Increased utilization of telehealth may put cost savings on hold

Reducing costs is one of the purported principal benefits of telehealth, but recent research questions just how much the remote services may save healthcare providers. A report in the March issue of Health Affairs explores the use of direct-to-consumer telehealth and related costs.

Telehealth has the potential to remotely link patient and physician, which would ideally save money and time for both patient and physician. However, that equation may not be so simple. Replacing in-visit appointments with less costly telehealth may increase utilization, which would erase any cost savings related to efficiency.

Researchers, led by RAND Corporation associate policy researcher J. Scott Ashwood, used more than 300,000 patient claims from 2011 to 2013. They analyzed rates of utilization and spending for acute respiratory illnesses. Telehealth won the savings argument per telehealth incident, costing an average of $79 per acute respiratory infection episode versus $146 for an office visit or $1,734 for an emergency department (ED) visit. However, those benefits are outweighed by 90 percent of the telehealth visits representing new utilization rather than replacing office or ED visits.

“Per episode, telehealth visits were about 50 percent of the cost of a physician office visit and less than 5 percent of the cost of an ED visit,” wrote Ashwood and colleagues. “However, the vast majority of telehealth visits for acute respiratory infections were new utilization rather than substitution. The savings from substitution were outweighed by the increase in spending for the new utilization, and per enrollee spending on acute respiratory infection treatment was higher among telehealth users, compared to nonusers. This pattern of greater spending for telehealth users remained even after we accounted for time costs to patients for traveling to and completing health care visits.”

The policy implications of these findings could be to increase patient cost-sharing in telehealth services, justifying to patients that they’ll save on travel costs and time.

“Telehealth has been promoted by direct-to consumer telehealth companies and by health plans as a way to decrease healthcare spending,” wrote Ashwood et al. “While we found that per episode spending was lower if the patient had a direct-to-consumer telehealth visit, compared to an in-person visit, the convenience of telehealth led to greater use of care and therefore increased health care spending. Creative strategies such as increasing patient cost sharing, targeted patient outreach, and the integration of telehealth into overall care may make it possible to use this emerging and popular service to increase the value of care.”