Feature

How to get better value from telehealth

A recent study raised questions about telehealth’s ability to lower healthcare costs.

Direct-to-consumer telehealth is growing rapidly, giving patients with minor illnesses 24/7 access to medical care at less than the cost of an in-office visit. But one of telehealth’s purported benefits — reducing overall healthcare spending — could be undermined because most of those visits represent new utilization, according to a recent RAND Corporation study.

The study, published in Health Affairs, looked at three years of claims data and found that only 12% of telehealth visits for acute respiratory illness replaced visits to other providers. The majority — 88% — represented unmet demand. And while virtual visits were typically less expensive than an emergency room or office visit, new utilization caused average annual spending on acute respiratory illness to rise by $45 per telehealth user.

The bottom line: Spending from new utilization outweighed savings from substitution.

Unbridled access?

The findings come as direct-to-consumer telehealth providers like Teladoc and Doctors on Demand are gaining traction with consumers. Membership at Dallas-based Teladoc, for example, grew by 55% to 17.5 million last year, driving revenues of $123.2 million. But with that growth come questions of how to get the best value out of telehealth and decrease overall healthcare spending.

Direct-to-consumer telehealth can reduce costs, but only if unlimited access is coupled with guidance on how and when to use it, says Scott Ashwood, associate policy researcher at RAND and the study’s author.

“If you give consumers a convenient alternative, they will take advantage of it,” says Ashwood. “That could be good if you are trying to increase access to providers, but probably will not save you money."


"If you want to increase access and save money, then you need to think carefully about how to integrate a convenient alternative such as direct-to-consumer telehealth into your overall care delivery model.”

Scott Ashwood

Associate policy professor, RAND Corporation


Telehealth works best when it is coordinated with the large healthcare ecosystem, says Ralph Derrickson, CEO of Carena, a Seattle-based telemedicine provider. “Our strategy has always been to work with the health systems to make sure that any medical care that’s offered is an extension and is not further fragmentation or duplication” of healthcare services, which can drive up costs, he tells Healthcare Dive.

‘The worst of fee-for-service’

With direct-to-consumer telehealth, “you’re kind of seeing the worst of fee-for-service combining to create a situation the outcome of which may or may not be the right thing clinically,” Derrickson adds. “The health plan wants you to seek the lowest possible care. The telehealth provider wants you to get a visit. And in order to keep you happy, they’ve got to write you a script.”

What plans should be doing is thinking about is how they can support the doctor-patient relationship and how telehealth services can reinforce that relationship, because a person who is using telehealth heavily may have a condition that needs additional workup, he says.


“These five-minute, quick-hit virtual visits aren’t what the patient needs.”

Ralph Derrickson

CEO, Carena


Patients "need a longer conversation … and a full investigation into what’s going on," says Derrickson. "And then they need coordination between the telemedicine provider who did that and their traditional provider if they have one.”

Carena refers roughly a third of its patients to primary care providers, urgent care and emergency rooms and touts lower prescription rates than other commercial telehealth providers — 37% versus 56%.

Right population + right services

“It comes down to picking the right populations and the right services that are going to serve those populations,” says Rob Rebak, CEO of tech-enabled behavioral health provider AbleTo. “And I think that the folks that are doing this right … we’ve published data and others have that shows a dramatic reduction in cost.”

Rebak points to a 2015 study published in the American Journal of Managed Care of behavioral health intervention in cardiac patients. The researchers — from AbleTo, Aetna and Brigham and Women’s Hospital — looked at total ER visits, outpatient visits, including behavioral health, and cardiac-specific hospital readmissions and hospital days and found that patients who received behavioral telehealth services in addition to care for their heart ailment were $11,000 less costly than patients who didn’t receive that help.

Having reliable data that can demonstrate both the health benefits and cost savings of telehealth is critical as access to virtual care grows, Rebak says.

Shifting the cost burden

One way to boost value from telehealth might be to have patients bear more of the cost, according to the RAND study. “Telehealth services could save money if greater shares of visits represented substitution for visits to other settings,” the researchers write. This could be accomplished by increasing patient cost sharing for telehealth visits, which could be justified by savings in travel time.” Health plans could also direct patient who frequent ERs to telehealth through targeted outreach programs, the study says.

Another way to reduce costs would be for telehealth providers to have more skin in the game.


“There’s an increasing trend to want to transfer some risk to the providers of telehealth services, which I think makes some sense.”

Rob Reback

CEO, AbleTo


For example, plans and employers could require more performance-based contracts that tie into how quickly and completely people get better and how much that costs the system. “If they’re delivering on the results, they get paid more,” he says. “If they’re not, they get paid less,” Rebak says.

Filed Under: Health IT Payer
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