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Hospitals Reaping Financial Benefits of Telehealth

Karen Minich-Pourshadi, for HealthLeaders Media, July 19, 2012

Approximately 130 private payers currently reimburse for telehealth services, according to a 2007 Michigan State University study. However, without state regulation each payer can determine which services are billable. Strides are being made though: 12 states have legislation requiring commercial payers to reimburse providers for telehealth services. However, while the legislation may require telehealth to be covered, it may not always stipulate that it be reimbursed at rates equal to an in-person visit. Regardless of the payment legislation, the Michigan State University study also noted the average estimate of the amount of telemedicine activity submitted to a private payer was moderate (40%), indicating a lot of telemedine transactions go unbilled.

Moreover, telehealth can be taken a step further to create another potential revenue stream for hospitals or health systems. For instance, Bloomington, Minn.–based HealthPartners, a four-hospital system with 1.4 million health plan members began an online service called Virtuwell in fall 2010 allowing anyone (with or without insurance) in Minnesota or Wisconsin to consult with a nurse practitioner for $40. Since then, some 23,000 patients have received treatment plans.

More important, says Guy, what makes telemedicine worth investing in for the hospitals "is so patients can remain in their local communities, and revenue from x-rays and other tests can remain in the community hospitals, and they are now accountable for readmissions and they need to manage patients with chronic disease or they're not going to get paid."

While in Georgia the state helped guide the development of telehealth, in Pennsylvania, Pittsburgh-based UPMC opted to expand telemedicine throughout its 20-hospital network and is now working to centralize the infrastructure to keep it cost effective.

"Our strategy is to encourage the development of telemedicine from all points of view, but centralize infrastructure to allow telemedicine to flourish. We're defining the common elements, such as IT expertise and support and legal contracting. We're developing a central platform so we can all work from a common set of technology rather than each developing separate systems and creating silos," says Lawrence Wechsler, MD, chairman of the department of neurology and vice president for telemedicine services for UPMC's physician services division.

Thirteen years ago UPMC tiptoed into telehealth using videoconferencing to offer psychiatry services to prisons. The program has grown and now has telemedicine services in 16 specialties including neurology, cardiology, pathology, dermatology, and ophthalmology and uses a variety of digital peripheries and other communications tools, such as teleconferencing and in-home monitoring. The annual volume for UPMC's telehealth consults is 13,500 visits, and it tracks another 106,000 teleradiology reads annually.

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3 comments on "Hospitals Reaping Financial Benefits of Telehealth"


Nirav Desai (8/30/2012 at 2:22 PM)
Just a few points worth adding: 1. Telehealth consults can actualy be better than face-to-face consults in some instances. For example, if a patient suffers from breathing problems and lives in a home with poor air quality, it is easier for a doctor to see how the patient's breathing is affected in his own home then to have the patient come in to the relatively clean environment of the office. 2. For-profit hospitals and health systems see telehealth as a significant advantage in increasing their competitiveness for getting new patients. Despite reimbursement challenges, I believe competition will drive telehealth adoption even more than patient outcomes. Hospitals are already feeling the pressure to increase profits, cut costs, and provide better quality care - and telehealth affords them the ability to leverage their resources to accomplish this.

Ruth P (7/20/2012 at 12:03 PM)
I am excited to see Georgia as a major player in the telehealth industry!

Mike Zingalis (7/19/2012 at 11:11 AM)
I've seen this in action, and it a great tool that will only expand. When you look at the mobile phone alone, and the computing power that it has....you are going to see the next wave here. For the web, many companies like Digital Group of Telehealth Companies already have the standardized software portal for hospitals and applications ready to go. Also, in the CMS space there are companies that I've consulted for, like Oxcyon, that put interfaces on top of the existing platform to allow design changes and data display changes through the site. Not only that, but through the content management system the hospital could have a multi-tier portal for the hospital, intranet, client services, and more. The information regarding prices for speicific tasks within the medical industry will only become more available, and luxury is lazyness and affordability...so to think that people would want to come into a hospital repeatedly to be charged heavy sums vs. making a phone call at a fraction of the cost is an unrealistic perspective at best. That's my two cents. Anyone got change for a buck?