we lifted our $200 minimum, so you can be a single provider in the United States and for $20 a month you can get a business associate agreement on a Zoom platform where you're covered by a BAA where you can see patients. So, we provide scale and cost effectiveness across a platform as well.
VN: I actually am seeing Zoom as similar to being an Apple iPad. The way Apple iPad is being used by healthcare organizations because, from the consumer side, people already understand, physicians know how to use the iPad, people know how to use iPad and people know how to use Zoom. And so it's easy and that is your core competency. They have so many advantages to use Zoom because people already know how to use Zoom.
RE: You bring up a great point, and there's two points to that. One is that Zoom was the number one downloaded app for a number of months, so it's already on a lot of people's mobile devices that they use. The ease of use, we all see our children use it, as you said; my son uses it as well, I'm seeing meetings every day on it. But the other one too is when they want to, when they want to have that integrated workflow, when the volume becomes large enough, when they need that workflow under their existing health information technology systems, Zoom has done a very good job on the APIs and SDKs, so we can integrate into that workflow and mimic what they do. So, you can use it either way.
The other thing that's very powerful is it's not a niche. What it allows you to do is to use one platform and you can use that one license. Yes, you can see patients, but you can also have an administrative meeting, but you know what? You can also use it to get your CME to maintain your medical license. You can also use that same license to educate a patient on wellness and prevention and you can also use that same license for care coordination, you can also use that for discharge planning. So, there's this multi purpose use that we see healthcare organizations using it for, that provides some real cost effectiveness and really moves the needle on a variety of levels for a variety of applications across the organization.
VN: In August, Cardinal Health chose Zoom as its video communications platform. Talk to me about what it meant to have them choose Zoom.
RE: It’s exciting on a variety of levels. The first thing is, and this is sort of an anecdotal statement that I'm going to make, but if you look at US News and World Report, and if you'd look at eight out of the 10 top hospitals in the world, Zoom has a moderate to significant presence in those organizations. Some might be using us as virtual health, it might be medical education, they might be using it for a variety of different reasons. So, Zoom has allowed the biggest centers of excellence in the world to use it in a variety of applications.
One of the big next steps for us as we expand our business associate agreement and have somebody like Cardinal Health using us is, and a lot of people don't understand because we're used to using this more like in this fashion, but Zoom has a full, unified collaboration cloud software platform. We have Zoom Phone, where we have an integrated Zoom phone system where we can do everything as a virtual PBX, we have meetings, we have recordings, so we really are this fully comprehensive system, even on just the collaboration piece for organizations to communicate on a day-to-day basis. But then having all the regulatory policy and HIPAA and the medical focus on top of that, to use it with organizations like Cardinal Health just adds more value. So it's very very important and very exciting for us.
VN: I was going to ask you about some of its features you recently added for your healthcare customers, including allowing them to access Zoom Chat, cloud recording for clinical applications, and Zoom Phone, but I think you already answered that. So I’m going to amend my question: what’s next for Zoom for Healthcare? What are some of the things you want to do going forward? What’s in the pipeline?
RE: I’ll say as much as I can. There are really three ways that Zoom goes to market: one is, as I said, we have our platform as it is and we can cover that underneath HIPAA, GDPR, all of those things, so that you can use it as an enterprise grade solution. The other way that we go to market is we have very robust APIs and SDKs that we can integrate into the workflow, which is very, very important for healthcare systems, so they don’t have to pull things together, and we can mimic what they're doing. The third thing, which you're talking about, is how we actually make advancements to our technology. We work across all of the different verticals and we look at specific commonalities, and how we can move everything forward, which gives the most users the most benefit and bang for their buck.
The other piece is we're continuing to expand our footprint with existing electronic health records. We have a more integrated workflow with some of the bigger electronic health records, so we can reach more of that and provide virtual care and mimic the workflow. That's another one. The other is just some of the more basic things like digital signage, where people are in waiting rooms and they can put specific material content specific to an application. Like, if it's a dermatology practice or if it’s a cardiology practice, we can provide educational tools. Some of the other things are concurrent users, where a clinician, rather than being tied to one license in one room, can basically have multiple rooms one-on-one so they can move in different areas. These just don't apply to healthcare, but they're very, very important to healthcare.
We're always working and partnering with medical device organizations and companies, so that we can integrate medical device technology into our solutions, or at least give them an answer on how they can do that, because there's telemedicine, which is this piece of it, and then there's telemedicine which is actually the diagnostic piece where you can plug a scope into your camera. THey could have a dermoscope, they could have an otoscope, they can have an exam camera, and I could look at your throat and look in your ears and the quality's there. We can plug a stethoscope into our technology and we'd be able to send heart and lung sounds through this right now. We can listen to each other's heart and lung sounds with electronic digital scopes, so we're always making those advancements where we can better utilize them and interact and interface with diagnostic technologies.
The other area, and I touched on it, is how do we provide Zoom as the platform for organizations to integrate things like interpreting services, which is a big one. We partner with an organization that does an amazing job, Stratus, and they're an interpreting service company. They have 35 different languages and American Sign Language and they have all medically certified interpreters where you can actually integrate right into the Zoom platform. So, if hospitals roll it in the room, they hit a button, it does automatic call routing, it finds the right interpreter, puts it in the queue, and within minutes it automatically launches a Zoom call back to the facility so that they can have a live interpreter on the line.
VN: That’s a lot to look forward to. A lot of this relies on a regulatory environment that allows all of this to happen. I know there were sweeping deregulation earlier this year that certainly created all this opportunity for Zoom and telehealth services, but where are we in the regulatory environment and will those regulations that we're leasing, will they continue?
RE: Yeah, that's a great question because we're all incentivized, including healthcare organizations and health professionals. We all have a bottom line. So, to put a little more light onto what happened, and I think it's important for a lot of folks to know, is that prior to COVID, Medicare would reimburse for telemedicine but they had specific criteria: the patient had to be physically located in a non-metropolitan statistical area, so maybe like a city of less than 50,000 people, or they had to be in a HIPAA health provider shortage area. And then, once they met that criteria, then the next step was they actually had to be physically located in a specific health care facility, like a physician's office, a federally qualified health center, a rural health clinic, a skilled nursing facility, an inpatient renal dialysis center, an outpatient mental health facility; I'm just pulling this from my mind, so if I missed anything I apologize. But you'll notice one place I didn't mention and what place did not that I mention?
VN: The home.
RE: The home. The big thing with COVID that you could see a clinician, and you could be on your device and you could be in your home and Medicare would reimburse you. Then, of course, when Medicare does something, we usually have follows and under the CARES Act there was an executive order, and it rolled down through Medicare and then the privates went on with it as well because that was the only way to see patients as we moved forward. We're having a second rebound with COVID so, from a regulatory perspective, everything is in place. Now, with the new administration, of course there are unknowns of where things are moving. Things that have been done historically through an executive order, if you look at technology some of the things that have happened have been from an executive order. Now what we're looking for, and we do have some bipartisan support on this, is for some actual legislation for reimbursement for telehealth that moves it forward. Now, what does that look like? Is it more parity, where you get reimbursed the exact same amount for a video visit in the home, as you would if the patient was in your office? Or is there a little give there because you don't have as much brick and mortar and we're trying to figure some of those things out? Overall, from everything that I've seen and everyone I've talked to, and what we've heard from the director of CMS, the ship has sailed. Now that physicians and patients are used to it, I think we all know that at least at some level that it's going to be here. I meet with multiple, sometimes 10 to 15, different health care systems a week and their telehealth programs and, regardless of reimbursement, they think there's enough other areas like capitated rates or CCOs for quality based care. So, there's a lot of other ways besides just fee for service, that organizations can decide that they want to use virtual care and telehealth. So, we're optimistic.
VN: You made me think of something: when cases go into the Supreme Court and they rule on it, they look at reliance. And if you have a number of people relying on Zoom and telehealth, I don't think you can take it away.
RE: That's the interesting part. You bring up a good point. I gave the statistic of what it was before COVID and then I just met with a large children's hospital this morning that was up to 85 percent of their outpatient visits being virtual. Now they're around 25 percent of their virtual visits. Then I talked to others that are still around 50 percent of their virtual visits, so there's a range there. But the big question is: after the dust settles, and the vaccines come out, now that clinicians are used to telehealth and patients are used to telehealth, what does that new normal look like? I think that's what we're all working very hard to figure out, since we've had adoption.
VN: Where do you see Zoom fitting into the telemedicine space going forward? How integral will it be to the company as a whole?
RE: Zoom is focused on telemedicine and we feel that we have a very unique opportunity in position to help a lot of people in a very cost effective, efficient manner that I think others have struggled with. We feel that we also have an opportunity to do that in a way that is the least disruptive to healthcare professionals and patients, based on what they do on a day-to day-basis in the traditional practice, which we feel is very, very important.
The very high level definition of telehealth is the transfer of electronic medical data but I think all of us know that that can mean a lot of different things; that can mean a telephone call to some people, it could be storing forward technology. At Zoom, we're really about that live interaction, that meeting where it actually takes place. So, just to kind of add on to that: virtual health, a doctor seeing a patient, yes, we’re very focused on that and it’s very important. That will continue to be there. But where we've felt like we add some real value across the board, and provide a lot of innovation, is all of the other components of healthcare as we move away from fee for service. Things are changing, you know? There's the global fees; a surgery is done, a health care system, a doctor or a hospital gets a certain amount of money to provide that procedure. It's not every time the patient comes in the door there's a fee that is provided to the hospital system and the patient. So, we're getting capitated rates, which means they get a certain amount of money to take care of a patient per month. This really opens up the doors for health care systems to be creative in how they want to use virtual technology, under the whole notion that it's just more efficient to move information into this peephole, and we can touch more people and have more contacts, which we know has a direct influence on clinical outcomes and access to care. There's a direct correlation between access to care and quality of care and clinical outcomes, and we feel like we play a key role in that; not just doctors seeing patients but all those other Allied Health, and then of course I just talked about other, bigger, core, unified collaboration within healthcare.
VN: The two industries that were significantly impacted were education, as we talked about, and healthcare. So, as we see the vaccines coming out, and the country opening up again, and kids probably going to school, but also people going back to their doctors, where do you see Zoom and video chats, where do you see them having more of a lasting significant impact: in in healthcare or in education?
RE: Wow, that's a really tough choice to choose from, because those of us that have children at home using Zoom and, of course, when we look at K-12, those children eventually will go back to school but there still will be some virtual components to it in different areas. I heard an interesting use case; I was on a call the other day and one of the mothers said her child was not happy when they found out that they changed their snow policy this winter, that there’s no snow days. And even next year, when this is over, they are even considering changing their snow policy days because now they can do it virtually. In the old days, I remember waking up and listening to the radio and getting all excited; if you lived in a part of the world that actually had enough snow to do that, that was a big thing. So, those are some differences. Higher education will continue to grow. I think we all realize it's sort of a new standard.
From an education perspective, it's really hard to make a choice, to be quite honest with you, but I can tell you from a healthcare perspective, now that the clinicians have, as I've said this many times, the familiarity of the technology, and the familiarity with Zoom because of the day-to-day use, it's become basically a verb. We're just really excited about the opportunities of where we actually focus and it's across all those different segments. We're changing the way we provide care. If you look at some of the statistics, there was about a 20 year span where the cost of health care actually increased 5X of what gross domestic product was. But if you look at that same time, productivity basically slowed down about 3 percent, but we increased the number of staff by about 3 percent. So, we know that the way we've been doing things is not working, and we know that we need to do things differently and the only way to do that is through collaboration coordination and being able to reach people regardless of where they're located. We see a very, very bright future and we're really honored and happy to be part of it.
You can listen to the podcast of our conversation with Ron below:
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