The Doctor Will See You Now (Part I)
Footing The Bill
Though opportunities exist for videomedicine to save the healthcare industry money, such programs require initial, up-front capital to get underway. In the case of UC Davis, the center has chipped in some $4 million from its own coffers, and receives an equal amount in grants. This investment, while impressive, still falls short of covering the entire cost of the UC Davis remote health program.
It’s a simple matter of technology. While telecommunication rates and equipment costs are both falling (UC Davis’ remote clinics cost from $5,000 to $30,000 to establish), it still costs more to treat a patient over video than it does to treat him in person.
"We think of telemedicine as a loss leader," says Kathy Chorba, UC Davis’ telemedicine program manager. "The equipment costs money, the lines cost $60 an hour. There’s no way we could make enough money to pay our doctors and recoup our expenses." In a routine doctor’s office visit, the patient handles the cost of travel to the facility. For a videoconsultation, the doctor still gets paid but the facility must absorb the equipment and telecommunication costs as added expenses.
But "loss leader" may be a near-term description of remote health services, as the potential long-term rewards, gained through brand building and repeat business, are substantial. "When someone asks how we cover our costs for a telemedicine clinic, I say that isn’t how we look at it," says Jana Katz, chief administrative officer of the UC Davis Telehealth Program. "From a business strategy, there are organizations that have found telemedicine to hold an advantage in helping reach a population they wouldn’t normally reach. In healthcare, you have to build relationships and nurture referral lines."
In this landscape, it’s not surprising that videomedicine is a venture paid for mostly by grants from the government and private foundations. UC Davis receives grant funding from the California Telehealth & Telemedicine Center and from the Office for the Advancement of Telehealth. While that funding seems to be holding steady, there’s no guarantee it will last. The major stumbling block for the financial viability of videomedicine remains in the insurance companies’ unwillingness to pay for it.
Still, the pioneers of videomedicine are pressing forward, heartened by tales of money savings — though perhaps not easily quantifiable savings — in many quarters:Patients. Rural patients who have to drive a long distance to see a specialist rack up expenses that an insurer will never pay for, including gas, restaurants, overnight hotel stays, lost work time and childcare. A University of Missouri study found that videomedicine saves patients an average of $40 per visit in transport costs alone.Medical Centers. In the simple fact that doctors talk more to patients, medical centers are benefiting from videomedicine. It’s hard to gauge how chiding a diabetic to exercise more frequently affects his prognosis, or whether a child is born healthier when an expectant mother in the country gets high-quality prenatal advice, but increased communication likely lowers the need for more advanced care and associated costs.
Some, however, have done the math calculating the cost savings. The University of Tennessee has 60 devices, known as POTS codecs, which make possible two-way audio and video transmission in a patient’s home. UT’s manager of telemedicine, Sam Burgiss, has tabulated the value of the service for chronic sufferers of congestive heart failure. Nationwide, the average congestive heart failure patient spends 6.2 days in the hospital; at the University of Tennessee, the average for 34 such patients is 1.26 days. If applied to every patient with congestive heart failure in the country, Burgiss extrapolates, each patient’s treatment would cost $2,024 instead of $9,920. "That’s a chunk of change," he adds.
Related Articles
From training to remote observations, the use of streaming video in the medical and pharmaceutical markets is growing.
08 Oct 2019