Navigating the Economics of Telemedicine

Written by Kunal Sharma

The Covid-19 pandemic altered the fabric of our society in innumerable ways, from mandatory, additional attire to a widespread anxiety associated with leaving one’s home. As we are just shy of the three-year anniversary of Covid’s introduction, it is clear that much of the world has returned to normalcy. That said, there is one quiet change during the pandemic that seems unwilling to leave us.

Telemedicine is a concept that was rapidly popularized to combat the airborne, high concentration of afflicted individuals in enclosed medical facilities, ranging from hospitals to general pediatric offices. Telemedicine is defined as the practice of medicine through the medium of technology. Naturally, imaging and testing is still done in-person, though preliminary visits and post-visit checkups, in addition to the majority of mental health concerns, are increasingly dealt with over Zoom or the phone.

As novel of a concept as it is, the medical industry is under great scrutiny for their rising costs. There are many concerns with the longevity of telemedicine, including pricing, resource distribution, etc. The fundamental worry is if the practice will be sustainable for both the patients and medical offices/facilities.

To explore this in greater depth, we can use a study conducted by the University of Pennsylvania Orthopaedic department. (Ravitz) They collected data across their history of in-person visits, as well as a year of telemedicine paired with Covid-19. It would be sensible to expect the prices to decline using the alternative of telemedicine. Unfortunately, it’s not as clear as could be expected.

The group mapped their data collection in such a way that it studied time spent at visits and cost associated with said time. On average, the imaging and in-person collection of samples would remain the same across visits. However, for preliminary check-ins and check-outs, scheduling, and the remainder of the administrative tasks, telemedicine visits took 4.5 minutes longer on average, which resulted in a cost increase of $2.40. Relatively, it’s not too steep, but multiplied by the tens to hundreds of thousands of visits, for just one office, it adds up quickly. 

Specifically, across the cost of “telemedicine platform technology cost, hospital outpatient department impact, and facility-related cost savings,” the office of orthopedics at the University of Pennsylvania medical school would lose $183,456. Further, this is at current levels, where telemedicine visits account for 7% of their total appointments. They created a predictive estimate of increase in telemedicine use over time, which resulted in them finding a $723,240 loss for 30% telemedicine use. 

The result of this would almost certainly indicate an increase in cost to follow, as the most logical step. That said, their forecast did not include a variety of influential factors, which likely created a more pessimistic outlook, financially.

The most costly variable included in their analysis was time. The imaging, sample collection, prescription costs, etc, will remain the same. They are almost fully attributing the detriment in efficiency to time lost. For a personal anecdote, I participated in numerous telehealth visits over the last few years myself. I, too, waited for more time than necessary for some of these visits. However, I also noticed that as time progressed, the platforms, transfer of medical information, and efficiency of the schedule improved. I believe the Penn study overlooked the possibility of inefficiency due to a platform that is going against a grain of nearly a century of cemented processes. The study was released in April 2021, barely a year after the pandemic reached critical levels.

To look further into that point, I’d like to explore some overlooked benefits of telemedicine, which may not correlate directly with cost, but can be aligned to do so. Patient engagement is an item with which the medical industry struggles. Many citizens avoid doctor’s offices for a variety of reasons, including cost, transportation time, immune-compromised situations, etc. (Melius)  In fact, 40% of Americans have reported skipping on a recommended medical visit or treatment. (Cite) By increasing the number of visits through telemedicine, we can reduce waste of bulk ordering, as well as increase use of technology that is an expensive investment. These two quick points and many more can mitigate the “potentially” rising cost of telemedicine. Further, it can act as a net benefit on the health of society.

To revisit the points made; the initial learning curve in the introduction of a new platform for medical technology should’ve been expected. More likely than not, it will decrease with updated features, as well as ease of use for medical professionals who are now more comfortable than they were at the inception of the platform. Moreover, should the time excess fail to decrease as use of the platform progresses, the increase in the patient base can serve to mitigate waste and unnecessary cost elsewhere, nullifying the losses.

Telemedicine should become an integral part of medicine for a variety of reasons; a slight uptick in cost should not deter practitioners from using it.

Works Cited:

Melius, Burton N, and Walter D Conwell. “Impact of Telehealth on Health Economics.” Sleep Medicine Clinics, U.S. National Library of Medicine, 9 July 2020, https://pubmed.ncbi.nlm.nih.gov/32762976/. 

“New Survey Finds Large Number of People Skipping Necessary Medical Care Because of Cost.” NORC at the University of Chicago, 26 Mar. 2018, https://www.norc.org/NewsEventsPublications/PressReleases/Pages/survey-finds-large-number-of-people-skipping-necessary-medical-care-because-cost.aspx. 

Ravitz, Neil, et al. “The Economics of a Telehealth Visit: A Time-Based Study at Penn Medicine.” Hfma, 26 Apr. 2021, https://www.hfma.org/topics/financial-sustainability/article/the-economics-of-a-telehealth-visit– a-time-based-study-at-penn-.html.