By Geoff Bloom, Partner, Health & Life Sciences
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Telehealth was already around before COVID-19, but it got a massive boost from people’s sudden inability to get out, becoming the only viable option for most people.
Between March 2020 and July 2022, 118.2 million episodes of telehealth services were delivered to 18 million patients, and more than 95,000 practitioners used the service for consultations. On 1 January 2022, expanded telehealth services became an ongoing part of Medicare, with a range of providers allowed to deliver it, including GPs, specialist physicians, allied health providers, mental health professionals, and nurse practitioners.[1]
Greater use of telehealth has facilitated the rise of single condition telehealth businesses, including businesses focusing on weight loss, medicinal cannabis, cosmetic injectables, peptides, smoking cessation, and medical certificates. The fact that Medicare rebates are usually not available for telehealth-only businesses[2] has not stopped their growth.
At their best, single condition telehealth businesses have considerable appeal for patients, with clinics offering same-day consultations and prescriptions at a price that is lower than a conventional medical clinic’s consultations, even when the Medicare rebate is factored into conventional consultations. Some people would prefer to bypass their regular GP for certain conditions, like weight-loss drugs or medicinal cannabis. Medical or nurse practitioners working at single-condition telehealth businesses may develop specialist expertise not available at a person’s regular GP. Many patients appreciate the convenience of having their medications delivered to them by a remote pharmacy, instead of needing to buy them at a physical pharmacy.
A closed-loop telehealth business combines a single condition telehealth business with vertical integration. That is, there will be common ownership of the prescribing clinic and the wholesale supplier of the medicines prescribed by the clinic. The partner pharmacy may also be included, though pharmacy ownership limitations might preclude that.
A major appeal of this business structure is that the business has two sources of profit: consultations, and wholesale sale of medicines to the partner pharmacy. A common strategy is to see consultations as loss leaders, because the losses can be made up from sale of the medicines.
Telehealth businesses do not have the same constraints on growth as conventional practices. Their accommodation costs may be close to non-existent. They do not need to move to bigger premises as they grow. Their so-called total addressable market is not geographically limited as they can take patients from anywhere in Australia. Likewise, their medical and nurse prescribers can come from anywhere in Australia.
By separating one component of a person’s medical care from the rest of it for those who have a regular general practitioner, continuity of care may be compromised. For example, weight loss drugs have profound metabolic effects that may be relevant to a patient’s other health issues but the regular general practitioner may not be aware that their patient is even taking weight loss drugs.
In conventional general practice, neither the prescribing practitioner, nor the owner of the medical centre, has any financial interest in what they prescribe. A closed loop creates a significant structural conflict of interest, where the clinic has a financial interest in the patient buying the medicines that they have prescribed. Most single condition telehealth businesses make their greatest profit from getting a slice of the sale of the medicines prescribed by the telehealth prescriber, rather than from the selling of the health service itself.
This leads to frequent allegations that patient consultations are too brief, leading to insufficient taking of a patient’s history, and too little discussion with a patient about possible risks and alternative treatments: if the consultation is a loss leader, the telehealth business is incentivised to reduce the amount of the loss by encouraging short consultations.
Standard statements of health profession ethics recognise that the mere existence of a conflict of interest is not, it itself, necessarily problematic, but it must be managed so that it does not compromise the practitioner acting in the best interests of the patient.[3] Even where the prescribing practitioner does not own a share of the telehealth business, AHPRA considers that that practitioner will have a conflict of interest.[4]
Single-condition telehealth businesses are often established by entrepreneurs with little background in the health industry. Drivers for maximising profits that make sense in other businesses can be problematic in a health context. Economic drivers may be prioritised over the health and wellbeing of patients, encapsulated in the allegation of putting profits over patients.
AHPRA, and the relevant health practitioner national boards have been deeply concerned by these developments. AHPRA has formed the Rapid Regulatory Response Unit (RRRU) to enable quicker and more targeted action. The RRRU is focussed on three areas, the first of which is “Easy access to drugs” which, especially when practiced in their worse incarnations, typifies single condition closed loop telehealth businesses.[5]
We see many closed loop telehealth businesses that leave themselves open to compliance risks. Usually these businesses come to us once AHPRA, or another health regulator, alleges compliance breaches.
In the highly competitive environment of telehealth businesses, complaints frequently come not from patients but from competitors. Businesses of a substantial size should expect to have to deal with complaints, and may want to anticipate them. Below, we set out common compliance questions that are posed.
The whole point of a closed loop structure is for the clinic to derive profit from other segments of the health and medicine industry that a clinic would not otherwise. This raises stark questions of conflicts of interest. While it may be possible to manage conflicts of interest within the chosen business structure, certain types of incentives or referral payments, for example, from a pharmacist to a clinic, are categorically prohibited.
We have acted for several health professionals who have been subject to review from regulators: Health Care Complaints Commissions and medical and pharmacy of various states and territories, and AHPRA. The review is usually about the business model, as embodied in the protocols of practice of the professional under review:
Telehealth businesses that expose their health professionals to regulatory risk may lose their professionals and find it difficult to replace them. We assist in adjusting business models to support health professionals in complying with their professional regulatory obligations.
The closed loop business model depends on having the large majority of patients fill their prescriptions through the partner pharmacy. Additional compliance challenges are posed with indirect dispensing, that is, where the pharmacist is remote from the patient.
The very fact of competition often pushes telehealth businesses to take advertising compliance risks. Closed loop businesses may have an interest in promoting purchase of associated medicines but, in Australia, it is illegal to advertise prescription medicines, as well as unapproved medicines.
We have helped numerous closed loop telehealth businesses respond to regulator concerns, or avoid those concerns.
If a regulator has raised concerns, our immediate aim is to help put together a response to the regulator, and provide help to make urgent changes.
Once we have addressed urgent issues, or if a client enquires outside of regulator concern, we typically begin with an audit of the business’ structure to identify compliance risks.
Common changes that we make are:
Please get in touch if you would like to discuss any of your compliance issues.
[1] https://www1.racgp.org.au/newsgp/professional/dissecting-the-rise-of-single-issue-telehealth
[2] Medicare has two rules in place to encourage people to attend telehealth consultations with their regular GP. Subject to limited exceptions, GPs and other medical practitioners working in general practice can provide Medicare-rebated telehealth where they have an existing and continuous relationship with a patient (known as the 12-month rule because it requires the patient to have seen their practitioner in person in the last 12 months). Medicare support for continuity of care was augmented as of 1 November 2025, when patients became able to access Medicare rebates for telehealth consultations, even if they have not seen their GP face-to-face in the previous 12 months. But it has to be with the practice they are registered with under MyMedicare.
[3] See, for example, Medical Board of Australia, Good medical practice: a code of conduct for doctors in Australia, paragraph 10.12.
[4] Australian Health Practitioner Regulation Agency – Medicinal cannabis prescribing
[5] https://www.ahpra.gov.au/Resources/Regulating-new-and-changing-healthcare.aspx#focus
If you would like further information or have any queries regarding other matters, please do not hesitate to contact:
