From the March 2016 issue of HealthCare Business News magazine
By: Nancy Rowe
The market for telehealth services and equipment is growing exponentially, and there’s a reason for that: telehealth works.
Articles published over the past 20-plus years document that telemedicine and telehealth save lives, improve patient outcomes and save money. There is a wide range of business models, each with its own cost-saving opportunities.
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More than half of U.S. states have enacted legislation to ensure private payers reimburse for telemedicine services. The scope of coverage varies widely, but the number of states with parity legislation is climbing steadily. Many of these states also cover telemedicine through their Medicaid programs. Medicare has expanded its covered procedure codes for live, two-way telemedicine encounters and now reimburses for remote patient monitoring of chronic conditions. With telemedicine parity escalating each year, it’s becoming more likely that tele-providers will be reimbursed for their services. How is that a cost-saver?
In some cases (such as Medicare), an extra “facility fee” is paid along with the provider reimbursement. And in most cases, telemedicine and telehealth increase efficiency and reduce costs, especially with the financial outlay for equipment and telecommunications spiraling downward. Here are just a few examples.
Closed or capitated systems
For health care systems providing services to specific populations in specific regions on a set annual budget, telemedicine has been a boon. In Arizona, for instance, the state-contracted Northern Arizona Regional Behavioral Health Authority (NARBHA, now Health Choice Integrated Care) is responsible for a vast, mostly rural area, with far-flung towns, that covers nearly half the state. NARBHA implemented a telemedicine network in 1996. This network has accommodated more than 166,000 telepsychiatry sessions. Prior to using telemedicine, doctors were being paid their hourly consultation rates to drive to and from remote towns — as well as incurring travel costs and lodging.
With telemedicine, doctors spend their paid hours providing patient services instead of driving. This creates obvious efficiencies, including reduced wait times for patients and fewer, but more productive paid physician hours. NARBHA estimates travel savings of more than $200,000 per year, plus 1,200 hours saved driving time. Another benefit is the marked improvement in physician recruitment and retention. With telemedicine, providers can be recruited from anywhere in the world, and can live and move wherever they want as long as they are properly licensed and credentialed. Because providers are not expected to live in or commute to a specific place, there is much less turnover, so the costs associated with losing and replacing doctors are greatly reduced.