Telemedicine competition, pricing, and technology adoption: Evidence from talk therapists

This paper examines how new telemedicine competitors affected incumbent health care providers during the first waves of COVID-19. Using data from the largest mental health provider search platform in Canada, I show that increased telemedicine competition in a market caused incumbent providers in that market to stop offering income-based dis-counts to patients. I isolate the causal effect of competition in a difference-in-differences framework, comparing providers before and after a supply shock on the platform that exogenously assigned some markets new telemedicine search results. I find that higher -quality providers are more likely to stop income-based discounts when facing new telemedicine entrants, while lower-quality providers are more likely to exit the platform, which is consistent with telemedicine providers competing for more price-sensitive pa-tients. The results suggest that expanding telemedicine options had a heterogeneous effect on the affordability of care. & COPY; 2023 Elsevier B.V. All rights reserved.