Why We Need Telehealth to Reduce Consumer Costs in Healthcare

At a time when consumer healthcare spending is at an all time high, Mary Meeker asks if we are “on the cusp of reducing consumer healthcare spending” in her 2018 Internet Trends Report. From 2017 to 2018 consumer spending on healthcare in the U.S. went up 3.9% in 2017 and reached $3.5 trillion USD or $10,739 per person. (Centers for Medicare and Medicaid Services)

To Mary’s question, yes, consumer healthcare spending can be reduced. Technology advancements available right now are already helping to deliver healthcare services more efficiently. One such technology is live video through telehealth services, where patients connect to their healthcare provider using real-time video chat.

Anytime, Anywhere Healthcare Access with Live Video

If you’re in the U.S., then you may have seen United Healthcare Group’s commercial titled “Night Shift.”

The commercial features two new desperate parents that need help in the middle of the night and want to ask a pediatrician, “is this normal?

With a simple video call they get their answer.

Most parents can relate to that scenario, but likely don’t have access to a pediatrician through a virtual visit. Rather, the more common scenario will find two tired parents packing themselves and their sick baby into a vehicle, and in turn making a mad rush to an urgent care or ER facility only to be told that everything was a-okay.

The convenience and peace of mind that parents gain through a virtual visit, and the greater likelihood of an immediate answer, is priceless to new parents.

The Path to Consumer Savings in Healthcare

And while this peace of mind is of course invaluable in cases like this, if we circle back to Mary’s question, will consumers see a healthcare cost savings this year from the adoption of this kind of technology?

The answer is yes, but it depends on how quickly cost savings work their way from healthcare providers and insurers to consumers.

The Wall Street Journal reported that telehealth appointments for non-emergency reasons typically cost around $45, versus $100 for an in-person visit at a doctor’s office or $160 at an urgent-care clinic.

Telehealth has been proven to benefit consumers and healthcare companies. Why else would the largest insurance providers also now become telehealth providers as well? Consider the following:

This doesn’t even include the hundreds, if not thousands, of independent telehealth companies in the healthcare market today that offer everything from specialized women’s health services (Maven Clinic) to primary care via Kry. There are platforms being created to help individual practitioners take their practice online like Doxy.me, SnapMD and Simple Practice.

The value of telehealth is clearly there. In particular, this is accelerating in the US as Medicare Part B approved reimbursements for telehealth services in 2018.

5 Factors to Consider with Consumer Spending in Healthcare

To get a better understanding about what this means for consumer savings, we need to break down consumer spending in healthcare into a few (rather simplified) areas:

    1. Transportation and Time

Consumers can now get the care they need without leaving home, school or work. They not only save time by avoiding traffic, but all together avoid the emergency room when it’s truly unnecessary. In addition, ambulance rides to the ER are expensive, with some estimates indicating it can range anywhere from $224 to $2,204.

Are savings possible in 2018? Absolutely. By leveraging telehealth services there is an immediate benefit.

    1. Co-payments

Of all the healthcare services, virtual visits are the least expensive for both the provider and the patient. While not all insurance providers make the cost of co-payments for virtual visits available to the public, one would assume they will be no more than your standard in-person visit (and hopefully less).

Consumers can experience massive savings by leveraging virtual visits because co-payments can be lower, or included in the cost of a concierge membership. This is particularly beneficial to senior citizens, who tend to make have more frequent visits to healthcare providers.

Where consumers can really save is in co-payments for visits to urgent care facilities or emergency rooms. If you’re lucky, your plan will only make you pay a few hundred dollars for that midnight visit to the ER. But that isn’t always the case.

Are savings in 2018 possible? Yes.

    1. Annual deductible + Out-of-pocket Expenses

Back to that midnight ER room visit with our new parents and baby. Not only would they have a co-payment for their visit, but if they have yet to meet their annual deductible, then they may also be responsible for paying any excess charges up to that deductible amount.

In this case, that ER visit not only costs our new parents $500 for the copay, it also costs them $200 more for administered services that go above and beyond their initial copay.

So could a video visit save money for consumers in this scenario today? Yes.

    1. Long-term healthcare costs

Early detection and adherence to long-term treatment plans or management of a chronic condition has been shown to reduce healthcare costs.

Studies also show that adherence to a treatment program was improved by having regular telehealth check-ins. In situations where time and cost could potentially interfere with a patient’s treatment program, telehealth check-ins can help alleviate some of this burden and save them both time and money in the long term.

Telehealth encourages easy and convenient check-ins, when people may otherwise face challenges getting to the doctor’s office.

Are savings possible in 2019? Yes.

    1. Annual Premiums

The real question we should be asking is: How quickly can healthcare insurers pass on the savings of telehealth services to consumers through premium rate reductions?

The for-profit insurers are motivated to reduce payouts while maintaining premium levels (or raising them, which is typical year-over-year). Only when insurers begin to compete for customers by reducing premiums will the amount consumers spend on healthcare really go down.

Are savings possible in 2018? Unlikely.

The Future of Telehealth

Most of the telehealth services being offered today are relatively new, and the full reality of the cost savings is still being uncovered. For an industry as complex as healthcare, we expect the immediate cost savings outlined above to consumers in 2019, with more substantial savings realized in the next 3-5 years.

While consumer spending on healthcare in the US may be significantly higher than in the UK, it doesn’t mean that savings can’t be realized. Public health services like the NHS cost money to run, and are already actively finding ways to save via their partnership with Babylon Health.

Visit our Healthcare Resources page for a closer look at how telehealth and telemedicine solutions.

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