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Hop on the Bandwidth Wagon

November 1, 1998
by David Essex
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Stories that show the amazing potential of telemedicine are easy to find. A Native Alaskan woman avoids a long, life-threatening trek to an Anchorage hospital because a remote consult determines the trip is unnecessary; a doctor, frustrated by the inability of his elderly mother, a two-time stroke victim, to remember to take her medications invents a home device that holds the pills, beeps reminders and transmits reports back to the hospital; Navy fleets that formerly turned sail to return ill sailors to port now avoid the costly trips thanks to on board remote monitoring and conferencing equipment.

But telemedicine as a whole remains unproven in the eyes of many doctors, healthcare organizations and government officials. Its effects on the quality of care and the bottom line seem unclear. High bandwidth digital telemedicine is a thing of the 1990s, so new that its methods still reside mostly in research papers and in the minds and memoranda of its pioneers.

Those pioneers who are now running self-sustaining telemedicine programs have pretty clear ideas about how to cost-justify the investment, how to ensure buy-in from care providers and patients, where the best opportunities are (in both the medical and market sense) and pitfalls to be avoided. Their collected advice can serve as a rough guide to implementing a successful (that is, sustainable) telemedicine program.

Telemedicine basics

Telemedicine is growing rapidly. According to Bill Grigsby, senior research associate at the Telemedicine Research Center in Portland, Ore., there were 41,740 telemedicine consults in 1997, up from 21,500 the previous year. (Grigsby’s statistics, culled from a study of 139 out of 155 active programs in 45 states, exclude teleradiology because it developed on a different path than newer forms of telemedicine and is more difficult to track.) First-quarter 1998 consults totaled 14,326, indicating a continuing growth rate that exceeds 60 percent. Between 1993 and 1996, the number of programs roughly doubled every year.

Reduced to its most basic definition, telemedicine is the use of electrical signals to transmit medical information between two points. In this sense, telemedicine has been practiced for decades. Phone consults and faxing of medical records were long ago integrated into standard medical practice. Teleradiology--transmitting digitized images of X-rays, CT scans and so on for diagnosis by off-site specialists--is well-established and fully reimbursed by Medicare. But today, the leading edge--and the focus of the most controversy--is the use of communications technology to replace existing methods of examination, diagnosis and consultation.

Faster, cheaper and more widely available high-speed phone lines and networks (such as ISDN, T1 and ATM) together with a boom in low-cost imaging and monitoring devices, have made simulation of face-to-face consultation both workable and affordable.

The hardware choices tend to fall into three neat categories: teleradiology, videoconferencing and remote monitoring systems. All-in-one teleradiology and videoconferencing rollabout units are available (they usually cost between $5,000 and $50,000), as are simpler standalone devices, such as videophones and home-monitoring stations, some of which cost less than $4,000. Analog-based audio stethoscopes, digital blood pressure meters and digital dermascopes provide input for transmission to the diagnostic site; price range: $150 to $10,000, with multi-function imaging devices costing the most; single-function data-gathering devices the least.

It’s also possible to piece together affordable setups using either generic or custom desktop PC peripherals, such as small, sub-$500 video cameras and capture cards. (One Oregon teledermatology pilot employed completely PC-based modems, capture cards and commercial still-picture digital cameras to process high-resolution images of skin lesions.) Continuing advances in image-compression software are making it easier to transmit sufficiently sharp images over widely available analog phone lines using 14.4-56 Kbps modems.

Issues and answers

The infrastructure investment decision boils down to bandwidth needs and capacity. Image-based telemedicine, especially two-way videoconferencing, often requires leasing of existing high-speed data lines--or the extension of new ones into outlying markets--which can cost thousands per month. On the other hand, standard phone lines and PC modems can easily support home monitoring applications, including low-quality full-motion video.

Selling the concept to healthcare providers, and educating them in how to use the technology, are often the first major hurdles. Some doctors (though few patients, according to early reports) may be uncomfortable with using the technology. Existing referral patterns are disrupted. Territorial behavior may arise as rural general practitioners fear losing patients to big city doctors, or urban specialists face more competition from other specialists. Doctors and nurses may doubt the technology’s effectiveness, or they might be apprehensive about its effect on their own hard-won effectiveness.

Poor planning can kill a telemedicine program in its infancy. "The biggest mistake people make is they have not defined the problem correctly," says Douglas Perednia, MD, director of telemedicine at Oregon Health Sciences University in Portland. The key differentiators to keep in mind are populations and the equipment needed to serve them. Anyone evaluating a telemedicine startup should not assume that telemedicine is one thing, implemented without a specific context. A well-framed question, for example, might be "How do I evaluate teledermatology using store-and-forward technology," says Perednia, who also advises performing a complete system analysis and model to anticipate bottlenecks and other inefficiencies in the planned system.

Licensing can be an issue when your telemedicine system crosses state boundaries, but the experts are divided on how serious an impediment it is. Only 27 percent of telemedicine administrators in North Carolina, South Carolina and Georgia cited it as a concern in a 1997 survey, according to Sherry Emery, PhD, a research associate at the University of North Carolina’s Sheps Center for Health Service Research. Emery, now a researcher in the Department of Family and Preventative Medicine at the University of California/San Diego, says licensing "is just a matter of taking the test." Large, multi-state HMOs such as Kaiser Permanente have already dealt with it. And licensing is even less of an issue in home telemedicine, which benefits from nursing boards’ interstate licensing compacts. On the other hand, the Western Governors’ Association’s June 1998 Telemedicine Action Update cites multi-state licensure as a cost that might deter providers from adopting telemedicine.

Finally, anyone considering a telemedicine startup must budget for publicity. "Very few people have heard of telemedicine, so when you set it up, you need to publicize that you’ve done it," Perednia says.

Of money and markets

Telemedicine consultants and practitioners offer no magic bullet for financial viability. Instead, they advise applying standard business-analysis methods to any telemedicine startup. Before you price out computer equipment, phone lines and vendors, do a feasibility study. Research existing and potential markets. Demographic studies can help delineate the universe of potential customers and reveal underserved markets. Estimate costs, new revenues and savings, then track them using normal accounting procedures along with surveys to track customer satisfaction.

Asking a few pointed questions up front can avoid surprises later. For example, if a prospective telemedicine program brings in new customers, will those customers cause a net financial gain or loss for the organization? (Increased hospital visits can be an unintended consequence.) Also, can the program become self-sustaining? The precariousness of grant money and government funding makes asking this question almost automatic, but it can also raise a red flag for poorly rationalized telemedicine programs that exist only because money was available for them.

Desirable telemedicine applications either save money on or improve the quality of existing services, or they make new services possible. Prospective applications that don’t have the clear potential to achieve at least one of the three probably shouldn’t be started in the first place.

Sometimes, the economic benefits won’t be obvious because you can’t bill for them directly. Telemedicine thus serves as a loss leader to bring in new customers. Telemedicine experts generally agree that this approach works best for large organizations with strong name recognition, such as the Mayo Clinic. Highly centralized organizations are also better suited to this approach, which treats telemedicine lines and equipment as a sort of public infrastructure available to anyone within the organization. Decentralized organizations tend to delegate cost justification and other decisions to each department, which can lead to less expensive setups and a greater variety of uses.

Cost savings are frequently the only justification that’s needed, especially in places where capitation predominates. "There’s not a lot of revenue to be generated--it’s expense reduction," says Mary Ellen Wells, president of Minnesota’s Buffalo Hospital. Healthcare organizations may thus be able to convince partner HMOs that the investment in a telemedicine program might be quickly recouped by savings from reduced office visits and improved early intervention.

Training costs are another big area of potential savings. Wells notes that telemedicine can save not only on transportation costs, but on the cost of covering for the person being trained.

The most controversial issue in telemedicine is the reluctance of the federal Health Care Financing Administration (HCFA) to reimburse doctors for most consultations that aren’t done in "real time" over two-way videoconferencing systems. So-called store-and-forward consultations, in which the consulting specialist’s diagnosis is made after the data was sent, is not reimbursable under revised rules published by HCFA in June. HCFA also limits telemedicine reimbursement to rural health professional shortage areas. (For an update see "Medicare Reimbursement: A Drag on the Telemedicine Engine," page 48.)

Still, administrators of successful telemedicine programs tend to de-emphasize reimbursement as a factor in economic viability. They cite savings on existing programs, along with new revenue generated by additional programs and consults facilitated by telemedicine, as the real drivers of successful programs.

Applications that work--and why

Programs targeted at proven growth areas may be the safest bet. Three hot prospects are prison, home and emergency telemedicine, according to several experts. "The lowest-hanging fruit is telemedicine for correctional facilities," asserts Jay Sanders, president of the American Telemedicine Association in McLean, Va. Several factors make this so, chief among them the constitutional requirement to provide healthcare to prisoners; the growth in, and aging of, the inmate population; the growth of AIDS and other drug-resistant diseases; the predominantly rural locations of prisons; and the costs and escape risks of transporting prisoners to hospitals. Home telemedicine fits into the broader trends toward cost reduction, self care and outpatient treatment; it is especially popular for saving nurse visits for the homes of patients with chronic conditions, such as diabetes or cardio-pulmonary disease. Emergency telemedicine can help address three acute problems of remote areas: increased--and sometime life-threatening--travel times for patients, the unavailability of specialty care and the educational needs of emergency care practitioners.


6 Reasons for Building a Telemedicine Program

Improved outcomes. Telemedicine can get the right treatment to patients sooner than otherwise.

Marketing. Telemedicine can foster the impression of technological leadership.

Expanded market share. Telemedicine can facilitate expansion into remote markets that would normally be too expensive to reach, or beyond existing markets where you are shut out or that are becoming more expensive to serve.

Cost control. Telemedicine can help avoid unnecessary patient trips and allocation of resources to outlying areas. Inpatient care, where necessary, can be handled by typically less expensive outlying hospitals.

Personnel retention and training. Healthcare organizations can keep physicians in remote areas by providing video-based training, thus helping them feel less isolated from their urban peers. Already well-trained physicians may be more willing to locate to remote areas if they think that the availability of telemedicine will permit them continued opportunity to exercise their skills.

New products. Telemedicine can expand catchment areas to include enough customers to support new products and services. Minnesota’s Allina Health System took advantage of this concept to bring videoconferencing-based cancer support groups to rural areas that would not have had enough patients to attend them.

--D.E.


Examples of Telemedicine in Action

University of Alaska, Anchorage.Statewide narrow bandwidth applications demonstration serving four regional hospitals and 25 remote villages in western Alaska.

Johns Hopkins University.Surgeon operated on a patient in Bangkok, Thailand, using video to view and guide surgical instruments.

Maryland Ambulance Project.Transmits video images, audio and patient vital signs enroute to hospital receiving physicians.

Project Phoenix. (http://www.imac.georgetown.edu/telemed/phoenix/phoenix.htm) Supports remote monitoring of renal dialysis patients.

Texas Tech University. Operates remote school-based clinic via interactive video.

UCLA School of Dentistry. Teledentistry project supports consultations with general dentists practicing in remote areas throughout the western U.S.

For more information:Telemedicine Information Exchange. (tie.telemed.org)

--Charlene Marietti


Best Apps for Telemedicine

AT THE MOST ABSTRACT LEVEL, the applications that seem to work best in telemedicine have two things in common. First, they already rely heavily on data that can easily be seen (such as the facial expressions of people in a training seminar, or the skin of a melanoma patient) or digitized (such as stethoscope sounds or blood insulin levels). Second, they have inherent issues of transportation, travel time and physical remoteness that can be easily mitigated by telecommunications.

Statistics bear this out. The three most popular specialties involved in teleconsultations are orthopedics, dermatology and radiology, according to the Federal Telemedicine Gateway (www.tmgateway.org). Anecdotal evidence suggests that the most up-and-coming applications include cardiac care (which is already based largely on interpretation of test results) home telecare (especially remote monitoring by nurses of patients with chronic or otherwise critical conditions) and emergency care (which, like dermatology, is weakest and less uniform in rural areas).

Ongoing telemedicine programs that have been deemed successful by their administrators have some underlying characteristics in common. They tend to be well-integrated into existing procedures (though some organizations contract out to telemedicine providers). They use existing infrastructure, where possible, to save costs and avoid wasteful duplication--often by partnering with government-sponsored telecommunications links at universities. Successful telemedicine programs provide an obvious improvement over alternative delivery mechanisms. And, not least, their continuing viability is monitored through the use of frequent surveys, research studies and budget reports.

--D.E.


Medicare Reimbursement: A Drag on the Telemedicine Engine

NEW, MORE LIBERAL REIMBURSEMENT RULES PROposed by the Health Care Financing Administration (HCFA) on July 22 didn’t go nearly as far as telemedicine providers would like, though only a minority of those interviewed cite it as a make-or-break issue. Still, broader reimbursement would clearly boost the financial viability of many telemedicine programs and expand the use of telemedicine technology.

HCFA, the agency that administers Medicare payments, already pays the consultant’s fee for services, such as radiology and interpretation of electrocardiograms, that traditionally don’t require face-to-face, hands-on contact with the patient. The proposed rule results from a provision in the 1997 Balanced Budget Act requiring payments for certain consultations by Jan. 1, 1999 in rural counties designated health professional shortage areas. It expands reimbursement to other types of consultations, but requires that both the consultant and the patient be simultaneously present during a live, two-way audio-video conference controlled by the consultant. It also provides for a new payment structure in which the consultant gets a single payment equal to the normal fee, 25 percent of which must then be shared with the referring practitioner.

Telemedicine advocates’ biggest complaint is that the new rules ignore store-and-forward applications as well as geographic areas that don’t qualify as HPSAs. The proposed rules also fail to reimburse for infrastructure costs and introduce fee splitting, which was formerly illegal.

Most egregious, says American Telemedicine Association President Jay Sanders, "is HCFA’s continued near-sightedness in refusing to identify a consultation as one that occurs in a store-and-forward modality. In the past, they’ve used a rationale that the radiologist doesn’t see the patient. What in the world is the difference?"

Calls to HCFA to get the agency’s rationale went unreturned before press time. But the proposed rules themselves state "that, although asynchronous transmission may be sufficient for diagnostic interpretation of images (such as radiological images), a teleconsultation is equivalent to a traditional, face-to-face consultation only if it permits the consultant to control the examination of the patient as the examination is taking place. With store-and-forward technology, the consultant is reviewing an examination that has already occurred and is limited to whatever information was recorded at that time. We believe that a teleconsultation instead must be an interactive patient encounter."

Not all telemedicine providers are so critical, pointing to the still-unproven costs and benefits of many telemedicine programs--and Medicare’s near-bankruptcy--as valid reasons for HCFA’s reluctance to spend more money. "They’re saying "prove ROI [return on investment] and reimbursement will follow," says Dr. Bruce Kehr, president of InforMedix, a vendor of home healthcare equipment. "They’re applying sound business principles to reimbursement, and they should."

--D.E.


David Essex, previously director of reviews at BYTE magazine, is a freelance writer in Antrim, N.H.



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