Telemedicine Cost Savings Are Just Beginning
Telemedicine has long been touted as a balm for rising healthcare costs. Indeed, a 2017 report from the Rural Broadband Association found that annual telemedicine cost savings averaged $20,841 per hospital in the US. Some believe that telemedicine, including remote patient monitoring, could shave a combined $4.3 billion off the country’s yearly healthcare bill. While a first glance at the cost savings looks promising, digging deeper reveals that several obstacles are still preventing us from maximizing the benefits of telemedicine; this suggests that, with full support, cost savings could be driven higher yet.
The largest financial benefits are probably felt in rural communities, where patients must often tolerate onerous travel requirements to see a specialist tens of miles away. An analysis from the NTCA – The Rural Broadband Association revealed that once telemedicine was implemented in the rural regions, the average facility saved $5,718 in travel expenses annually, and the patients saved $3,431 in lost wages—in addition to the hospital’s cost savings, which could exceed the aforementioned $20,000 and actually top $100,000 for rural hospitals. Furthermore, revenues for local labs and pharmacies increased because people tend to fulfill these services near the doctor who prescribed these services; by keeping their medical appointments local via telemedicine, patients are able to keep their lab and medication services local as well. In fact, annual revenues for local labs rose roughly $30,000 for certain procedures, and local pharmacies’ revenues grew by about $4,000 for each prescription, depending on the medication prescribed.
Other tangible, but non-quantifiable, benefits of telemedicine include easier access to specialists, comfort, transportation, timeliness, improved outcomes, and provider benefits.
Despite all of these benefits, significant barriers to adoption remain, such as:
- Reimbursement – Medicare is very strict regarding reimbursement for telemedicine services.
- State Licensing Requirements – Many states do not have reciprocity agreements and thus require physicians to be licensed both in their home state and in the state in which the patient is located.
- Patient Privacy Protections – HIPAA laws must be followed. There are many video calling software companies out there, but very few offer the HIPAA-compliant security that is necessary for the medical field.
- Initial Cost – To get a video conferencing suite off the ground, an initial investment of up to $20,000 is often needed. This may be beyond what a rural clinic can comfortably handle.
Overcoming these barriers will clear the way for widespread use of telemedicine—and for more patients and medical facilities to enjoy its advantages, including telemedicine cost savings. In this way, by easing the financial burden on providers, we can allow them to focus on their true area of expertise: the patients and their wellbeing.
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