Health Tech

How Penn Medicine’s Telemedicine Program Saved It $113 Per Patient Visit

Penn Medicine recently published a study on the economics of providing telemedicine — it showed that when the health system began offering virtual urgent care services to its employees, the visits ended up being 23% less expensive to conduct than in-person appointments.

Health systems can reduce costs by providing their employees homegrown telemedicine services, according to new research.

Penn Medicine recently published a study in the American Journal of Managed Care on the economics of providing telemedicine — it showed that when the health system began offering virtual urgent care services to its employees, the visits ended up being 23% less expensive to conduct than in-person appointments.

The study analyzed how much it costs to provide visits via Penn Medicine OnDemand — a 24/7 copayment-free telemedicine program that Penn Medicine established for its employees in the summer of 2017.

The researchers examined nearly 11,000 visits for adult employees and their dependents who used the Penn Medicine-sponsored insurance plan between July 7, 2017, and December 31, 2019. They compared about 5,400 visits conducted via the on-demand telemedicine service to about 5,400 visits that were conducted in-person during the same period. 

The research team found that the per-visit costs for Penn Medicine OnDemand averaged $380. In-person encounters for the same conditions — which took place in primary care offices, emergency departments or urgent care clinics — cost $493 to conduct on average. This represents a $113 difference per patient.

During the study period, there was a 10% increase in demand for telemedicine services, but there was also a 23% reduction in the overall “unit cost” per service — which factors in things like provider salaries and the equipment expenses. This means that telemedicine is less expensive to provide for Penn Medicine, as well as a more accessible option for employees, the study said. 

The study authors argued that more health systems should offer in-house telemedicine programs for their employees, as doing so will drive cost savings. 

Despite the growing availability of telemedicine programs provided by employers, many health systems have been hesitant to embrace this approach. One reason for this is because past research has shown that the cost of care is not reduced when employers offer telemedicine via third-party platforms, the study said.

However, the study authors argued that health systems are uniquely positioned to establish homegrown, money-saving telemedicine programs — they can use the providers they already have, make in-system referrals and coordinate better follow-up care.

The study also asserted that the value of direct-to-consumer telemedicine services offered by academic health systems is an understudied topic. Cost savings could be even better now that patients across the country are more comfortable with telemedicine, lead study author Krisda Chaiyachati said in a statement.

“The data we analyzed predates the pandemic. It was a time when people were just putting a toe in the water and wondering, ‘Let me see if telemedicine could treat my needs.’ These days, people seem willing to jump in for an appropriate set of conditions. The good news is that we made care easier while saving money, and we think the savings could be higher in the future,” she declared.

Penn Medicine’s telemedicine program began by only serving the health system’s employees, but a few months before the pandemic started, the program opened up to insured patients.

Photo: ronnachaipark, Getty Images