Updated: Jan 23, 2022
As medical professionals of all fields face persistent medical pressure due to the COVID-19 pandemic, it is paramount that the healthcare industry expand alternative options for patients to access healthcare. The leading alternative is known as telemedicine, which is the act of using telecommunication to provide healthcare services rather than by direct patient-provider contact, which saw an incredible 38 fold increase in use over the course of the pandemic . The rapid adoption of telemedicine has caused ambiguity across healthcare insurers, with providers and insurers conflicted over the relative value of a telehealth visit compared to a traditional one. However, many providers and insurers agree that the overall cost of telemedicine has significant cost-reducing potential for the healthcare sector.
In a typical telehealth visit, the provider will attempt to replicate the services provided during an in-person visit. The patient will log into their secure portal to be greeted on screen by their provider. After verbally agreeing to a statement ensuring confidentiality, the physician will then guide the patient in gathering all necessary medical information, creatively utilizing visual technology and accurately comprehending the provided information. As the visit concludes, the provider can determine a diagnosis, offer a referral, or write a prescription, essentially like any other traditional visit.
The Centers for Medicare & Medicaid Services (CMS) appear to agree that telehealth services should be viewed as an extension of quality healthcare, rather than an inferior alternative. CMS classified Medicare telehealth to be “considered the same as in-person visits” and, therefore, that physicians and beneficiaries should be “paid at the same rate as regular, in-person visits” . Effective March 6th, 2020, the CMS announced through the Coronavirus Preparedness and Response Supplemental Appropriations Act that Medicare will temporarily cover virtual services including Medicare telehealth visits, along with less formal virtual check-ins and e-visits for all medicare beneficiaries . To view CMS’s act from a broader perspective, ensuring the equal pay rate for a telehealth and traditional visit strongly incentivized providers to both quickly adopt and employ the use of telehealth services into their own practices.
Assuming that telehealth becomes more pervasive, where does the healthcare sector see the largest cost-reductions? In October of 2020, an Australian group released a review of 17 Telehealth cost-analysis models, outlining the areas with the most successful cost-minimization . Of the 17 models, 9 (53%) demonstrated net-positive cost saving outcomes when comparing traditional and telehealth models. The most common area of saving was identified from the offsetting of patient and clinical transportation funded by the health system. In a system where the only barrier to access is having an electronic device capable of using broadband internet, this much is clear. However, some outcomes from the review were not as obvious. In one study, the usage of telemedicine was shown to reduce expenses caused by in-hospital monitoring services. Specifically, the change from traditional to remote monitoring of high-risk pregnancies reduced potential hospital spending by an annual $164,305 . Additionally, a few studies identified cost-savings resulting from the practice of teletriage, which is when a patient is virtually screened to determine if additional tertiary care is necessary . Both identified areas were successful in reducing costs mainly through minimizing or even eliminating the need for in-person visits.
Although the cost-reduction due to telehealth in these areas is a sizable win, the greater economic success will only be uncovered over the longer term. Installation of a telehealth system including equipment set-up and employee training is a huge investment for hospitals and providers and the duration to reach a break-even point is lengthy; one cost-analysis model estimates the payback period for hospitals to be around 9 years . But not all is lost. Even well through the end of the COVID-19 pandemic, the benefits of telemedicine remain too relevant and substantial to be lost. As telehealth services continue to garner attention and further develop, hospitals can begin to see the hefty installation costs and the duration of payback periods reduce. Perhaps then, the healthcare industry will see the concept of traditional healthcare become redefined with the picture including less costly medical bills, unnecessary time-wasting, and uncomfortable patient waiting rooms and more efficient care, empowered patients, and high-definition laptops.
Bestsennyy, O., Gilbert, G., Harris, A., & Rost, J. (2021, July 22). Telehealth: A quarter-trillion-dollar post-covid-19 reality? McKinsey & Company. Retrieved December 2, 2021, from https://www.mckinsey.com/industries/healthcare-systems-and-services/our-insights/telehealth-a-quarter-trillion-dollar-post-covid-19-reality.
Centers for Medicare & Medicaid Services. (2020, March 17). Fact sheet medicare telemedicine health care provider fact sheet. CMS. Retrieved December 2, 2021, from https://www.cms.gov/newsroom/fact-sheets/medicare-telemedicine-health-care-provider-fact-sheet.
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