Telemedicine is poised for growth

December 8, 2014

The industry turns to telehealth to lower costs and improve quality.

Being diagnosed via video may sound like the stuff of science fiction for some, but it is a reality for many people whose employers have embraced telehealth for its potential to improve employee health while reducing costs and time off work.

Telehealth (aka telemedicine) is becoming increasingly popular, according to a survey by the National Business Group on Health (NBGH). The group found that about 28% of large companies currently offer telehealth options, and 48% of the employers it surveyed in states where telehealth is permitted plan to provide such services in 2015. The survey also shines a light on what may be the biggest hurdles to more widespread telehealth adoption: Spotty federal government and state-by-state acceptance.

“The main challenge revolves around state laws and regulations affecting employers’ and insurers’ ability to provide telehealth services,” says Brian Marcotte, NBGH chief executive officer. “The scope of services that telehealth initiatives can provide differ by state, which makes it a challenge for multi-state employers.”

The National Conference of State Legislatures reports that 43 states and the District of Columbia provide some form of Medicaid reimbursement for telehealth services. The American Telemedicine Association (ATA) says Medicare covers many physician services, including videoconferencing for traditional fee-for-service beneficiaries living in rural areas. Medicare Advantage plan members have more flexibility when using telehealth, according to the ATA.

“Most of the commercial market has made the decision to embrace telehealth,” says Roy Schoenberg, MD, chief executive officer of American Well, a telehealth services company. “The problem is, with Medicare and Medicaid there are good intentions -- lots of bills have been submitted -- but when it comes down to the Congressional Budget Office, they have to put a number on costs. Telehealth acceptance has happened so fast, there is no track record.”

While telehealth services are not new, several factors have recently converged to bring them more widespread attention. Among these are improved technology, greater acceptance by insurers, physicians and consumers, and demand for medical services that outstrips supply. Jason Gorevic, CEO of Teladoc, a telehealth company founded in 2002, says he saw an inflection point in the company’s growth curve in 2012. “We did 1,200 telemedicine visits yesterday, and expect to do half a million next year,” he says. “It really points to a wave that’s building. It started in the private sector, but now we’re seeing significant movement in the federal and state governments.”

Part of that growth can be attributed to the impact that newly- insured consumers created by the Affordable Care Act are having on an already strained primary care system. Part of telemedicine’s promise is that more people can engage in their health and wellness in a way that is more efficient for primary care physicians without affecting the quality of care.

NEXT: Changing cultural norms

 

Changing cultural norms

In addition to a patchwork of federal and state government acceptance, telehealth proponents face the cultural hurdles typical to any new initiative, especially one involving technology. Employees may not be comfortable with the idea of video conferencing, receiving wellness texts or using online portals for medical care. That’s where employers may have an advantage. “Employers are in the unique position of having a captive audience, so they can do more communication and education,” says Marcotte. “They can showcase the benefits of telehealth.”

For employees, chief among those benefits is what has already been shown to be a strong driver of cultural change: convenience. Employees no longer have to schedule an appointment during their doctors’ often limited office hours, or take time off work to drive to their doctor’s office and wait to be seen.

The most convenient telehealth initiatives provide employees with quick access to their physicians while at home, at work or on the road, before, during and after traditional office hours.“There is an initial hurdle to get employees comfortable with it, but it’s not a huge barrier,” Marcotte says.

Employers are using a variety of methods to overcome that hurdle. Employees must feel their privacy concerns have been addressed, both as they are conferencing with care providers and with their medical information. Some large employers are easing the acceptance of telehealth via on-site clinics for employees and telehealth kiosks in branch offices. Many employers are also offering attractive telemedicine options alongside high-deductible plans to allow employees to have more direct control of their healthcare costs.

NEXT: Technology integration

 

Technology integration

The healthcare industry is moving toward better integration and communication along the entire care continuum. Payers, providers, pharmacies and labs are not yet able to communicate seamlessly with one another on a patient-by-patient basis.  “There are many silos in the healthcare industry, and telemedicine integration is going to be key,” says Alan Roga, MD, founder and chief executive officer of Stat Health Services, provider of the Stat Doctors e-health services. “That’s why we are seeing a greater demand for ‘big data’ in this industry. To be successful, data has to follow the patient independent of the currently fragmented healthcare market.”

Schoenberg agrees that the infrastructure needed to institute telehealth is key to its success. He says the idea that videoconferencing is the only necessary technology is one of the biggest misunderstandings surrounding telehealth. “Videoconferencing technology is maybe 1% of the investment that needs to be made,” Schoenberg says. “It has to come with the integration to claims, eligibility, prescribing, scheduling, auditing systems, encoding systems … all the important pieces of the puzzle. If you try to cut corners and not integrate or interact with one of those systems, it breaks. You can’t just turn on Skype.”

Telehealth may represent an additional technology integration consideration, especially if patients are not using their primary care physician. That could become less of an issue as more physician groups and insurers warm to the idea of telemedicine.

“We’re seeing more and more patients beginning to use the technology with their own physicians, not just to access the next available physician, but as one of the channels you’re using to interact with your doctor,” says Schoenberg. “We’re seeing completely different populations now of people who have chronic conditions or need long-term treatments.”
He says the majority of telehealth users still access it for convenience, but he sees a growth in longitudinal care. “The biggest growth is from hospital patients,” he says. “They use telehealth to connect pre- and post-surgery. That will grow rapidly.”

Larry Boress, president and chief executive officer of the Midwest Business Group on Health and executive director of the National Association of Worksite Health Centers, also sees hospitals driving telemedicine growth. “Of employers who have their own on-site health centers -- about 30% are doing telehealth themselves. About 40% to 50% are contracting with a third party, and the rest are contracting with local health providers. It’s a growing trend for providers. They see it as new business opportunity.”

NEXT: Insurance companies expand use of telehealth

 

Likewise, more insurance plans are expanding their telehealth coverage, according to the ATA. The association lists 21 states and the District of Columbia as requiring private insurers to cover telehealth the same as they cover in-person services. “More employers and insurance carriers are seeing the value, as telemedicine enhances convenience while significantly reducing costs,” says Roga.

Cost saving estimates vary. Gorevic pins savings at as much as $700 per consultation. Schoenberg says savings depend on the population and geography, but approximates an urgent care center visit at $150, and an emergency room encounter at $500. By contrast, he says, a telehealth visit costs around $50, including all the technology needed.

If telehealth applications replaced physician, emergency department and urgent care visits, it would save $6 billion annually in healthcare costs, according to a recent study by Towers Watson. Of course, telemedicine isn’t applicable for every situation. “If you’re having a heart attack, get on an ambulance, not your iPhone,” Schoenberg advises. But for those non-emergency situations that send many consumers to the ER unnecessarily, telehealth could have a significant impact.

“The cost savings are meaningful for payers, whether they are employers or health insurance plans, and also for consumers in this age of high-deductible health plans,” Gorevic says.  

Jamie J. Gooch is a freelance writer based in Northeast Ohio.