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Telehealth Actually Makes Some Health Care More Expensive: Study

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Spending on acute respiratory illnesses was $45 more per telehealth user than it was for patients who saw the doctor in-person, a study finds. (Alkov/iStock)

Telehealth takes a lot of forms these daysconsultations with a doctor by video, phone or text; an appointment through the web or a mobile app. The one commonality: You get to interact with a health care provider from anywhereyour home, the office, Starbucks. Virtual consultations can mean you don’t have to schlep across town, sit in the waiting room, and leaf through a year-old Time magazine article as prelude to a short visit with your doc.

Telehealth appointments are less expensive because the companies offering these services contract with doctors who are paid by the visit, and the companies themselves have little of the overhead necessary in a typical medical office, says Lori Uscher-Pines, a health policy researcher with the RAND Corporation. That means telehealth should theoretically save money for patients, employers and insurance companies -- the entire health care ecosystem. At least this is what telehealth companies claim. But now a study from RAND, published Monday in Health Affairs, says this isn't the case.

The study found that using telehealth for treatment of acute respiratory illnesses increased total annual spending, which the researchers defined as costs to insurers and out-of-pocket payments by patients, by $45 per telehealth user.

That's because 88 percent of the telehealth visits represented people who would not have gone to a doctor otherwise -- what the industry calls new utilization. Just 12 percent of the telehealth sessions, the researchers concluded, amounted to a substitute for going to see the doc.

Uscher-Pines, a co-author of the study, says she's not surprised.


“When you make services that are convenient, it’s an ‘If you build it, they will come' kind of thing.”

Uscher-Pines says patients using telehealth for respiratory infections would likely not have gone to a doctor if the service had not been available. Rather, they would self-treat.

"You sit at home, you watch Netflix, you take Tylenol," Pines says. "But now because of these kind of services that are so easy to access, you have a visit that would not have otherwise occurred.”

The study is the fourth on telehealth funded by the California Health Care Foundation. Researchers examined claims data from more than 300,000 enrollees in the Blue Shield of California HMO offered by CalPERS, the California Public Employees' Retirement System. In 2012, CalPERS began offering the telehealth appointments to selected members through Teladoc, a Texas-based public company that provides virtual appointments with licensed physicians 24 hours a day, 365 days a year.

The current study looked at 981 people who used the Teladoc service over 18 months in 2012-13, seeking help for acute respiratory infections like bronchitis, pneumonia or sinusitis. The researchers compared these users with patients who had their acute respiratory infections treated by a doctor in-person. The focus was on this type of illness because it is the most commonly treated by direct-to-consumer telehealth providers, the researchers said.

Teladoc, which markets its service as a cost reduction, says patient information it gathered at the time of care contradicts the findings. Courtney McLeod, the company’s director of public relations, said in an email that just 13 percent of appointments for more than 400,000 acute respiratory infection patients represented new health care utilization.

That is pretty much the reverse of the 88 percent new utilization that the RAND researchers found. The RAND study asserts that the discrepancies between its numbers and those of the telehealth companies on new-versus-replacement health care could be due to the companies' use of surveys, as opposed to actual utilization data. The surveyed telehealth patients, the researchers wrote, may have overestimated the likelihood of going to see a doctor as opposed to not acting at all.

The researchers did acknowledge that use of telehealth for different conditions might produce better results. One of the study’s limitations was that respiratory infections often resolve on their own. “In contrast, an increase in utilization for patients with diabetes or mental illness might be perceived as a net positive," the study reads. "These are conditions that are often undertreated and for which there is clearer evidence that receiving treatment improves health."

Uscher-Pines also said there could be economic benefits from telehealth that the study didn’t capture. "These services can be offering patients reassurance,” she said, which can positively impact employee productivity. Telehealth visits initiated from a patient's work site might also reduce absenteeism,

But, she said, “You have to take this with a grain of salt when a company says we’re going to prevent emergency department visits. It’s unclear whether that’s likely to happen given the fact that the literature on innovations in health care delivery frequently tells us that when you increase convenience you increase utilization."

David Cowling, a co-author of the paper and a research scientist at CalPERS, said the study revealed the tradeoff that telehealth presents.

"We have increased access to our members, which is a good thing. Eighty-eight percent were new utilization, so they wouldn’t have gotten care previously. Our members were seeking care and I’m sure their satisfaction with their health plan was higher."

But Cowling said the issue could prompt a change in the benefit when CalPERS re-examines its benefit package. He said the organization could potentially limit telehealth access to rural areas, one of the original aims of introducing the service, or tailor it to specific conditions.

Melissa Buckley, the director of the California Health Care Foundation’s Innovation Fund, said that sort of strategic thinking may be the best bet when it comes to telehealth.


“If you use it naively you can drive up utilization," she said. "You have to use it as a more precise tool with particular populations in order to serve their needs. Don’t just go into it blindly.”

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