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Making the Business Case for Virtual Care

News  |  By Alexandra Wilson Pecci  
   April 25, 2017

A KPMG survey shows 31% of healthcare organizations currently use video-based services and 34% offer remote patient monitoring.

Telehealth is approaching a tipping point: Consumers and the technology are ready, and the clinical case has been made. There's just one element left to resolve.

"The challenge to it is there's no sustainable business model," says Richard Bakalar, MD, KPMG managing director and member of the firm's Global Healthcare Center of Excellence.

KPMG has released its Digital Health Pulse 2017, a survey conducted by HIMSS Analytics, of 147 hospital executives that included C-suite, IT, and clinical leaders. Respondents were asked about the state of adoption for virtual care services and the top challenges hospitals and healthcare systems face in digital health.

It found that about 31% of healthcare organizations currently use video-based services and 34% offer remote patient monitoring. About half of providers said they had clinician-to-clinician consults or continuous monitoring through telestroke or teleICU offerings.

When asked how they would classify the maturity of their virtual care initiatives, though, only 4.5% said they had an "Advanced Virtual Care Program, with central governance and standard clinical workflow, technology solution and KPI reporting, supporting greater than five service lines."

The biggest percentage—45% of respondents—said "the time is right and we are just beginning with one or two pilot projects." Another 28.8% said their programs could be described as having "Early program investments with less than three FTE staff supporting the network for two-plus service lines across the organization."

Making the Business Case for Virtual Care

When asked about the challenges in virtual care, a quarter of survey respondents said "maintaining a sustainable business and/or financial model" was the biggest challenge.

Bakalar points to a couple of reasons why making the business case has been a persistent challenge. Until now, he says, most telehealth incentives came in the form of grants. Although grants allow users to prove the clinical concept of telehealth, they also can have an adverse effect from a business perspective.

"You don't ever get to a sustainable biz model because you're dependent on these grants," he says.

Grants also sometimes encourage users to adopt technology that's too expensive and too complex for everyday use.

"The highest-level technology isn't needed everywhere," Bakalar says. "You have to pick the right technology for the right problem."

Often, unsustainability stems from choosing the wrong technology in the first place. For example, a high-end, specialized robot that's designed for complex patient care isn't a good choice for a small hospital that would only use it two or three times per year. Bakalar says "requirement-based decision making" should drive which technology hospitals choose.

"As the scale gets bigger, we're going to find the technology gets more appropriate based on the clinical needs as well as the financial, business case," he says.

Grants also sometimes have a narrow focus—studying telestroke, for instance—but for telehealth to be truly sustainable, hospitals and health systems must broaden the scope of telehealth projects, aggregating multiple service lines and multiple sites.

"One service line with one or two remote locations is not going to be a tenable model," Bakalar says. "It's multiple non-sustainable projects that will give telehealth a bad name."

Finally, the shift from fee-for-service to value-based care will also help drive telehealth adoption: When the incentive is to keep people healthy and out of the doctor's office and hospital, the financial argument for telehealth will be stronger.

"It's all about costs containment today," Bakalar says. "It's all about the business case."  

Alexandra Wilson Pecci is an editor for HealthLeaders.

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