Telemedicine Competition, Pricing, and Technology Adoption: Evidence from Talk Therapists

52 Pages Posted: 18 Feb 2021 Last revised: 20 Jun 2022

Date Written: December 22, 2021

Abstract

Covid-19 has sparked substantial growth in direct-to-consumer telemedicine (DCT) provision, intensifying healthcare competition by expanding patient choice sets. I analyze the causal effect of new DCT entrants on incumbent healthcare providers, leveraging quasi-experimental variation in market structure induced by an algorithmic shock on an online mental health provider search directory. I find that incumbent mental health providers stop offering income-based discounts on the directory after DCT entry, and are not more likely to adopt telemedicine themselves. A simple model of dynamic, capacity-constrained providers and heterogeneous patients rationalizes therapists' behaviour and implies that higher-quality therapists are more likely to stop income-based discounts, which is supported in the data.

Note:
Funding Information: This project was funded by a grant from the Connaught Fund at the University of Toronto, #504836.
Competing Interest Declaration: The author declares that he has no relevant or material Financial interests that relate to the research described in this paper.

Keywords: Digital health, telemedicine, healthcare competition, price discrimination, mental health

JEL Classification: I11, L11, O33

Suggested Citation

Goetz, Daniel, Telemedicine Competition, Pricing, and Technology Adoption: Evidence from Talk Therapists (December 22, 2021). Available at SSRN: https://ssrn.com/abstract=3767034 or http://dx.doi.org/10.2139/ssrn.3767034

Daniel Goetz (Contact Author)

Rotman School of Management ( email )

United States

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