Telemedicine: An Opportunity to Lower Costs and Expand Access to Healthcare
Telemedicine: Clinical innovation promoting access and affordability for US healthcare
With the 2020 elections looming, America's focus has turned to the many challenges that next term’s president will face. Arguably, the most important question America faces is: How are we going to fix healthcare? Nestled in this question are two, often competing, priorities: access and affordability.
How do we maximize the number of people who can get healthcare when they need it?
How do we provide healthcare services without breaking the bank, for patients and their care providers?
Very often, improved access to care leads to significant cost increases. Similarly, victories against the increasing cost of healthcare often come at the expense of access. Seldom do we see clinical innovation that can decrease the cost of care while actually improving access. I recently had the opportunity to chat with Dr. Prentiss Taylor, VP of Medical Affairs at Doctor On Demand, about the promise of telemedicine to do just that.
What is telemedicine?
Telemedicine is the use of telecommunication technology to provide healthcare services to a remote location. It is not a new concept. In fact, since as early as the 1960s, physicians have been experimenting with two-way transmission diagnostic information via video equipment [1]. In telecommunication, much has changed since the 60s, when less than 1% of the US was using mobile telephone communication.
Today, the Pew Research Center estimates that 96% of Americans own cellphones and about 84% of those cellphones are smart phones [2]. With these dramatic shifts in capability and availability of advanced telecommunication technology, the potential of telemedicine has evolved. As we spoke, Dr. Taylor expressed his views that telemedicine has become “a vision of improving access to quality healthcare in every zip code across the United States.” With modern capabilities, Dr. Taylor believes many of primary care physician services could be delivered effectively via tele-medical intervention.
Telemedicine supports the vision of improving access to quality healthcare in every zip code across the United States.
And Dr. Taylor is not alone. Telemedicine seems to be reaching a tipping point in the American healthcare landscape. One study from the American Hospital Association estimates that as of 2017, 76% of hospitals were implementing telehealth programs, a number that has more than doubled since 2010 [3]. Presently, these services are delivered via three main modalities: (1) phone conversations, (2) text messaging, and (3) video visits. Each has its own set of strengths and weaknesses, but all serve to minimize transportation and scheduling barriers associated with traditional office visits. In many cases, video visits can take the place of an in-person visit or even improve on the experience.
Telemedicine can improve access in rural areas
A promising application of telemedicine has been in rural markets. The challenge of efficiently providing care to the 10-15% of America’s population who live in these sparsely populated areas has led to significant gaps in access to care. Residents in these areas must travel significant distances to receive even basic care and often face longer wait times and minimal access to specialists when they arrive. In some of these areas a woman would need to travel up to 200 miles to meet with her Gynecologist [4].
By providing services via a smartphone, video visits alleviate the need for extended commutes, and allow specialists to connect virtually to the care team to provide their expertise. Dr. Taylor, who still works part-time as a video visit physician, described the strong levels of satisfaction that he sees from those who are able to avoid the many-hour nightmare of a rural in-person visit by taking advantage of telemedicine services.
“Many people do call in, in the rural areas across these states and they say repeatedly, ‘well gee, the quality of what you all are providing on a smartphone is better than what I have available at my local community’. Increasingly some of these people have been asking for the telemedicine doctors to become their primary doctors.”
While it might be expected that incumbent rural providers would view telemedicine technology as a market share stealer, Dr. Taylor explained that some progressive hospitals view these care advancements as an opportunity to improve care and differentiate their offerings.
“What many [rural providers] are doing is organizing around [tele-medical technologies] to extend their reach into their service area. One example: A lot of rural hospitals have been having trouble getting access to high-quality, board-certified, emergency room doctors… some of them have been… getting nurse practitioners to staff the emergency room, and then they have a hub of certified emergency room physicians who operate at a center to back up those nurse practitioners in those rural hospitals.”
What about the costs?
The US healthcare system faces ever-mounting pressure to keep costs down. While telemedicine provides care-seekers and providers with new ways to access each other more efficiently, the financial viability of the technology will ultimately determine its fate in the US market.
As we discussed the cost of video visits and other telemedicine services, Dr. Taylor stressed that the cost advantages of virtual interactions over in-person.
“An initial primary care visit with a doctor in a brick-and-mortar setting usually costs between $175 and $225 dollars whereas the cost under telemedicine services such as [Doctor On Demand] is usually about $70 to $75 dollars, so that's a huge difference right there.”
Dr. Taylor added that these costs savings are even more pronounced for end-users as their commercial health plans begin to offer telemedicine benefits. He estimated that about 90% of Fortune 500 companies offer a telemedicine benefit. Some companies offer their employees out-of-pocket costs of $5 or even $0 for certain telemedicine services.
At half the price of an in-person visit, the cost savings from video visits seem impressive. However, for these savings to be considered savings, telemedicine services must truly replace in-person visits – not just add another step to the care process. After all, if every remote consultation requires an in-person follow up, the remote visit could often be skipped entirely. Dr. Taylor shared his views on the case for telemedicine as a replacement for in-person visits – and the competitive advantage many large players have already witnessed.
“There are very large health plans in the country who have been actively promoting telemedicine because their own studies and their own data show that it does replace brick-and-mortar healthcare and it is not additive. So, they don't consider that to be controversial.”
Dr. Taylor isn’t the only one buying-in to the cost-saving potential of telemedicine. As of September 2019, 40 states have enacted laws requiring private payers to provide service coverage parity with in-person visits [5]. Even more encouraging, the top 5 US payers have elected to provide coverage for telemedicine services in all 50 states, even those in which coverage is not mandated by law [6]. The embrace of telemedicine is not limited to private payers either. Today, all 50 states have implemented some form of Medicaid coverage for video visits [5].
Where will telemedicine expand to next?
The state of telemedicine in 2020 is quite strong according to Dr. Taylor. The convenient, relatively low-cost technology has already made a home in several markets and Dr. Taylor expects that it will only expand with the rise of health retail settings in companies like Walmart and CVS. Further penetration is also expected in the care and management of chronic disease as connected devices enable virtual coaching and monitoring for those fighting diabetes and obesity. Telemedicine might not be new, but as the technology supporting it continues to develop, it will have an increasing impact on the accessibility and affordability of healthcare.
About the Author:
Isaac DuPree
Isaac is a first-year in Kellogg's MBA + MS in Design Innovation dual-degree program. He currently contributes to the KBHC team as a marketing director for the conference. Beyond KBHC, Isaac volunteers as a Kellogg tour guide and represents his section on the board of the Kellogg Student Association.
Prior to Kellogg Isaac worked as a senior analyst on the MedTech team of the Boston Consulting Group. At BCG he contributed to a wide variety of medical device projects, and solidified his passion for the sector. After Kellogg, Isaac hopes to continue collaborating with MedTech innovators to bring meaningful change to healthcare.
Sources:
[1] R. Bashshur, "Telemedicine: A new Mode for the Delivery of Health Care," Inquiry, vol. 13, no. 3, pp. 233-244, 1976.
[2] Pew Research Center, "Mobile Fact Sheet," Pew Research Company, 12 June 2019. [Online]. Available: https://www.pewresearch.org/internet/fact-sheet/mobile/. [Accessed 10 January 2020].
[3] American Hospital Association, "Fact Sheet: Telehealth," February 2019. [Online]. Available: https://www.aha.org/system/files/2019-02/fact-sheet-telehealth-2-4-19.pdf. [Accessed 10 January 2020].
[4] R. Warshaw, "Health Disparities Affect Millions in Rural U.S. Communities," AAMC, 31 October 2017. [Online]. Available: https://www.aamc.org/news-insights/health-disparities-affect-millions-rural-us-communities. [Accessed 10 January 2020].
[5] The National Telehealth Policy Resource Center, "State Telehealth Laws and Reimbursement Policies," September 2019. [Online]. Available: https://www.cchpca.org/sites/default/files/2019-10/50%20STATE%20INFOGRAPH%20FALL%202019%20FINAL.pdf. [Accessed 16 January 2020].
[6] M. Reiboldt, "Telemedicine Reimbursement and Regulations," Healthcare Business Management Association, 1 March 2018. [Online]. Available: https://www.hbma.org/news/public-news/n_telemedicine-reimbursement-and-regulations. [Accessed 2020 16 January].