Telehealth was just a bubble and it has finally burst. This is the ongoing rhetoric doing the rounds on the internet. And they are not without their reasons, with share prices of telehealth companies like Teladoc, Amwell and Hims plunging to as low as $6 a share the evidence is plain for everyone to see.

But is it really a burst akin to the dot.com bust of the 90s or is this just a resetting to a ‘new normal? No one really knows, but many argue for the former, telehealth in the last years has all the hallmarks of a bubble.

At the onset of the pandemic, many countries raced to lock down their streets so as to curb the spread of a novel disease. The result was an acute uptick in demand for health services both in-person and most relevantly online. This is where telehealth came in.

Patients all across the world chose online health services over going to seek treatment in person. They learned that they could seek treatment from home and thus avoid the risk of being exposed to a bunch of sick people in the waiting room.

Moreover, this was a win-win for both hospitals and patients. Patients could get immediate treatment while hospitals could avoid overcrowding. Telehealth was thus a much welcome solution during very perilous times.

The question, however, was whether this model would work post-pandemic? With the inevitable dying down of the virus looming nearer every day will patients continue to prefer online medical care over physical attention?

Recent evidence indicates not. With shares down to the lowest levels since the onset of the pandemic even investors are skittish about the declining sector and opting for other options in healthcare. According to data from CB insights while funding for healthcare exploded in the third quarter ($97.1 billion in the third quarter) much of that money is going into biotech companies and drug development and research. The only exception was Cityblock Health which managed to raise a whopping $400 million this year at a $5 billion valuation. The company focuses on servicing Medicaid recipients.

How did this all happen?

Well, the answer seems to be simple. Patients seem to prefer a physical trip to the doctor than an online consultation.

“Telehealth has been in the crosshairs,” said Adam Gale, CEO and co-founder of Klas, an organization that rates Health IT companies, on the podcast Healthcare Is Hard, hosted by venture firm LRVHealth. “Everyone had one or two solutions they went into COVID with and came out with five or six or seven.”

He goes on to explain that a lot of companies are trying to reconfigure their strategies for the long term. This may mean dropping products that may have worked during the pandemic but are no longer viable. While health care was largely online in 2020, now only 13% – 17% happens online.

“The bigger macro trend here is that telehealth is starting to see some declines from the peak during the pandemic where we didn’t have much choice other than to see our providers virtually,” says Christina Farr, a venture capitalist at OMERS Ventures (and former Fast Company writer). “Where we don’t see those declines as acutely is in the behavioral health space—and I expect that’s why we are seeing record funding moving into the sector.” She also says that there’s a lot of interest in telehealth platforms that specialize in a specific demographic, such as LGBTQ patients.

The key point here is that telehealth has to adapt to survive. Companies in this space will have to pivot to other healthcare sectors to remain profitable. One key sector here is mental health where we are seeing increasing investment. Here it is possible for companies to provide solutions that can actually work online and in the process save lives.

Another way is by providing at-home services instead of requiring the patient to visit a hospital. Telepharmacy company Workpath is already doing this by carrying out at-home blood draws and running a small in-home vaccination pilot for seniors.

There is also an increasing focus on the online sale of tests. These include COVID-19 tests, kidney diseases and also urinary tract infections. There is also a growing range of in-home devices such as smart thermometers, mats that detect diabetic foot complications, and pulse oximeters—basically anything that helps doctors continue care after a regular visit. We can expect that going forward, more care will happen in the home. But perhaps more interesting is the way in which digital health start-ups are moving into retail clinics.

So, while telehealth is in the doldrums right now, it is by no means the end. There still lies lots of opportunity for growth. However, telehealth companies will have to be creative to exploit these opportunities.