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Potential Savings from Telemedicine

By December 22, 2014Commentary

Using technology to facilitate non-face-to-face visits with clinicians is not difficult.  But utilization has not expanded as rapidly as might be expected due to a variety of barriers, including regulatory impediments, reimbursement policies and payer ambivalence.  A new study gives some descriptive statistics regarding use of telemedicine and analyzes savings which might be available.  (Telmed Study)   The author drew up data provided by American Well, Anthem, Doctor on Demand, Optum and TelaDoc.  The analysis focuses on the commercial market, but extrapolates to Medicare.  Overall, about 1 to 2% of visits were by telemedicine capability, or about 1.3 per patient per year.  Less than 1% of patients  have as many as 4 telemedicine visits per year.  Visits are pretty evenly spread through the days of the week, with a slight decline on the weekend.  The most common conditions were sinusitis, colds, bladder infections and skin infections.  Very few visits were related to chronic conditions, although telemedicine could be well-suited for monitoring visits for such diseases.  About 83% of visits are fully resolved, in the remainder the patient is referred for an in-person visit somewhere.

If they had not used telemedicine, somewhere around 45% of patients would have gone to urgent care, 31% to a physician’s office, 6% to an ER and 12% would have done nothing.  This suggests that telemedicine creates few additive visits and may improve quality by ensuring that people who believe they have a serious condition seek some medical advice. The average cost of a telemedicine visit is $40 to $50 to the health plan.  There may be copays, but health plans tend to waive those or they are lower than for in-person visits.  Depending on where the patient otherwise would have gone, the telemedicine visit is very cost-effective.  The average urgent care visit cost, for example, is  around $116.  On a weighted average basis of cost at where the patient otherwise would have gone, telemedicine saves about 70% a visit.  Of course, if a significant fraction of visits begin to be done by telehealth, doctors in particular may want to be paid more per visit to keep their total income up, but telemedicine would still likely be less costly.  The analysis could be picked at in a variety of ways, but it is hard to imagine that encouraging much wider use of telemedicine would not create large savings.

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