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How the telemedicine boom hurt access to cheap, in-person therapy

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Daniel Goetz

When COVID-19 arrived in North America in early 2020, mental health care professionals scrambled to offer their services remotely to patients stuck at home. Suddenly, people seeking therapy had access to providers from beyond their local area, perhaps even across the country.

In a new study published in the International Journal of Industrial Organization, Dan Goetz – an assistant professor of marketing at the University of Toronto — asks the question: did this sudden influx of telemedicine providers help or hurt people’s access to mental health services?

“It increased access for a lot of people — those who are willing to use it,” says Goetz. “But was it good for everyone? My research says no.”

Using data from Psychology Today Canada, the largest search platform for mental health care providers in the country, his analysis found that the sudden addition of remote providers decreased the likelihood that local therapists would offer discounts to low-income patients. In addition, the sudden shift caused low-cost traditional providers to drop off the search platform entirely. 

Combined, those two effects left patients who were specifically looking for in-person rather than remote therapy with fewer, more expensive options.

To isolate the effect of telemedicine from the other seismic changes during the pandemic, Goetz focused on a very specific set of mental health workers. In 2020, Psychology Today Canada began adding non-local telemedicine providers to search results in certain postal codes with fewer than 20 local therapists. So, if you were searching for a new therapist in a small town that had only 13 providers, the search engine would add an additional seven non-local providers to your results page. Goetz focused on these places, which he characterized as underserved areas, and observed the changes from before to after remote providers were added to search results. He also compared these figures to regions that were not provided with additional therapist, despite having fewer than 20 listed on the website.

“In general, these areas were a bit lower income and less connected in terms of digital services,” Goetz says. “I think it’s fair to say that these are the areas we worry about the most.”

He found that during the pandemic demand for mental health services rose sharply and many therapists — both those serving local and non-local clients — were booked out far in advance.

“They had a capacity constraint. They could only see so many people,” Goetz says.

Therapists with limited capacity decided to keep spots open for higher income patients, instead of competing with new telemedicine providers for price-sensitive patients. For lower-priced in-person therapists who had to compete with the new telemedicine entrants, many simply left the platform. 

For patients who were happy to shift to remote care, telemedicine options may have actually saved them money or provided better access. However, clients who required in-person therapy were left without affordable options.

“Imagine you're someone who can't really talk to your therapist in your home because you're discussing something very sensitive and maybe there's someone in the house that you wouldn't want to hear these things, or perhaps you have a child who needs things like drawing and art therapy,” Goetz says. “Your in-person therapist might have quit the market because they’re competing with all of these telemedicine providers, or they might have raised their price.”

Goetz’s paper is the first to establish a causal relationship between the increase in telemedicine options and the availability of mental health care. As other types of care, such as primary-care physician visits, migrate online and over the phone, his model might inspire similar research in other medical fields.

“Most health care providers are operating under sharp capacity constraints. Some patients are happy to use telemedicine and others still want that in-person option,” Goetz says. “Where those things are true, this is a potential mechanism for how competition will shake out.”

Goetz also hopes that his work will influence policymakers to take a more nuanced approach to mental health care policies. 

“Suppose you’re up in a remote place that’s underserved, like Thunder Bay and you think, 'we know there are unaddressed needs, let’s start pushing telemedicine,’” he says. “We have to make sure there’s still protection for local in-person options.”


Daniel Goetz is an assistant professor of marketing at the University of Toronto Mississauga, with a cross appointment to the Rotman School of Management.