Health IT, Patient Engagement

RAND study: Does telehealth’s increasing popularity undermine healthcare cost savings?

The study zeroed in on patterns of utilization and spending for acute respiratory illnesses since this is the most common reason why people use direct-to-consumer telemedicine services.

Deloitte report cover telemedicine etc

A RAND Corp. study assessing telehealth’s cost effectiveness concluded that although virtual visits to physicians are increasingly popular and are cheaper per episode than seeing an in-person appointment, it actually spurs more doctor visits than not. This, in turn, means it’s not as cost-effective in the short term as telemedicine companies claim since telehealth visits significantly increase patient visits to doctors, according to the study.

The study, published in Health Affairs this month, examined commercial claims data on more than 300,000 beneficiaries of the California Public Employees’ Retirement System. These were enrollees in CalPERS Blue Shield of California health maintenance organization plan from 2011-2013. The group had made telemedicine business Teladoc available to plan members.

The study zeroed in on patterns of utilization and spending for acute respiratory illnesses since this is the most common reason why people use direct-to-consumer telemedicine services.

Cost savings are a significant issue for telehealth because many self-insured employers are persuaded to use telehealth specifically to reduce their healthcare costs.  Approximately 90 percent of 133 employers in a National Business Group survey said they would use telehealth in 2017.

“While direct-to-consumer telemedicine services do increase patients’ access to convenient health care, researchers say new strategies such as higher co-pays or targeted marketing may be needed if telehealth is to fulfill its potential as a cost-saving strategy,” a RAND news release on the study concluded.

Although the researchers estimated that telehealth replaced visits to other providers for 12 percent of direct-to-consumer visits, they estimated that annual spending on acute respiratory illness increased $45 per telehealth user.

The study points out that telehealth is so convenient it leads the majority of people who use the service to go for follow-up, in-person visits with doctors. These patients, in the absence of telehealth, might otherwise be inclined to just do something else, like taking a sick day, resting and drinking more fluids. In other words, not see a physician.

“Instead of saving money by substitution (that is, replacing more expensive visits to physician offices or EDs), direct-to-consumer telehealth may increase spending by new utilization (that is, increasing the total number of patient visits),” the study noted.

Convenience, it seems, causes its own set of problems.

“Given that direct-to-consumer telehealth is even more convenient than traveling to retail clinics, it may not be surprising that an even greater share of telehealth services represent new medical use,” said Lori Uscher-Pines, a policy researcher at RAND and co-author of the new report. “There may be a dose response with respect to convenience and use—the more convenient the location, the lower the threshold for seeking care and the greater the use of medical services.”

The study offered some positive conclusions on how employers could better utilize telehealth. With telehealth gaining in popularity, plan changes could improve cost containment. If members used telehealth for diabetes and behavioral health, costsavings could improve longterm.

Photo: Deloitte