Hits and Misses with Telemedicine

The chief promises of telemedicine have long been the reduction of health care costs and the improvement of health care.  The special allure of telemedicine is that these goals are not in conflict and both can be achieved at the same time.

One of the ways telemedicine could improve care is through timeliness.  By removing travel time, care could be delivered more quickly, which can be critical in many urgent care circumstances.  Eliminating travel is also a nice benefit to patients.

Enabling a patient to have a telemedicine consultation with a remote specialist at the local hospital/clinic is far more convenient than having to drive, sometimes long distances, to see the specialist in person.  In these cases, the hospital bears the cost of the telemedicine capability and the patient benefits from it.  Of course, someone has to pay for it.  In many cases, the cost of the telemedicine equipment is paid for by grants.  The growth of telemedicine in hospitals has been driven by grants.  Without them, hospitals would have to cover their expenses through higher charges to the patient or to insurers.  Instead of saving money, telemedicine in the hospital environment could actually cost money.  Thank goodness for grants!

Sticking with convenience, there are companies using telemedicine applications on cell phones to provide video chats to clinicians for a virtual office visit.  For about $50, a consumer can have that nasty cough checked out and get a prescription.  Not only is this cheaper than an in-person office visit, it is the ultimate in convenience – no travel, no time in the waiting room (with sick people no less) and fast (not a lot of chit chat since the clinician is a stranger).

Looking at the big picture, this is considered a substitute visit and at the present time, the company providing it may be losing money in the transaction (with the hope of becoming profitable at some point).  This type of telemedicine service is appealing to relatively healthy individuals that don’t go to a doctor very often, who may not even have a primary care physician.  This doesn’t have much of an impact on total industry costs.  To find the areas that do have a major cost impact, we don’t have to look very far.

It is estimated that 80% of health care costs in the US are incurred by just 20% of the population and 90% of the costs by 50% of the population.  These aren’t the video chat users.  These are people with chronic illnesses, the elderly and other at-risk individuals.  The main costs stem from hospitalizations (average cost of $10,000 per day with an average stay of 4 days) and use of Emergency Rooms (average cost $1.2K per visit).1

One area that has given serious attention with some success is in the reduction of re-hospitalizations.  They have learned that if patients are released from the hospital without adequate follow-up, complications can occur that result in some (too many) patients being re-admitted.  Assigning home care for discharged patients helped, but because of different business interests, in the past that wasn’t as effective as it should have been.  Filling a bed with a re-admission didn’t really hurt the hospital.  Spending extra money (on telemedicine, for example) might help reduce re-admissions, but the home care agency incurred cost without any benefit.  The solution was to align business interests by placing a significant penalty on the hospitals for re-admissions.  Home care agencies are now incentivized to help reduce re-admissions and telemedicine is recognized as being a valuable tool in helping to accomplish that.  This is a good example of lower costs and better care going hand in hand.

Initial hospital admissions are a different story.  Because the drivers are totally different, success in reducing re-admissions hasn’t led to reductions in initial admissions.

There are some encouraging, although isolated examples demonstrating that telemedicine can also help in reducing ER visits.  One illuminating example is a program in Houston that put telemedicine in the hands of paramedics so when they arrive at the scene of an emergency, they can immediately conduct a telemedicine visit for an injured party.  Last year when they conducted their 10,000th patient encounter, they had prevented 6,000 unnecessary ER transports.  (Average cost of the telemedicine visits was $220 and the average cost of an ER transport was $2,200.)  A great example where immediacy of care hit the duel goals of lower cost and better care.2

Positives for Telemedicine

There are some clear cut positives for telemedicine.

  • For patients, convenience due to “no travel” is a great benefit even though that may not bring down any costs.  This is true for hospital based telemedicine as well as consumer video chat telemedicine encounters.
  • Beyond convenience, “no travel” offers the tangible benefits of earlier treatment.
  • Immediacy of care may be a fundamental element of telemedicine for reducing costs while improving health care.

This simple review provides some insights into why we should be more encouraged about the promise of telemedicine than the limited success so far.

Key Targets for Telemedicine

Two primary targets for telemedicine should be reducing hospitalizations (not just re-hospitalizations) and reducing ER visits.  The degree of success in addressing these goals is directly related to achieving immediacy of care to those most in need.  Telemedicine offers a means for delivering that care in the fastest possible means.