How Hospitals Are Reducing Medical Costs with Telehealth

Reducing Medical Costs with Telehealth

Interest in telehealth has reached an all-time high, with many of the most prestigious health systems in the U.S. implementing the technology in 2015. This surge in adoption is driven by the need to address a host of urgent issues, including the need to engage patient populations, bridge gaps in care, expand revenue sources, and make care more convenient for patients. Out of all the reasons health systems are implementing telehealth, however, reducing medical costs is one of the largest driving factors.  This is particularly true for health systems that have become Accountable Care Organizations (ACO) or that are in the process of becoming an ACO.  For these institutions, the mandates to improve patient care and reduce medical costs go hand in hand.

A recent study by Towers Watson found that telehealth could save as much as $6 billion annually in U.S. healthcare costs. This number shows the huge potential within hospital systems for reducing medical costs with telehealth. But, it’s also important to break down these numbers into more digestible use cases and data.

“Telehealth could save as much as $6 billion annually in U.S. healthcare costs.”

Below are three specific examples of how hospitals use telehealth  to reduce medical costs, while simultaneously delivering high-quality care.

1. Readmission Reduction

The federal government has pegged the cost of hospital readmissions for Medicare patients at $26 billion annually, with $17 billion accounting for readmissions that result in patients not receiving the right care. In 2011, hospitals spent $41.3 billion to treat patients readmitted within 30 days of discharge. Telehealth is being used as a key part of hospitals’ readmission reduction programs to help combat high readmission rates.  By improving the follow-up care and care management of a range of patients—from the chronically ill to post-surgical patients – hospitals find they can prevent many readmissions.

“In 2011, hospitals spent $41.3 billion to treat patients readmitted within 30 days of discharge.”

A report by the Commonwealth Fund found that Partners HealthCare’s Connected Cardiac Care Program has seen a 50% reduction in heart failure-related readmission rates for enrolled patients since its remote monitoring and telemedicine pilot launched in 2006. The program has estimated a total cost savings of more than $10 million. [In the study, participants answered symptom-based questions on a computer and received weekly education sessions via telephone. Each patient’s parameters were reviewed by telemonitoring nurses, who were able to then intervene for immediate teachings when the patient was out of their range.]

2. Better Staff Utilization

Many health systems struggle to staff multiple campuses or locations with medical specialists, due in large part to high costs and a lack of available personnel. Telehealth enables health systems to better distribute staff throughout their healthcare facilities and load-balance resources across entire systems, reaching more patients with less strain on specialist resources. Telehealth also improves provider-to-provider communication, which can also result in improved patient care and as a result, cost savings.

In fact, a study conducted by the Center for Information Technology Leadership (CITL) found that implementing provider-to-provider hybrid telehealth technologies—such as a combination of store-and-forward and interactive audio-video telehealth technologies—would result in annual net savings of $1.39 billion in avoided inter-emergency department transfers, $270.3 million in avoided correctional facility transfers, and $806 million in avoided nursing facility transfers. The statistics are clear – telehealth means much efficient staff utilization.

3. Preventative Outreach

In 2008, approximately 1 in 10—or 40 million—hospitalizations were from a potentially preventable condition, such as complications of diabetes, dehydration, and heart conditions. These types of conditions cost hospitals billions of dollars a year.   By reducing the number of potentially preventable admissions, health systems can greatly reduce medical costs. Analysis of data from the Healthcare Cost & Utilization Project’s 2010 Nationwide Inpatient Sample and the Agency for Healthcare Research and Quality’s Prevention Quality Indicators showed that a decrease in the number of potentially avoidable hospital admissions from 2005 to 2010 saved nearly $1 billion in hospital costs. Just imagine if telehealth was used in this scenario. Telehealth can be a true game-changer when it comes to preventing hospital admissions by facilitating regular and convenient monitoring and caring for patients at the highest risk for hospitalization, including chronic care patients and those with behavioral health conditions.

“A decrease in the number of potentially avoidable hospital admissions from 2005 to 2010 saved nearly $1 billion in hospital costs.”

A study by the Commonwealth Fund examining the Veterans Administration’s (VA) telehealth program, Care Coordination/Home Telehealth (CCHT), saw a 20% reduction in patients seeking hospital services for diabetes. On the behavioral health side, the VA saw a 56% reduction in hospital services for depression and a 40% drop in hospitalizations for other mental health issues. Together, these results translate to $2,000 in per-patient annual savings.

Centura Health also saw a reduction in diabetes readmission rates—from 12% to zero—when they introduced and trained patients on telehealth before they were discharged. Again, the numbers speak for themselves.

How American Well Is Helping

With American Well’s introduction of the AW8 platform, our goal is to enable health systems to reap all the benefits of telehealth—including cost reductions. American Well enables both provider-to-patient and provider-to-provider telehealth on an easy-to-use, mobile- and web-friendly platform.

American Well’s Telemed Tablet allows providers to connect over live, secure video for immediate consultations by specialty. This type of implementation helps health systems maximize their reach within their hospital ecosystem, while saving on costs associated with staffing specialists at each medical facility.

American Well is also integrated with Apple HealthKit, which allows monitoring of many chronic care conditions, including blood sugar levels for diabetics and blood pressure levels for patients with hypertension and other heart conditions. Better monitoring helps decrease hospital readmissions. We’re working with our health system clients to implement disease-tailored telehealth practices that will aid in preventing these types of hospitalizations moving forward.

Conclusion

While telehealth arms health systems with the resources needed to reduce medical spend, it’s also important to note that a significant portion of the value derived from telehealth comes from  improved patient satisfaction. The VA found an average patient satisfaction score of 86% for its Home Telehealth program. CVS, which recently implemented telehealth into its Minute Clinics, has also seen an impressive patient satisfaction rate of 90% with telehealth.

As hospitals seek to decrease costs and increase patient satisfaction, American Well serves as a partner in the process, ensuring that telehealth programs help hospital meet these critical goals. Telehealth will continue to be an important tool in helping hospitals reduce costs and offer better patient care.

One comment

  1. Larry Fetzer

    A very interesting and important article.

    I would like to learn more about this program. Specifically, I want to know the VA process for establishing a VA sponsored Telehealth facility in rural America.

    Thank you.