The 5 Phases to Maximum TAM in Telehealth

Executive Summary

• Telehealth scale comes from sequencing: nail the cash-pay model first, then expand into insurance once operations and clinical workflow are airtight.
• Insurance unlocks real TAM, but only if you can operate inside established codes and run billing at scale without derailing your team.
• Long-term leverage comes from data: prove outcomes, prove savings, then stack risk-based models on top of a strong FFS engine.

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There's a holy grail for telehealth companies: reaching the maximum number of potential patients across all 50 states. For most Americans, that means one thing—accepting their health insurance.

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Sure, some people will pay cash for healthcare. But that's maybe 1% of the population. The rest? If they believe insurance should cover something, they won't pay out of pocket. It's the same reason you'd go through Geico after a car crash instead of writing a personal check to the body shop. Cash pay healthcare is essentially the same—it's for people who'd rather skip the insurance hassle entirely.

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So how do you reach that holy grail? What's the strategy, what are the milestones, and what should you optimize for at each stage? The reality is that you unlock new waves of TAM with each phase, but you have to start very small and prove things step by step.

Phase 1: start with cash pay

Phase 1 is about validation, not revenue at scale. You're learning whether your fundamental model works before adding the complexity of insurance operations.

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What you should be learning:

• Does your care model actually work?
• Can you hire the right clinical team?
• Can you stitch together the right technology platform?
• Can you process payments and retain care team members?
• What does patient churn look like when people pay directly?

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Cash pay strips away the noise. If patients won't pay $50 out of pocket for your service, they probably won't engage when insurance covers it either. This phase teaches you if you have product-market fit at the most basic level.

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The TAM here is tiny—that 1% willing to pay cash. But that's exactly the point. You're not trying to scale yet. You're trying to learn.

Phase 2: start taking insurance using established codes

This is where most telehealth companies should spend the bulk of their early growth. Phase 2 is about proving operational capability and clinical effectiveness within the constraints of the existing reimbursement landscape.

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What you should be learning:

• Can you establish operations that scale?
• How do you build a care model that fits within established CPT codes? If your model involves significant clinical time that isn't reimbursable, you'll struggle. You need to figure out how to deliver excellent care in the most reimbursable way possible.
• Is your care model improving health outcomes in the population you serve?
• Will patients engage over time when they're not using their own hard-earned cash?

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You’ve probably heard of stories where companies have tried to sidestep the "established codes" constraint. This means working with the AMA to create entirely new CPT codes tailored to their care model. This path exists, but it's measured in years, not months. Omada, for example, was founded in 2011 and didn't get CPT code 0488T—created specifically for the online delivery of their Diabetes Prevention Program—approved until 2018. That's seven years of operation before securing a code that fit their model. If you're a startup watching runway and racing toward sustainability, betting on AMA approval timelines isn't a strategy—it's a gamble. The faster, more reliable path is designing your care model to work within codes that already exist and are already reimbursed.

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Here's the critical insight: taking insurance fundamentally changes patient behavior. When someone pays $200 cash for care, they show up. When insurance covers it, engagement dynamics shift. You need to understand those dynamics before you can optimize for them.

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Phase 2 also unlocks massive TAM expansion. You go from that 1% cash-pay market to potentially reaching anyone with insurance coverage. But to capitalize on that expansion, you need infrastructure—credentialing, contracting, eligibility verification, claims submission. This is where many telehealth companies get stuck building operations instead of refining care models.

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This is where Bridge comes in. Immediately after you've proven your care model with those first few thousand patients, Bridge handles the insurance infrastructure so you can focus on what matters. We manage credentialing across all 50 states, handle payer contracts, verify eligibility in real-time, and process claims. That means your team stays focused on the clinical and operational questions that actually differentiate your company—not becoming experts in revenue cycle management. When you get Phase 2 right with the proper infrastructure in place, the next three phases become dramatically simpler. You're not constantly context-switching between refining care delivery and managing insurance operations.

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The milestone to hit before moving forward: proof that your care model works within fee-for-service constraints and that you can operate insurance billing at scale without it consuming your entire team.

Phase 3: channel partnerships that feed your FFS model

Once you've proven you can deliver care and bill insurance effectively, Phase 3 is about patient acquisition at scale. You're not changing how you get paid. You're expanding how patients discover you.

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What you should be learning:

• What messaging works in data-driven direct-to-consumer advertising? Ads for cash-pay patients look very different from ads targeting people who want to use insurance.
• Can you break through the noise selling into large employers?
• What do health system collaboration partnerships look like?
• Which acquisition channels have the best unit economics?

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The beauty of Phase 3 is that you're building growth muscle without adding payment model complexity. You've already figured out fee-for-service operations in Phase 2, so now you're layering on sophisticated demand generation.

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This phase unlocks TAM through distribution, not through changing what you do clinically or operationally. You're learning which populations find you most valuable and which channels efficiently connect you to those populations.

Phase 4: build a compelling data story

By Phase 4, you should have years of patient data and refined operations. This is where you transition from proving you can operate to proving you drive value.

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What you should be proving:

• Does your care model demonstrably improve the health of a population over time?
• Does your model save payers money when you look at total cost of care?
• What are the unit economics of every aspect of your care model? Are you not just getting paid, but actually profitable?
• Can you decrease churn, improve engagement, and articulate why patients love your service?

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Phase 4 is the foundation for everything that comes next. If you can't prove clinical outcomes and cost savings with real data, you'll never move beyond fee-for-service. Payers won't take you seriously for value-based contracts without years of outcomes to back up your claims.

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The TAM expansion here is subtle but important. You're not reaching new patient populations yet, but you're building the evidence base that will eventually let you capture significantly more value per patient.

Phase 5: build two parallel business models

Phase 5 is the endgame. You're running a fee-for-service insurance-taking powerhouse AND developing risk-based contracts backed by years of data.

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What you should be proving:

• Your clinical protocols are stable and replicable
• Your cost structure is sustainable at massive scale
• You have multiple years of outcomes data showing consistent results
• You can handle massive patient volume without quality degradation
• You understand exactly which patient populations you serve exceptionally well

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This is where you unlock the final frontier of TAM. Risk-based contracts and value-based care arrangements let you capture more value per patient while simultaneously making yourself more attractive to payers and employers. But you can only get here by proving yourself through every previous phase.

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Phase 5 companies don't abandon fee-for-service—they run both models simultaneously. The FFS infrastructure continues serving the bulk of patients while value-based arrangements provide leverage with specific payer partners and populations where your data story is strongest.

The path forward

Each phase unlocks a new wave of potential patients, but trying to skip ahead is how telehealth companies lose years and burn through runway. The companies that reach maximum TAM have a structured set of milestones for each phase and they don't move forward until those milestones are hit.

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Cash pay first. Insurance billing with established codes second. Patient acquisition channels third. Data story fourth. Parallel business models last.

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That's the path to the holy grail.

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If you're ready to move into Phase 2 and want infrastructure that simplifies everything that comes after, talk with the Bridge team. We'll help you get set up so you can focus on your care model, not insurance logistics.

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