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RAND: Direct-to-consumer telemedicine expands services, but doesn’t reduce care costs

While direct-to-consumer telehealth services may be convenient, it may actually increase healthcare costs and use, according to a RAND Health study published this week.

Patients who use telehealth may actually use the service in addition to traditional medical appointments, the report found. In fact, merely 12 percent of patients used telehealth to replace provider visits. The other 88 percent tacked telehealth on as a new service.

RAND researchers studied the patterns of over 300,000 beneficiaries of the health plan CalPERS from 2011 to 2013. The plan included telemedicine use. While the service increased access to healthcare, researchers found new strategies are needed, if telehealth is to become a cost-saving device.

For example, the cost of patients with acute respiratory infection who used telehealth was 50 percent lower than visiting a physician in-person and 5 percent of the cost of an emergency room visit, the study found. But these patients still went to the emergency room or provider or more frequently used telehealth, which increased the cost of care by $45 per each telehealth patient.

“There may be a dose response with respect to convenience and use – the more convenient the location, the lower the threshold for seeking care and the greater the use of medical services,” Lori Uscher-Pines, the report co-author and RAND policy researcher, said in a statement.

Companies like Teledoc, American Well and Doctors on Demand are some of the largest direct-to-consumer telehealth providers, which tout more convenient and cost-effective care. Membership to these services has seen a boon in recent years, with over 1.2 million visits reported in 2015.

Although these services are meant to replace costly visits to the emergency room or physician with a $40 to $50 telehealth visit, patients who use the service are actually adding to the already burdened healthcare system. In fact, RAND found the most frequent users to be younger and tech-savvy – not the intended elderly or rural patients who telehealth targets.

To fully reap the cost-effective benefits of telehealth, providers must consider increasing the cost of copays for telehealth visits or developing tools to encourage patients that frequently use the emergency room to use telehealth instead.

“Telehealth services could save money if greater shares of visits represented substitution for visits to other settings. This could be accomplished by increasing patient cost sharing for telehealth visits, which could be justified by savings in travel time,” the researchers wrote.


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