Will Telemedicine Send Costs Up or Down?

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Don’t be misled by the recent RAND study — the jury’s still out.

It is often said that “perception is reality.” And while I take exception to the philosophical underpinnings of this concept, it is true that, for some, once they perceive something to be true, they have a hard time seeing it any other way, regardless of the facts. And that’s where we find ourselves on the issue of whether telemedicine has the ability to reduce medical costs.

The Rand Corporation recently published a study that suggests telemedicine does not reduce overall medical expenditures. In fact, the study was limited — examining respiratory illness after a telemedicine call-in service was implemented. What the investigators found was predictable: most people with minor respiratory illnesses were not planning to go to the doctor’s office in the first place, but they are more than happy to call in to get an opinion or a prescription drug. Thus, the study concluded, telemedicine brings the not-so-sick to the stage, but does not actual keep many people from going to the doctor. Therefore, one could conclude that costs go up because patients still wind up in doctor’s offices or the ER. The bottom line, according to some analysts of the study: Patients accessing a telemedicine service should perhaps be asked to pay more for the service.


Setting the Record Straight
Unfortunately, the fallout from this study carried over into other areas of telemedicine. And since politicians are often simple thinkers, some have begun to worry that further expansion into this new medical delivery model could open Pandora’s Box to a whole new set of costs. So it is our responsibility, as ambassadors of telemedicine, to set the record straight.

To do so, I walked the exhibit floor at the recent meeting of the American Telemedicine Association asking this straightforward question: “What hard evidence do you have that your product or service will result in decreasing the cost of medicine”? I was surprised at the vague answers. Dr. Richard Newell of CEP America expressed the overall consensus: “At this point in our telehealth program,” he said, “I believe what we have would be anecdotal. We are just going live now with an offering at an independent living facility where we are partnering with Harvard to look at costs of care for those that have telehealth with controls that don’t have telehealth.  I hope to have more firm data to stand on regarding cost reduction.” Others gave a solid rationale but little hard data. Dr. John Mendelson, the CMO of DxRx Inc., a company that developed a custom web service and app to treat Alcohol Use Disorder by integrating a smartphone-connected breathalyzer, said “because 93% of people with AUD get no treatment at all immediate costs can rise. We currently only charge $100/month but plan to get to about $500/month from patients and insurers. But the competition — injections of long acting naltrexone at about $1,000/month, Intensive Outpatient Programs at $8,000-12,000/month and Rehab at $30,000-60,000 month — are a lot more expensive.” However, he added, they’ve only been taking patients since January and currently have only 50 patients/day in treatment/monitoring. He rationalizes that “because 1/10 of all healthcare dollars are directly related to alcohol abuse (mostly from binge drinkers, not end stage alcoholics) payers will get a fairly quick ROI.”

What We Know and What We Don’t
That’s all well and good, but I suggest we take a little more organized approach to the question while the data start to come in. First, let’s look at what we know, what we don’t know, what information is still needed and the circumstances that will impact our understanding of what we learn to be the facts.


First, we know that certain monitoring programs are already saving money. Proof of that is the fact that government programs are beginning to use telemedicine programs to manage their diabetic population, keeping them out of the hospital. Pay-for-value insurance programs are starting to use telemedicine to pre-screen their geriatric nursing home transfers to avoid inappropriate ER visits. Similarly, hospitals that get dinged for bounce-back admissions are using telemedicine to monitor the complicated patients after discharge. Thus, we have pretty strong evidence that telemedicine can keep chronically ill patients out of the hospital, thus saving the system. But what about the direct to patient care?

Even though the perception of cost ineffeciency bled over into chronic care, it was this question that the RAND study was trying to address. Can we use telemedicine to appropriately triage patients with real problems, to the right specialist, the pharmacy, or to the use of simple first aid? I say real problems, because the telemedicine has to go beyond sunburn, acne, and bladder infections to really have an impact on the cost of medicine as we transition from fee-for-service to fee-for-value. In the fee-for-service world, simple, convenient, timely access is everything. A clear HIPAA-compliant video platform is all that is needed. Throw in a few telemetry gadgets and more people will access the platform. But as the emphasis starts to shift to the need for reducing costs, will this side of the technology become less attractive because it does, in fact, invite people to access care who otherwise would not? Not if we tackle the single most important and most difficult part of medicine: taking a thorough and complete history.

Most of our current direct to patient systems focus on a brief history, which jumps quickly to an efficient treatment. A patient with a simple problem gets connected briefly to a provider, much like the video version of an office visit, for a quick diagnosis and treatment. But this isn’t where telemedicine is really going to shine. Telemedicine, through the appropriate use of artificial intelligence, has the ability to take a really thorough history, something the busy clinician often sacrifices in the interest of efficiency.

Check out Health Navigator
I recently spoke to one company that I believe is breaking new ground in this area, Health Navigator. Invented by two emergency physicians, Drs. David Thompson and Jeffrey Schwartz, Health Navigator tackled the primary and most difficult problem facing the clinician, “What is the major problem”? As we know, once that is identified clearly and succinctly, the follow-up questions, physical exam, and subsequent tests are fairly standard. Even for vague problems or multi-faceted problems, once the clear constellation of complaints exist, everything flows from that point.


For Health Navigator, that problem was solved by a combination of artificial intelligence, speech recognition technologies, and clinical history taking and problem solving skills. More than just taking the history, Health Navigator is able to apply AI to give the diagnostic probabilities for the entire differential diagnosis. And while it offers significant benefits in its current form, I believe that the best is yet to come. If the efficiencies of a history taking platform like Health Navigator are combined with live VTC interaction of an experienced clinician, utilizing AI to augment the decision making process, tackling complex medical problems will be within the comfort zone of the diagnostician. Moreover, with a written and video record of every piece of information that the clinician has as a basis for his or her decision, along with the diagnostic probabilities, it will be possible to clearly delineate appropriate standards of care such that medical liability will actually decrease, instead of increase. When that happens, and it will happen, the cost of direct to consumer medicine will go down. Telemedicine will be the source of the savings. And we will be able to prove it.

Pictured Above: To get a sense of how telemedicine is going to impact healthcare utilization and costs, I walked the floor of the American Telemedicine Association trade show and talked to a range of companies.


FOUNDER/EXECUTIVE EDITOR Dr. Plaster has been an emergency physician for more than 30 years, working exclusively night shifts for the past 20 years in emergency departments across the country. During that period, he joined the U.S. Navy and served two tours in Iraq. Dr. Plaster is the founder and executive editor of Emergency Physicians Monthly and the founder of Plaster Publishing.

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