Study: Telehealth use could drive up costs

Dive Brief:

  • Direct-to-consumer telehealth services make care more convenient by giving patients with minor illnesses 24-7 access to a physician, but they don’t necessarily reduce costs by substituting for office and emergency room (ER) visits, a new study published in Health Affairs suggests. 
  • Researchers at RAND Corporation looked at three years of claims data and found that just 12% of telehealth visits for acute respiratory illness replaced visits to other providers, while 88% represented new utilization.
  • Despite lower costs for telehealth visits, average annual spending on acute respiratory illness rose $45 per telehealth user largely due to new utilization, the researchers concluded. 

Dive Insight:

Use of direct-to-consumer telehealth provided by companies like Teladoc, American Well and Doctors on Demand is on the rise. Dallas-based Teladoc, for example, saw membership grow by 55% to 17.5 million in 2016 and revenues hit $123.2 million. 

There are now more ways for Americans to access care — from retail clinics to telehealth. There are currently about 3,000 retail clinics operating in the U.S., and one in three consumers has visited one, according to a 2016 PricewaterhouseCoopers’ Health Research Institute report. Also, more companies are partnering with others to enter the telehealth space, including Sam's Club and Samsung.

With all of these alternative care options, the goal is to increase access and keep people healthy while also reducing down costs.

However, the overall result in the RAND study was that spending from new utilization outweighed savings from substitution. And the new findings echo a recent study in the Annals of Emergency Medicine, which found widespread availability of retail clinics is not noticeably reducing nonemergency visits to ERs. While retail clinics have helped to meet increased demand for healthcare created by newly insured Americans under the ACA, they haven’t led to a meaningful drop in low-acuity ER visits, according to the study.

One way to get better value out of telehealth might be to increase patient cost sharing, the RAND researchers suggest. “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 patients who frequent ERs to telehealth through targeted outreach programs, they say.

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