Telemedicine

A Framework for Developing a Telehealth Strategy

April 25, 2017 12:40 pm

For a larger health system, a telehealth system can cost approximately $3 million for the initial setup.

There is no doubt that telehealth has a tremendous role in the future of healthcare providers. But as organizations include it in their strategies, many questions arise. How does the technology work together? How does each component sync with patient data, existing infrastructure, software, and user devices? Finally, how does the provider pay for a system that has so many complex components?

Components

Most providers need to evaluate their current technology and either purchase or upgrade key components to implement a new telehealth system. Key components include the following items:

  • Medical equipment, such as imaging technology and/or remote monitoring equipment, depending on the purpose of the system and services offered.
  • Hardware, including computers, laptops, tablets, microphones, and/or mobile devices that are capable of streaming video and communicating with the device on the other end of the visit.
  • High-speed broadband internet and supporting infrastructure with the internet having video streaming capabilities with recommended minimum speeds at 15Mbps for downloading and 5Mbps for uploading.
  • Secure software that complies with HIPPA regulations and has robust security features.

Budget

For a larger health system, a telehealth system can cost approximately $3 million for the initial setup, new equipment, and implementation. However, the cost varies significantly based on the provider’s size, estimated patient volume, and geography. Many providers can start a telehealth system with basic system requirements, and build the system out gradually as the patient base expands.

The funding options for a telehealth system vary greatly, and it’s best to keep in mind that the permutations of terms and structure are endless. Leasing is a great option, because it provides flexibility, gives the option to upgrade and replace equipment over time, and costs less than paying cash. If starting a telehealth system, consult with your financial advisor to determine what makes sense for your organization. The following are examples of telehealth system financing options:

  • Medical equipment and imaging equipment:  4-7 year terms on fair-market-value lease agreements or $1 buyout financing agreements.
  • Hardware, computers, mobile devices, microphones, camera:  2-5 year terms on fair-market-value lease agreements or $1 buyout financing agreements.
  • Software (i.e., security software):  3-5 year terms on $1 buyout financing agreements.
  • Staff training and consulting: 2-4 year terms on $1 buyout financing agreements.

The cost of a telehealth system varies with the system requirements, features, and the size of the provider.

Will telehealth equipment increase or reduce costs over time?

Telehealth systems are forecasted to reduce costs over time. There are savings from both the provider and patient perspectives. On the provider side, there is the initial cost of equipment, but once up and running it reduces overhead from a brick-and-mortar office, creates efficiencies by reducing patient wait time, and can be implemented from any secure remote location. On the patient side, it saves costs by reducing travel time and the expenses associated with travel, and it provides more convenient visit times.

Telehealth payment varies depending on what type of payer is in the mix. Medicaid, Medicare, and commercial payers all support telehealth, and payments are decided based on patient setting, the type of technology, geography, and provider type, or a subset of these areas. For specific information, check your individual state laws.

Three Tips

Here are three tips that can go a long way toward building and funding a telehealth strategy.

Start with a pilot. Before you implement telehealth throughout your entire organization, start with a pilot. Providers can offer telehealth visits from one physician or for one service, and evaluate how their patient base adapts. If telehealth transforms into a high-demand service, more physicians or services can be offered. It is critical to have support from senior leadership, and the team can plan and scale when it is the right time for the organization.

Build in flexibility. Because all providers are different, there is no one-size fits all telehealth strategy. Providers should be comfortable with a little uncertainty, and they should build some flexibility into the budget to cover unforeseen costs. Providers may experience the number of visits increasing because care is more convenient, so increased hours and staffing may be needed. Also, visits may increase for common ailments that could be treated with over-the-counter medicine, but the telehealth visit will still cost the provider less than if the patient came into the organization or emergency room.

Streamline equipment orders. Working with too many vendors can not be confusing, and it can be costly. Many providers are hiring directors of telehealth to manage both the technology aspect and staff training, or at minimum dedicating a project manager to oversee all of the projects and equipment purchases. For this role, it’s best to have someone who understands IT, logistics, staffing, regulations, and medical care.

In the report Telehealth: Helping Hospitals Deliver Cost-Effective Care , the American Hospital Association says “a growing body of evidence shows that telehealth can not only expand access to services but also create cost savings. For many patients, telehealth increases the ability to access timely care while reducing the potential inconvenience of travelling long distances or being transferred to another healthcare facility.”

“In 10 years, the word ‘telehealth’ won’t be in our vocabulary…. It will just be ‘health,’” says Jim Tempio of First American Healthcare Finance.


Sara Fay is an assistant vice president, First American Healthcare Finance, Fairport, N.Y.

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