Telehealth: Are We Saving Money Yet?

Ateev Mehrotra, MD, MPH, associate professor of healthcare policy at Harvard Medical School discusses striking growth and potential savings in telehealth.

Doctor's hand reaching out of tablet

There has been tremendous investment in creating direct-to-consumer (DTC) telehealth platforms, which promise to pull patients away from the emergency room and office visits into cost-efficient virtual health relationships. The number of visits in the last three years has grown more than 250%. Yet research suggests certain types of telehealth may represent more care, rather than a substitute for expensive emergency room visits, thereby increasing spending. How can the cost-cutting promise of telehealth be realized without causing spending to soar by pumping up overall utilization of care? 

Ateev Mehrotra, MD, MPH, associate professor of healthcare policy at Harvard Medical School and co-author of many studies on telemedicine, answers three questions for HMS executive education about current trends, misapprehensions and shifts in focus that could help drive cost-savings in telehealth. His research suggests the potential for paring back costs may not lie in expanding direct-to-consumer telehealth models. 

Interview condensed and edited for clarity.

What are the real-world data trends on how patients are using direct-to-consumer (DTC) telehealth vs. the ER or urgent care sites?

Despite the myriad ways telehealth can be deployed, DTC appears to be the biggest player now, at least in terms of sheer numbers. A patient will use their own personal device—laptop, smart phone—to access care, usually from a private company, such as Teladoc, American Well or Doctors on Demand. Typically, it’s for a simple problem like sinusitis, a rash or a child’s ear infection.

Generally, we’re seeing rapid growth among younger, more educated, healthier patients and urban adults are more likely to use this service. This is notable because telemedicine has often been promoted as improving access to underserved communities, such as rural areas with few doctors. But when you look at the data for DTC telemedicine, the vast majority of the visits are patients who live in cities. It’s a different group than many anticipated. However, given that younger and more educated folks are more likely to embrace technology, maybe in retrospect it is not that surprising.


You and your colleagues published a study on telehealth for low acuity conditions, such as acute respiratory illnesses. It estimated roughly 90% of low acuity telehealth encounters were new use and only 10% of encounters substituted for in-person visits. What’s the takeaway?  

A lot of groups have said that telemedicine can be a mechanism to decrease healthcare spending by replacing expensive emergency department or office visits. Our results really emphasized that this may not always be the case. People who previously would have stayed home and had chicken soup now are going to get care. And because of the increased utilization, you see increased spending. We were basically expanding this new category of medicine vs. substituting telehealth for higher-cost office visits.

You may wonder why we needed research on this. It’s very much a duh finding: if you make anything more convenient, more people are going to use it. But research was important because people have assumed that telehealth is going to decrease spending. Now this is only one type of telemedicine. We need to study whether it’s true for other areas of telemedicine.


What changes do you believe could drive cost-saving in telehealth?

Focus on conditions in which concern about expanding utilization is less of an issue. I’m not worried about increased utilization for stroke or cancer. One aspect to emphasize is weighing the degree to which a telemedicine encounter can deter a long-term complication. If you can prevent a person from being hospitalized or sent to a nursing home, for example, you can potentially save money.

We’re seeing very rapid growth of these technologies and with the growth rates I’m observing, in three, five, or ten years, telehealth will be ubiquitous. We’re still trying to figure out the best way to deploy this promising technology. Like everything else, some applications are going to work really well and others—even those that seemed to make a lot of sense—just aren’t going to work.


Continue the conversation on Twitter by connecting with us @HMS_ExecEd or with Dr. Mehrotra @ateevm. Join Dr. Mehrotra at our upcoming webinar "Telemedicine: Promise vs Reality" and in our spring 2019 program, Inside the Healthcare Ecosystem: Strategic Insights for Business Leaders.


—Francesca Coltrera

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