How health systems can take advantage of telemedicine’s reduced care costs

Another study has concluded that telemedicine costs a lot less than in-person care, and the authors suggest it might be time for hospitals to rethink their approach to care delivery, clinical resource allocation, and system design. 

The research team led by the Perelman School of Medicine at the University of Pennsylvania looked at data from more than 163,000 encounters at five hospitals in the state over more than three years. Researchers focused on 10 common diagnostic codes treatable vis telemedicine or in-person outpatient care.  

The mean 30-day episode charge was less than $97 for telemedicine, compared to more than $509 for in-person care. Tellingly, the study also found a 23% comparative reduction in 30-day subsequent visits for telemedicine users, compared to those whose first encounter was an in-person visit. 

“Our work suggests that for many patients, telemedicine can be a complete solution, not just a temporary band-aid,” Penn professor Dr. David Asch said in a statement. 

More proof that telemedicine costs less

These findings align with previous papers that have found telemedicine demonstrates  similar clinical outcomes for early palliative care, congestive heart failure treatment, and blood pressure treatment when compared to in-person visits. (That said, 30-day visits are more frequent among oncology patients initially seen via telemedicine compared to those seen in person.) 

Meanwhile, researchers from Michigan Medicine found telemedicine-initiated visits among Medicare beneficiaries reduce 30-day spending by $82. This may stem in large part from lower lab test rates and imaging rates compared to in-person episodes, according to the paper.  

An older study from Epic Research supports this point, noting that telemedicine consistently bills at a lower level of service than office visits. This could be because patients “self-select” in-person visits if they believe they’ll need a higher level of care – or because lab tests, imaging, and other additional services are more readily available in an office setting. In either case, it helps explain why Penn found that 30-day charges for telemedicine were so much lower than in-person episodes. 

3 tips for making telemedicine financially viable

The study begs the obvious question: If telemedicine costs less and demonstrates comparable outcomes, how do health systems avoid financial ruin? Fortunately, the Penn research team had a few suggestions. 

Run the numbers and test viable pilots without heavy lifting. The combination of electronic health record (EHR), diagnostic codes, and billing/reimbursement data “allow[s] for episode-level analysis of both financial and utilization outcomes.” This lets organizations emulate a trial that compares telemedicine to in-person care and “monitor and optimize their care models in a dynamic clinical health care environment.” In other words, they can essentially run a pilot without running a pilot. 

Leverage reduced patient burden to increase utilization. The availability of telemedicine services “may alter care-seeking behavior and patient preferences,” according to the paper. Eliminating common barriers to care such as travel, parking, and time off work can help health systems attract patients who may forgo an initial in-person visit or struggle to schedule repeated in-person follow-up visits. What’s more, with increased utilization comes improved care plan adherence for a range of conditions, from rehabilitation to weight management to respiratory infections. 

Rethink care infrastructure and clinical workflows. Telemedicine’s greatest potential appears to be managing outpatient conditions, researchers said. Organizations should keep this in mind as they reallocate clinical resources and redesign workflows to ensure telemedicine is accessible, scalable, and cost-effective. Here, bolstering local infrastructure for supporting outpatient care will work well; this will provide a central location for managing telemedicine and help avoid the common pitfalls of fragmented and redundant care.

Brian Eastwood is a Boston-based writer with more than 10 years of experience covering healthcare IT and healthcare delivery. He also writes about enterprise IT, consumer technology, and corporate leadership.