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How Telemedicine Drives Volume, Revenue

Scott Mace, for HealthLeaders Media, October 22, 2013

Not only is health information technology helping to control costs, it's also creating new opportunities for revenue.

This article appears in the October issue of HealthLeaders magazine.

Healthcare systems find that telemedicine can help grow their volume and drive out inefficiencies, but new methods of care delivery require thoughtful planning to avoid hiccups.

The UC Davis Health System now offers access to 30 specialty care services ranging from behavioral health and dermatology to audiology and ophthalmology for both children and adults.

Recently, the system reported it was able to grow its pediatric medicine practice through telemedicine. In a study published in the July 2013 issue of Telemedicine and e-Health, authors from the UC Davis Health System reported 2,029 children transferred to the hospital from 16 surrounding hospitals connected via telemedicine between July 2003 and December 2010.

From these patients, average hospital revenue increased from $2.4 million to $4.0 million per year, and average professional billing revenue increased from $314,000 to $688,000 per year.

The Sacramento, Calif.–based system, which has 619 licensed beds and reported total operating revenue of $1.3 billion in 2012, has the benefit of being in a state that has long recognized the practice of telemedicine.

"Our experience has been positive with private payers in California," says Shelley A. Palumbo, chief administrative officer for UC Davis Health System's Center for Health and Technology and the Center for Virtual Care. "In fact, several payer organizations have attended the UC Davis Telehealth Education Program to better inform themselves about telehealth and the benefits for their membership."

Since starting its telemedicine program in the early 1990s, UC Davis Health System has provided nearly 37,000 consultations that way. This represents synchronous (real-time communication) and asynchronous (recorded and stored for another time) telehealth consultations to more than 100 sites spanning 44 of California's 58 counties, Palumbo says.

"Patients and their physicians can connect with UC Davis doctors from many different locations, including rural hospital emergency rooms, community clinics, and Native American healthcare sites," she says.

Integrated delivery networks have been able to sidestep reimbursement issues due to the fact that they own their own insurance companies.

In Utah, Salt lake City–based Intermountain Healthcare enrolled about 77,000 Medicaid participants under full capitation in January, says Wesley Valdes, DO, telehealth services medical director at the 22-hospital system.

"Once you're capitated, you're freed up from thinking like fee-for-service, and now you can look at what we jokingly say is how we really want to take care of patients without having to worry about justifying everything as a single encounter," Valdes says.

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1 comments on "How Telemedicine Drives Volume, Revenue"


Nirav Desai (10/24/2013 at 8:41 PM)
This is an excellent article in that it highlights some of the key nuances of getting involved in telemedicine. When you're running across states or rural/suburban/urban, you do have to deal with differences in reimbursement. The UC-Davis, Mercy and Intermountain teams are doing some great trailblazing work. Thanks for sharing some of their insights and discoveries.