Penn Medicine Study Shows Telemedicine Can Cut Employer Healthcare Costs by 25%
This is good news for clinical laboratories that already perform medical testing for telehealth providers and an opportunity for medical labs that do not, it is an opportunity to do so
Telemedicine visits have become commonplace since the arrival of COVID-19. Before the pandemic, telehealth was primarily used to give remote patients access to quality healthcare providers. But three years later both patients and physicians are becoming increasingly comfortable with virtual office visits, especially among Millennial and Gen Z patients and doctors.
Now, a recent study by the Perelman School of Medicine at the University of Pennsylvania (Penn Medicine) suggests that there could be a significant financial advantage for hospitals that conduct telemedicine. This would be a boon to clinical laboratories that perform medical testing for telemedicine providers.
According to Digital Health News, in July 2017 Penn Medicine launched a 24/7/365 copayment-free telemedicine program for its employees called Penn Medicine OnDemand. To engage with a telemedicine provider, patients must have a smartphone or tablet with a front-facing camera and updated operating system.
Telemedicine Visits Cost Less than In-Office Doctor Appointments
An analysis of the OnDemand program’s data collected from its inception through the end of 2019 found that the telemedicine appointment per-visit cost averaged around $380, whereas the cost of an in-person visit at an emergency department, primary care office, or urgent care clinic averaged around $493.
Typically, Penn Medicine’s employees used the telemedicine program for common, low risk health complaints. Healthcare conditions that many patients might otherwise not seek treatment for if an in-office visit was inconvenient.
“The data we analyzed pre-date the pandemic. It was a time when people were just putting a toe in the water and wondering, ‘Let me see if telemedicine could treat my needs,’” Krisda Chaiyachati MD, an internal medicine physician and Adjunct Assistant Professor at Penn Medicine, told Digital Health News. Chaiyachati lead the research team that conducted the telemedicine study.
“These days, people seem willing to jump in for an appropriate set of conditions,” he added. “The good news is that we made care easier while saving money, and we think the savings could be higher in the future.”
Chaiyachati and his colleagues found that telemedicine can save employers healthcare costs without sacrificing quality of care.
The Penn Medicine researchers published their findings in The American Journal of Managed Care, titled, “Economics of a Health System’s Direct-to-Consumer Telemedicine for Its Employees.”
“The conditions most often handled by OnDemand are low acuity—non-urgent or semi-urgent issues like respiratory infections, sinus infections, and allergies—but incredibly common, so any kind of cost reduction can make a huge difference for controlling employee benefit costs,” Krisda Chaiyachati MD (above), a Penn Medicine physician and the study’s lead researcher, told Digital Health News. Clinical laboratories that already perform testing for telemedicine providers may see an increase in test orders once hospitals learn of the costs savings highlighted in the Penn Medicine study. (Photo copyright: Penn Medicine.)
Telemedicine on the Rise
The idea is not new. In late 2018, Planned Parenthood launched the Planned Parenthood Direct mobile app in New York State. The app provides New York patients with access to birth control, emergency contraception, and UTI treatment with no in-person visit required.
The program has since expanded across the country. Users of the app can connect with a physician to go over symptoms/needs, and the be sent a prescription within a business day to the pharmacy of their choice.
The concept is similar to Penn Medicine OnDemand, which gives patients 24/7 year around access to treatment for common and low-acuity medical issues in a convenient, virtual process.
Telemedicine was on the rise in other parts of the healthcare industry before the pandemic. According to “The State of Telehealth Before and After the COVID-19 Pandemic” published by Julia Shaver, MD, Kaiser Permanente, in the journal Primary Care: Clinics in Office Practice, 76% of US hospital systems had utilized some form of telemedicine by 2018. This rate grew exponentially while the healthcare system had to navigate a world with COVID-19 on the rise.
And, apparently, quality of care does not suffer when moved from in-person to virtual settings. Two studies conducted by The University of Rochester Medical Center (URMC) found telemedicine to be effective and that “common concerns about telemedicine don’t hold up to scrutiny,” according a news release.
In her New England Journal of Medicine (NEJM) paper on the studies, Kathleen Fear, PhD, URMC’s Director of Data Analytics, Health Lab, and her co-authors, wrote: “Three beliefs—that telemedicine will reduce access for the most vulnerable patients; that reimbursement parity will encourage overuse of telemedicine; and that telemedicine is an ineffective way to care for patients—have for years formed the backbone of opposition to the widespread adoption of telemedicine.”
However, URMC’s study found the opposite to be true. The NEJM authors wrote, “there is no support for these three common notions about telemedicine. At URMC, the most vulnerable patients had the highest uptake of telemedicine; not only did they complete a disproportionate share of telemedicine visits, but they also did so with lower no-show and cancellation rates. It is clear that … telemedicine makes medical care more accessible to patients who previously have experienced substantial barriers to care.
“Importantly, this access does not come at the expense of effectiveness. Providers do not order excessive amounts of additional testing to make up for the limitations of virtual visits. Patients do not end up in the ER or the hospital because their needs are not met during a telemedicine visit, and they also do not end up requiring additional in-person follow-up visits to supplement their telemedicine visit,” the NEJM authors concluded.
“Not only did our most vulnerable patients not get left behind—they were among those engaging the most with, and benefiting the most from, telemedicine services. We did not see worse outcomes or increased costs, or patients needing an increased amount of in-person follow up. Nor did we find evidence of overuse. This is good care, and it is equitable care for vulnerable populations,” Fear said in the news release.
“For patients, the message is clear and reassuring: Telemedicine is an effective and efficient way of receiving many kinds of healthcare,” she added.
Opportunities for Clinical Laboratories
Dark Daily has covered the fast growing world of telemedicine in many ebriefs over the years.
In “Two New Definitive Healthcare Surveys Show Use of Inpatient Telehealth is Outpacing Outpatient Telehealth Services,” we covered how medical laboratories could help hospital telehealth physicians in ordering clinical laboratory tests and reviewing test results to ensure selecting the best therapies.
And in “Despite Technical Challenges During COVID-19 Pandemic, Healthcare Networks Plan to Increase Investment in Telehealth Technologies,” we reported on a survey which showed that in 2021 more than 50% of hospitals and health systems planned to increase virtual care services within two years, a development that we predicted could change how patients access clinical laboratory testing services. And it has.
As telemedicine broadens its reach across the healthcare world, clinical laboratories and pathology groups would be wise to seek collaboration with health plans and providers of telemedicine to figure out where sample collection and testing fits into this new virtual healthcare space.
—Ashley Croce
Related Information:
Telemedicine Visits Cut Health System Employee Care Costs by Nearly 25%
The State of Telehealth Before and After the COVID-19 Pandemic
Myths Busted: New Studies Show Telemedicine is Effective, Doesn’t Reduce Access to Care
