The Cost of Telehealth
2022 saw the IT industry stumble, with massive layoffs across the board. Amazon let go of 18 000 people and continues cutting across the board. Google let go of 12 000 people, while Twitter dropped to around 1 800 employees from the original 8 000. The current IT macroeconomic climate means that more layoffs will follow and that investments pouring into digital health are slowing down: according to Rockhealth, the overall U.S. digital health funding scraped by $15.3B, compared to the whooping $29.1B in 2021. Despite the ongoing turbulence in the industry, the main goal of digital health is to make healthcare more accessible to everyone and ensure seamless healthcare delivery to those who need it most. With that in mind, we decided to look at the cost of telehealth and how digital healthcare reduces healthcare expenses for patients and providers.
What Is Telehealth?
Telehealth refers to using telecommunications and digital technologies to deliver healthcare services remotely. It involves the use of videoconferencing, telephone calls, mobile applications, and other virtual platforms to connect patients with healthcare professionals. Through telehealth, individuals can receive medical consultations, diagnoses, and treatment recommendations without the need for in-person visits. It provides a convenient and accessible means of healthcare delivery, particularly for individuals with limited mobility, those living in remote areas, or those seeking immediate medical advice.
Telehealth encompasses a wide range of services, from primary care, to mental health, and the management of chronic conditions. However, the cost of telehealth services is significantly lower when compared to traditional in-person visits.
Indirect Cost Savings of Telehealth
Before we get into the direct cost of implementing and maintaining digital health services, there are indirect ways in which digital healthcare is superior to the traditional approach. For example, according to the Bureau of Labor Statistics’ American Time Use Survey, between 2006 and 2017, Americans spent 34 minutes traveling to an in-person appointment, and then an additional 11 minutes in the waiting room.
Digital healthcare removes the travel and the waiting, effectively saving patient and doctor time and reducing the spread of germs in the waiting room, effectively helping with the flattening of the curve, for example, in a pandemic era. Below are some examples of how telehealth costs undercut traditional healthcare:
Telehealth Reduces Travel Costs
Telehealth eliminates the need for patients to travel to healthcare facilities, resulting in significant cost savings related to transportation expenses, such as fuel, parking fees, and public transportation fares. Additionally, patients save time by avoiding lengthy commutes, making healthcare more accessible and affordable.
Increased Productivity in Medical Institutions
True telehealth cost savings can be measured in the increased productivity in hospitals and medical facilities. Telehealth streamlines healthcare workflows, reducing administrative burdens, and enabling medical institutions to optimize resources. With virtual consultations, healthcare providers can see more patients in a shorter period, leading to increased productivity and revenue. It also minimizes wait times and improves scheduling efficiency, ultimately reducing costs.
Reduce Hospital Readmissions
Telehealth enables remote monitoring of patients, facilitating early detection of potential complications and allowing timely interventions. This proactive approach reduces the likelihood of hospital readmissions, which can be costly. By providing continuous remote care, telehealth ensures that the cost of telehealth is far superior to the cost of traditional healthcare services.
Reduce the Number of A&E Visits
Telehealth offers an alternative to unnecessary emergency room visits for non-emergency conditions. Through virtual consultations, patients can receive timely advice, triage, and appropriate referrals without physically going to the emergency department. This helps alleviate the burden on emergency services, reduces healthcare costs, and ensures that emergency resources are available for those truly in need.
How Much Does Telehealth Cost?
In 2021, the global telehealth market was valued at USD 195.1 billion and is expected to surpass USD 780 billion by 2030. COVID expedited the speed of development for digital health solutions and in 2023 we are witnessing the aftermath of said expansion. Most IT companies overhired in rapid preparations for the digital transformation of healthcare and the world. However, rapid expansion halted, and we are witnessing the stumble of IT. Still, the benefits of telehealth are very much tangible, and so are the cost reductions associated with it.
Several factors influence the cost of telemedicine: the number of staff a medical institution employs, the number of patients, the service that a medical institution offers, and the necessary equipment for telehealth implementation. Setting up telehealth in your medical institution can cost anywhere between $10 000 and $300 000.
Aside from the initial hardware costs, the development of a telehealth application is a costly endeavor. The associated costs depend on the number of features and services you wish to offer, but will typically amount to anywhere between $15, 000 and $50, 000.
Aside from the equipment and the application, a successful medical organization will also require a telehealth platform. The platform cost also varies depending on the size of the medical organization but will land somewhere between $50 000 to $300 000.
Telehealth Cost Savings
Once COVID hit in 2020, the number of telehealth visits jumped to more than 52 million, from less than a million in the year before. Expedited by COVID, the digital transformation of healthcare resulted in doctors and medical professionals closing their doors to all but the sickest patients.
Although reliance on telehealth services has dropped since, patients still demand the option to receive care remotely, citing convenience and ease of use, not to mention the telehealth cost savings. 70% of younger generations say they prefer telehealth to in-person visits, with 44% saying they would switch their care provider if telehealth isn’t offered in the future.
A study of 3 million outpatient telemedicine visits in California published by Mary Ann Liebert found that, on average, patients saved about $11 in transportation costs per visit. Coupled with lost productivity, child care costs, or additional costs that may arise from an in-person visit, the pennies and dimes add up to make for a significant cost reduction in the telehealth vs. in-person visit arena, in favor of the former.
But, according to Cigna, actual healthcare cost reduction thanks to lower telehealth costs can be observed in the following data:
The average cost of a non-urgent virtual care visit was $93 less than the average cost of an in-person visit.
Seeing a specialist averaged $120 less for a virtual visit than an in-person visit.
Virtual urgent-care visits averaged $141 less than being seen in an urgent-care clinic.
Additionally, according to AMA, 79% of patients reported being very satisfied with the quality of their telehealth visit, with 73% saying that they wish to continue to use telehealth services in the future.
Improved Clinical Outcomes
The lower cost of telehealth along with the emerging technologies (including applications), means that now we can virtually treat conditions that we previously left unchecked. This is primarily the case with mental health conditions.
Following the lockdowns resulting from the COVID pandemic, there was a massive surge in mental health diseases, most notably anxiety, and depression. People became aware of their deteriorating mental health and sought cures online. Despite the drop in the number of in-person visits, the number of telemedicine visits for mental health was up 20% during the lockdowns, suggesting that if people had access to care, they would seek it.
This is further supported by the fact that 90% of respondents to a study claimed that they wouldn’t have sought help for their mental conditions if telemedicine was not available. This is more true for younger, tech-savvy generations.
The Future of Telehealth
The future of telehealth is promising, with the potential to revolutionize and completely transform healthcare delivery and patient experience. As the IT industry navigates its challenges, the focus on making healthcare more accessible and cost-effective remains steadfast. Following the initial investment, the cost of telehealth benefits patients and providers. The growing demand for telehealth services, coupled with high patient satisfaction rates and improved clinical outcomes, indicates a bright future where telehealth becomes an integral part of healthcare systems worldwide.
The cost of telehealth
