Impact of Telehealth on Costs

By March 13, 2017Commentary

Telemedicine use almost always has a lower unit cost, sometimes much lower, than does an in-person visit.  In the abstract, that would suggest that greater use of telemedicine could lower health spending.  But that assumes that all telemedicine use would be substitutive; that there would be no increase in utilization.  Research published in Health Affairs examines whether this is the case.   (HA Affairs)   There were around 1.25 million direct-to-consumer telehealth visits in 2015 and volume growth has been quite rapid.  Many employers and health plans now offer, even encourage these visits.  For patients they offer greater convenience and savings in travel and wait times and lost work time.  The authors examined claims data on over 300,000 patients insured through CalPERS for the years 2011 to 2013 to explore telehealth and other spending on acute respiratory illnesses.  They looked at all enrollees with an acute respiratory infection visit, comparing those who used telehealth with those who did not on a matched and adjusted basis.  Total episode costs were examined, as well as raw trends in telehealth use for this condition.

Spending per episode for a telemedicine visit for the respiratory infection averaged $79, compared to $146 for a physician office visit and $1447 for use of the ER.  Episode costs for visits starting with telemedicine were lower for almost every category of care–tests, imaging, drugs, etc.  Comparing total visits among the telehealth users to those matched patients who did not use telehealth, there was a significant increase in total utilization, resulting in around 88% of the telehealth visits representing new utilization.   This resulted in a net additional annual cost of about $45 per person.  It should obviously be noted that this study is limited both in size and to one disease, and this particular group is not in a high-deductible plan and has generous benefits.  It also could be that as telehealth is introduced, it is most likely to reach those who for convenience or other reasons have not often gone in-person to a doctor for acute health needs.  But the patterns of use found may well be typical for all of telemedicine.  From an employer’s perspective, the limited additional health spending should be weighed against gains in productivity from less work time being used for an in-person visit.  And it is possible that the added convenience and increased attention to health issues may have longer term health status benefits that also confer longer-run spending reductions.  So it is too early to conclude that telemedicine raises overall spending.

Author Kevin Roche

The Healthy Skeptic is a website about the health care system, and is written by Kevin Roche, who has many years of experience working in the health industry through Roche Consulting, LLC. Mr. Roche is available to assist health care companies through consulting arrangements and may be reached at khroche@healthy-skeptic.com.

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