How Is Telemedicine Reducing Healthcare Costs

how does telemedicine reduce costs

Key Takeaways

  • The problem of inequality, racism, and exclusion at the foundation of poor health in America is an issue that technological advancements in telemedicine and interoperability can address.
  • Remote consultation, 24/7 coverage, and availability of specialists over telemedicine applications has played a key role in reducing healthcare costs.
  • Studies state that children are over-triaged about twice as many times as adults. So, using telemedicine to connect with a pediatric specialist can reduce the number of over-triage patients and save plenty of dollars.
  • Telemedicine or telehealth services reduce readmission costs by following up with patients virtually, especially chronic disease patients.
  • Hiring full-time medical specialists can be a costly affair for health care organizations, especially if the demand doesn’t compensate for the hours a specialist was hired for. So, telemedicine can directly connect patients with specialists.
  • Wearable monitoring devices integrated with telemedicine apps can help reduce healthcare expenditures since they provide you with real-time vital checks, and they also decrease travel costs.

Table of Contents

  1. Employers Consider Telemedicine to Reduce Healthcare Costs
  2. The Practice of Telemedicine
  3. Healthcare Inequities in America
  4. Using Technology to Improve Access to Care During Covid-19
  5. How Does Telemedicine Reduce Costs for Healthcare Systems?
  6. How can the Telehealth Business Model Work for You?
  7. Healthcare Model Conundrum
  8. Online Portals, mHealth Apps, and Accessibility

The utilization of telemedicine has the power to maximize the quality of healthcare around the world. It provides underserved and impoverished populations with access to quality healthcare. It is applicable in both rural and urban settings.

Alternatively, it also has the potential to widen disparities for people who lack the resources of a stable internet. Despite all the nuances of telemedicine, there is no denying that it eradicates redundant healthcare procedures, resulting in lower costs for patients around the world.

It is no surprise that the United States spends way more than anybody else on healthcare. It spends almost 50% more than Norway. However, people will agree that Norway and some other countries that spend less on healthcare produce better outcomes. Healthcare premiums tend to go up in value despite the worsening healthcare plans.

This raises questions of whether the US has been effectively spending on healthcare. The inequities in the healthcare system are rising, and one of the most evident ones has to do with the increasing costs. The cost of healthcare in the United States has been very high.

With the onset of the pandemic and the mandate towards lockdowns, patients and healthcare workers now realize the cost-cutting potential of telemedicine practices, amongst other benefits.

Employers Consider Telemedicine to Reduce Healthcare Costs

Employers are dealing with new uncertainties about health benefit costs. As they slowly ease back into a new reality, the employees returning to the workspace have many concerns about COVID-19 and in-person visits to the hospital.

Large employers have unprecedented economic pressures that they haven’t had before. They are now seeking ways to get the best healthcare for their employees at a fair price.

Large employers are looking at a fair total cost of care. In other words, they want high quality, knowing that the quality varies by physician groups and hospitals.

Making sure that quality stays consistent is challenging, especially in a pandemic situation where they cannot visit their primary care physician. Hospitals’ pricing in pandemic times is not sustainable, whether it is hospital pricing or increased testing and visiting costs.

In times like these, the recent innovations in telemedicine technology are filling the gap in the healthcare sector.

Employers are finding it much easier to ensure access an active intervention and innovation in the healthcare market. To find out more about telemedicine applications, one must understand what the technology comprises.

The Practice of Telemedicine

The practice of medicine is when someone who has a license either makes a diagnosis or performs a treatment. This treatment can include prescribing medication, changing dosage, or adding medication and offering reassurance based on the diagnosis.

Medicine is very well-defined, and it is the diagnosis and treatment of disease. The “tele” in telemedicine varies from one state to the other. Most people consider telemedicine as a video-based interaction with the physician.

In other words, you would do everything that you normally do in a regular clinic visit, but the only difference is that you are doing it through video conferences remotely. It is important to note that to claim a patient-doctor online interaction as telemedicine requires reimbursement.

If an encounter over a telecommunication device does not have reimbursement, most states will not deem that encounter telemedicine by legislation. However, there are different legislative requirements in different states.

The practice of telemedicine was first introduced in the 1950s by governments to provide healthcare to rural areas that did not have access to healthcare infrastructure.

However, its legislative framework has not caught up with the recent advancements in telecommunication technologies.

A video-based encounter allows face-to-face encounters to occur between patients and doctors. This allowed healthcare specialists to provide in-person services to people who did not have them.

Healthcare Inequities in America

Inequity plays out in the healthcare system during the Covid-19 environment all over the place. Unemployment is also a factor that causes inequity.

The Covid epidemic led to job vulnerability. For people who had income bands of 20 to 25,000 a year, 76 percent of their jobs were in jeopardy. Read this report to find out more.

This shows that there are very regressive economic and healthcare effects after the pandemic. The inequity is also evident in the racial and socioeconomic associations with covid and its mortality rate.

Overall, the death rate from Covid-19 is about 2.7 times higher for African American populations than the rest of the population.

It is also higher for other minority populations that are lower on the socioeconomic scale. This is a highly inequitable reality of the healthcare industry and its adherence to the people lower in the economic ladder. Poverty rates in the United States are somewhat alarming

Poverty, racism, and inequity infuse American society, which impacts their access to healthcare. It also translates to life expectancy as well. The poorest 10% have very little gain in life expectancy when you compare them to the richest 10%, according to reports.

This is due to a chain of effect, in which regressive policies towards people of lower income deepen poverty and lead to isolation and despair, which in turn results in poor health.

Unless there is attention to this inequity problem, the United States’ healthcare system will not get better. The problem of inequality, racism, and exclusion at the foundation of poor health in America is an issue that technological advancements in telemedicine and interoperability can address.

Using Technology to Improve Access to Care During Covid-19

Huge disparities and outcomes stem from race and ethnicity that have existed for a long time. The Covid-19 pandemic has made these disparities worse and has presented them at the forefront for the public and authorities to take notice.

The hospitalization rates are disproportionate in less fortunate neighborhoods and areas. The reaction to this inequality has been to move to telemedicine methods.

Unfortunately, trying to solve the problem with technology may lead to a digital divide, even making the situation worse. Federal interventions in telemedicine services must be aimed at maintaining an equitable and just reimbursement system. The transition from telephone medium to video encounters has been a game-changer for telemedicine practice.

It not only allows clinicians to make better assessments but also makes for better interactions with the patients. There are still barriers to video visits that hospitals have yet to overcome.

For instance, most of the patients that require frequent checkups are older. They do not have the technical understanding to handle devices without assistance. But this can be overcome easily with the help of tech support.

Overall, minority groups are being disproportionately affected by unemployment and the loss of coverage. In addition, employers face financial pressures to reduce coverage for those employed during the recession. It is important to question the decades-long healthcare approach with the new technologies at hand.

The government needs to provide people with alternate approaches so that losing a job does not mean losing your healthcare privileges. Insurance from employers has been getting expensive, both for the companies and the people they employ.

The existing regulations and problems meant to curb the loss of health insurance are often unaffordable in reality. The integration of telemedicine stems as the only viable solution to economic and racial disparity in health care.

How Does Telemedicine Reduce Costs for Healthcare Systems?

1. Saving Costs and Lowering Risks with Remote Consultation

In terms of use cases, telemedicine can present a variety of different application uses. In the case of critical access, hospitals need coverage from specialists 24/7.

Most hospitals, especially those going through the coronavirus pandemic, do not have the means to hire a fully covered staff with a full-time specialist or even a primary care doctor.

With the help of telemedicine, you can augment this situation and provide that staff by utilizing 24-7 coverage by providers that reside within their region.

They can then connect to lower-level or mid-level providers to have physician coverage throughout the day from a distance location. This allows hospitals to save their expenses and resources for hiring staff and specialists.

It also allows specialists to work with more flexibility from the comforts of their homes. Moreover, the virtualized and flexible work model also gives more freedom to healthcare professionals since they no longer have to commit to being physically present at all times. Moreover, the telemedicine method also helps with the scenario of going into a crowded emergency department.

Staying in close contact with other people for a long time increases the chances of exposure, making it a very risky situation. Some formulas include cascading systems. Thanks to these systems, consultations do not necessarily have to be face-to-face. Also, virtual care via telehealth allows patients and insurance companies to reduce cost per visit.

You can have emergency room (ER) providers at some of the slower and more crowded ERs to manage it remotely. In other words, for patients who are late for their physical consultation, instead of waiting, they can go on to a provider that is remotely present for consultation. The remote patient monitoring feature of telemedicine aids physicians in tracking vitals and ensuring the best quality of care, including positive patient outcomes.

2. At-Home Triage Services and No Transportation Costs

Another cost-saving element of the telemedicine healthcare model is that healthcare providers and patients can save the money they use to spend on commutes to the clinic. Physicians can therefore increase their revenue from virtual visits, while at the same time, patients can save their overall healthcare expenditures.

It also helps patients avoid unnecessary transport and remittance. This is a high cost when it comes to health provider organizations and hospitals. According to a study, telemedicine helps prevent secondary over-triage of adult and pediatric patients. Secondary triage is transporting a patient unnecessarily where they get discharged within 24 hours.

Studies have also proven that children are over-triaged about twice as many times as adults. Using telemedicine and reaching out to a pediatric specialist provider can greatly reduce the number of over-triage patients. Thus, this will save plenty of dollars for both the healthcare provider organizations and healthcare professionals.

Another benefit of keeping the patients in remote hospitals or their homes by using telemedicine is that the attendees and close relatives of the patient can keep working without taking any day-offs.

3. Reduce Hospital Readmission Costs

Hospital readmissions are a huge financial burden to healthcare organizations and telemedicine applications can help to minimize the costs associated with readmissions.

Telemedicine or telehealth services reduce readmission costs by following up with patients virtually, especially chronic disease patients. According to a paper published by the JAHA (Journal of the American Heart Association), the use of telemedicine services for follow-up increased during the Covid-19 pandemic, and patients with cardiovascular disease or heart failure who received outpatient follow-up with either in-person or telemedicine had better outcomes than those with no follow-up care.

Additionally, healthcare providers can use telemedicine features such as remote monitoring to keep track of high-risk patients, thus preventing unnecessary admissions. Providers can check blood pressure, temperature, and oxygen levels through remote monitoring tools integrated into telemedicine apps.

Furthermore, patients may or may not follow post-discharge care or instructions, the latter case leads to readmissions caused due to negligence in care. medical practitioners and nurses can use telemedicine services to access and ensure that patients follow post-discharge instructions.

4. Access to Specialists via Telemedicine Reduces Costs

Hiring full-time medical specialists can be a costly affair for health care organizations, especially if the demand doesn’t compensate for the hours a specialist was hired for. So, during such scenarios, healthcare facilities can use telemedicine to hire specialists for patients. Medical specialists can use telemedicine to expand their horizons and directly connect with patients in need.

In this way, telemedicine not only connects patients with healthcare specialists but also enhances care delivery services beyond certain geographical locations and ensures that urgent care is delivered to the ones in need.

Furthermore, timely access to specialists via telemedicine can enable early diagnosis and intervention, preventing the progression of illnesses or complications. This can lead to better health outcomes and reduce long-term costs associated with treating advanced diseases.

Specialist clinics or hospitals in rural or underserved areas might have higher operating costs. Telemedicine allows these facilities to connect with specialists remotely, eliminating the need for expensive infrastructure, and passing these cost savings onto the patients.

5. Automation of Admin Tasks Promotes Cost Savings

According to research, the amount the United States spends on administrative tasks accounts for twice the spending on care for cardiovascular disease and three times the spending on cancer care.

Data from the Peterson Foundation suggests that the USA spends $1,055 per capita on admin costs, which is the highest amount on a list of 12 OECD (Organization for Economic Co-Operation and Development) nations plus the USA.

Automation of admin work with the help of telemedicine can help with potential cost savings for the healthcare industry in the long run. Telemedicine can promote cost savings by automating tasks such as:

  1. Appointment bookings
  2. Data entry
  3. Manual form filling of patients
  4. Billing and claims processes
  5. Maintaining ePHI (Protected Health Information)
  6. Generating e-prescriptions
  7. Medication and appointment reminders

The Future

Doctors have many clinical problems, and these problems have surfaced and amplified in the coronavirus pandemic. Software engineers and developers have responded to these problems with great innovative projects that streamline, enhance, and enable remote medical practices.

Overall, the goal of the nationwide healthcare associations is to design telemedicine systems that help programs be sustainable. To do that, the system has to be a revenue generator and a revenue loss limiter.

There is now an incentive to keep people in their homes and not admitted to hospital beds with the coronavirus outbreak. Doing this through telemedicine paints a prospective and egalitarian future of healthcare in the coming years.

How can the Telehealth Business Model Work for You?

The healthcare dynamics are changing and shaping into a virtual augmented world. Understanding the fundamentals of the digital healthcare practice can be incredible for healthcare practitioners.

Telehealth is a collection of means that methods that enhance healthcare methods using telecommunications technology.

It encompasses a wide variety of technologies and tactics to deliver virtual medical health and other services. Telemedicine is typically done with a pre-existing patient relationship. If you have patients and wish to consult them for consultation from distant locations, telemedicine allows you to remotely serve them.

From a patient’s perspective, going to the physician is not very enjoyable. It takes away a couple of hours from your day. Two major motivators that humans love are speed and convenience.

The telemedicine practice is beneficial for the healthcare provider, but it is also incredible for the patients and customers because of location independence and how important that is in times of the pandemic.

The pandemic has trained people’s behavior, and even after reopening lockdowns and lifting social distancing laws, people are likely to refrain from brick-and-mortar consumption. The digital realm will instead be the priority and the same thing is happening with healthcare.

If you can offer people virtual opportunities, it will give them a huge amount of convenience. It is also at the same time going to lead to less hassle.

Healthcare Model Conundrum

In the industry, every person is facing a continuum of healthcare. Traditional healthcare is completely oriented to numbers. In other words, more volume of patients will lead to more revenue.

If you look at a reformed healthcare system, the focus is to improve patient satisfaction and experience. In other words, a digital healthcare system improves the population’s health without burdening them with health care costs.

It reduces the per-capita cost of healthcare. If you look at the continuum, there will be a point where you leave the traditional healthcare system and completely adopt the reformed healthcare system. Mass adoption of telemedicine practices is moving from a volume-based healthcare system to a value-based system.

Whether it is Medicare and Medicaid or other private insurance companies, almost everything you do is still a service fee. It is a real challenge to move away from one model to the other. The future is, however, here with self-insured employers.

The new reformed healthcare systems that represent telemedicine emphasize healthcare in its true essence. Moving in the digital direction will also help healthcare facilities focus on cost avoidance and clinical outcomes.

Online Portals, mHealth Apps, and Accessibility

Online virtual medical portals and mHealth apps allow for increased accessibility for patients toward quality care. It provides expert opinions and care at a reasonable price while giving access to instant care as well. A licensed medical doctor within a state or country can reach out to patients seeking critical consultations within seconds.

Not only those, but the new interfaces are also centralized and optimized to carry appointments and patient data in an organized way. This allows the telemedicine services to be more versatile for the doctors and patients.

The new reformed billing codes also waive some of the restrictive elements of the codes. All of these aspects allow patients and doctors to interact according to their convenience and without any issues. This, in turn, saves a lot of time.

Virtual solutions and automated features make lives easier for physicians and patients. Electronic data management programs will enhance the collection, update, and transfer of patient data. This can lead to the reduction of unnecessary in-patient visits and medical tests.

Wearable monitoring devices can also help reduce healthcare expenditures since they provide you with real-time vital checks, and they also decrease travel costs. This can help you stay ahead of your health and stabilize your vitals before they get worse.

Concluding Thoughts

In the right environment, telemedicine can reduce the cost of healthcare. The principal problem for many low-income people is not the geographical distribution of healthcare but the economic distribution.

Without access to adequate insurance, people choose not to get medical care simply because they cannot afford it. Telemedicine increases access to care for people who usually cannot afford it due to financial reasons.

If you’re looking for a telemedicine application for your healthcare practice, then connect with Arkenea, one of the leading healthcare software development companies in the USA. We deliver quality product that matches industry standards.

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