Telehealth Increases Access to Healthcare

A new study found that direct-to-consumer telehealth often initiates new use of medical services and may increase medical spending instead of decreasing it. The use of telehealth, in which a patient has access to a physician via telephone or videoconferencing, is projected to increase access to health care while reducing costs and saving time.

The Rand Corp. analyzed 2011 to 2013 claims information for 300,000 beneficiaries of a health plan provided by CalPERS, a large California public employee benefit organization, which began offering telehealth services to selected members in 2012. They examined the per episode cost of telehealth and physical visits for acute respiratory infections and estimated what fraction of telehealth visits represented substitution versus new utilization.

One of their key findings was that the cost of telehealth visits was 50 percent lower than a visit to the physician’s office and less than five percent of the cost of an emergency department (ED) visit. Although there were cost savings, these were outweighed by the increase in spending from new utilization. Net annual spending on acute respiratory infection actually increased by $45 for every telehealth patient due to new use of medical services. Only 12 percent of all telehealth visits were substitutions for visits to other providers, while the other 88 percent represented new utilization.

The researchers suggest that innovative policies could help telehealth services reach their cost-saving potential. Insurers who want to increase direct-to-consumer telehealth services may consider raising copays for telehealth and encouraging frequent ED users to utilize telehealth services instead.

Although these new findings seem to overturn the common belief that telehealth is cost-saving, the authors acknowledge that their study was subject to several limitations that may mean that their results are not universally generalizable. First, the patient population studied had generous commercial insurance, and utilization patterns among the uninsured and those with government insurance may differ. Secondly, the overall uptake of telehealth in the population was low, so it is difficult to predict how utilization might change when telehealth becomes more popular. Finally, telehealth utilization may vary among conditions, and the breakdown of spending per episode may change when other conditions are considered.

Overall, these findings begin to shed light on the question of whether telehealth tends to substitute or supplement in-person care. At this time, it appears that telehealth services are primarily increasing overall access to care without replacing physical visits to a meaningful extent.

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