How Telemedicine’s Convenience Factor Might Increase Costs


Communications technology has taken telemedicine from the simple phone call to the advanced secure video doctor visit.

Telemedicine and convenience go together.

By connecting with their healthcare providers by phone, or through a secure Skype-like video interface, patients get to avoid traveling to a doctor’s office, sitting in a boring, crowded waiting room, and the general upheaval that goes along with being sick and trying to get help for it.

On the surface, telemedicine sounds like a cure itself for many of the woes facing healthcare providers as demand for services continues to increase. Who wouldn’t want less crowded waiting rooms, greater convenience, and lower costs (since telemedicine visits cost less than in-person visits)?

But the very convenience of telemedicine could be the thing that limits how well it is able to cut overall costs of medical services. That’s because when something is too convenient, people tend to overuse it. It’s a bit like owning a car, but relying increasingly on Uber to get around.

Not that there’s anything wrong with taking advantage of convenience, but doing so without discretion can end up producing its own problems.


The CalPERS Blue Shield Teladoc Study

A 2012 CalPERS Blue Shield study of telehealth visits over 300,000 insurance enrollees found that indeed, many people did use telemedicine for routine respiratory infections over the course of a year.

About one-third of the roughly 3,000 people who came down with respiratory infections used telemedicine visits (which were covered by insurance) offered by an independent telemedicine company called Teladoc to address their concerns.

The good news was that Teladoc visits helped patients avoid unnecessary testing and imaging studies for bronchitis. But did those telemedicine visits replace in-person visits? Unfortunately, that only happened about 12% of the time. The result was that spending went up by an average of $45 per Teladoc patient. In other words, telemedicine visits didn’t significantly cut down on in-person medical visits.

The lower barrier to usage provided by telemedicine meant that people tended to use it in addition to, rather than in place of ordinary in-person medical visits.


Who Actually Uses Telemedicine?

The advent of telemedicine was touted as a wonderful way for rural, disabled, or elderly patients to access the healthcare services they needed more conveniently. Patients would be more likely to engage in follow-up or preventative services, less likely to use emergency departments, and would avoid the transportation difficulties that often accompany disabilities, advanced age, or remote location. Indeed, telehealth can deliver on these lofty promises, when patients are willing to use telemedicine services.

However, studies of telemedicine users have found that rather than being older and sicker, they tend to be younger, healthier, and more urban – the exact people who tend not to have the transportation and access problems that vex older rural residents. Is the answer discouraging these users from enjoying the advantages of telemedicine, or redoubling efforts to encourage its use among people for whom it can make the most difference?


Preventing Overuse and Healthcare Service Fragmentation

While overuse like that documented by the CalPERS Blue Shield study can result in higher per-capita healthcare costs, there’s another downside to over-reliance on telemedicine, and that’s healthcare fragmentation.

Companies like Teladoc often operate independently of a patient’s normal healthcare network. Therefore, the physicians providing telemedicine services won’t have the level of access to patient health records that their family physician might have. Moreover, the telemedicine visit may not be incorporated into the patient’s medical history. This is a classic case of healthcare fragmentation, and it affects the efficiency and effectiveness of the healthcare delivery system.

Telemedicine provides its greatest benefits when it’s more fully integrated into the patient’s total care system, with access to medical histories and assurance that telemedicine visits will be incorporated into that history.


How Kaiser Integrates Telehealth

Kaiser Permanente has emerged as a leader in the integration of telemedicine with primary healthcare. More than half its patient interactions happen either online or over the phone. Since Kaiser runs its own telemedicine web portal, integrating this type of care with traditional care is far easier. Say a patient wants to set up a video consultation through the web portal. They’re offered the option of scheduling an in-person visit with their primary care physician or speaking with an on-call ER physician.

Patients who choose the second option know that the responding doctor can bring up patient health histories and has the authority to transfer them to a specialist or even an urgent care clinic if that is the most appropriate type of care for the patient. This type of integrated care “closes the loop” by ensuring better continuity of care and less care fragmentation.


Medicare Concerns with New Utilization

Medicare has actually been in the telemedicine business for decades. Early telemedicine services were narrowly defined for Medicare enrollees who lived in rural areas without good access to the services they needed. Care has been provided by phone, and in most cases, it has been provided not directly to patient homes, but to clinics closest to patients.


Limited telemedicine services for rural patients have been part of Medicare for decades.

Limited telemedicine services for rural patients have been part of Medicare for decades.

While you might imagine that Medicare would be anxious to expand telemedicine services, they have actually been very conservative about doing so. The reason is that they are concerned about over-utilization becoming a problem, similar to what CalPERS Blue Shield found, but on a national level.

If, the reasoning goes, telemedicine makes access to medical care too convenient for too many people, providers will be overrun with calls for incidents and conditions that patients may have “waited out” before, thus stretching medical resources even more than they already are. Medicare does intend to expand telemedicine services, and has actually done so over the past several years. But they have expanded telemedicine in clearly defined populations and with specific health conditions to guard against over-utilization.


Telemedicine Vendors Respond to Studies

Telemedicine providers, naturally, take issue with the assertion that convenience will lead to over-utilization. They point out that studies that have already been done, like the CalPERS study, were only short-term studies, and would, over time, discover long-term savings. If the telemedicine visits result in hospital admissions being reduced, then higher short-term telemedicine expenditures would be more than offset by longer-term reductions in care costs.

They also question the whole concept of over-utilization, which implies that there is an appropriate amount of healthcare a person should access, and that it’s defined by the number of in-person visits that have historically been recorded. In other words, strong utilization of telemedicine could lead to the conclusion that until now many patients have been under-utilizing healthcare services due to inconvenience, cost, or other reasons.

Telemedicine may be in a “honeymoon” period with the American public, for whom there is a lot of pent-up demand for healthcare. Telemedicine takes less time, costs less, and eliminates transportation issues, and people like that enough that they use telemedicine options when they’re available and appropriate. Some insurers and Medicare worry that the great convenience of telemedicine will lead to over-utilization and higher costs.

Telemedicine providers, on the other hand, say that it’s best to wait and look at longer-term results and see if higher up-front expenditures on telemedicine will be offset by less need for more intensive and invasive care, such as that provided in hospitals. For more information about telemedicine and other healthcare topics that affect your life, we hope you will take a few minutes to browse through our blog.