Page 8 Unlocking The Potential of Physician to Patient Telehealth Services The Information Technology & Innovation Foundation

reducing wait and travel times for patients and ensuring higher productivity for health care
workers.

Cost
Telehealth programs can decrease health care costs by improving the quality of care and
keeping those with chronic illnesses stable and out of hospitals. In addition, online health
care providers able to identify and resolve health issues before such issues become
dangerous, save money on future costly treatments by avoiding these through early
detection. As discussed earlier, a number of largely unmeasured cost savings also exist, such
as the travel time spent by patients and doctors traveling to in-person visits, as well as the
lost work time spent on these appointments.

The overall economic impact of adopting large-scale telehealth programs has not yet been
fully assessed; however, several case and observational studies have reported significant
savings resulting from telehealth programs, especially from the use of remote monitoring
systems to treat chronic illnesses. For example, many nursing homes use on-call physicians
to provide services to residents after hours or on weekends. On-call physicians can
recommend hospitalizing patients when clear health care problems arise, eliminating the
need to travel to the nursing home to evaluate the patient. Using telehealth services,
nursing homes could also reduce the number of avoidable hospitalizations. In the VHA
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study noted earlier, hospitals saved $9,655 per patient from reductions in hospitalizations.
In comparison, the cost of the program was only $1,600 per patient. Other observational
30
studies have reported similar results. Another study by the VHA reported significant
declines in re-hospitalization among veterans with congestive heart failure, chronic
obstructive pulmonary disease, and diabetes, which resulted in cost savings between $1,000
and $1,500 per patient. A study on using in-home monitoring for congestive heart failure
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for 3,000 patients in Boston led to $10 million in savings over six years.
32
Not all studies found telehealth to be cost saving, however. While a 2010 review of
statistically rigorous studies found that 61 percent of studies found telehealth to be less
costly than the alternative, 31 percent did find telehealth to be more costly. In addition,
33
the British Department of Health found that costs for providing telehealth care were
roughly comparable to traditional care. Yet, given the substantial differences between the
34
American and British health systems, this result may not be relevant to U.S. policy.

Cost savings are important in the light of predicted future incident rates of chronic
diseases. Several trends have intensified the problem of chronic illnesses in the United
States. Dramatic increases in life expectancy means seniors are living longer with chronic
diseases and on average contracting more chronic conditions. Ninety percent of Americans
over the age of 65 have been diagnosed with a chronic illness, and 75 percent have at least
two. Many of these diseases require constant monitoring and frequent care. Treating
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chronic diseases takes up the majority of the Medicare budget, and has contributed to
skyrocketing spending on health care in the United States. The problem is set to get worse
as the baby-boomer generation prepares to retire. For example, the number of patients in
the United States treated for heart disease is expected to increase by 40 percent in the next
ten years, and the number of patients treated for cancer and diabetes will increase by 50

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