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Report: Adoption of Telehealth Can Generate Cost Savings for Rural Communities, Hospitals

March 30, 2017
by Heather Landi
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The adoption of telehealth technologies in rural areas can result in significant cost savings for hospitals and their communities due to transportation cost savings, lost wages savings, hospital cost savings and increased revenues for local labs and pharmacies, according to a white paper by the NTCA-The Rural Broadband Association.

In the white paper, titled “Anticipating Economic Returns on Rural Telehealth,” Rick Schadelbauer, manager, economic research and analysis at the organization, outlines the case to be made for increasing adoption of telehealth in rural areas, and throughout the country, by keeping patients using local health care services rather than traveling to bigger, nearby cities for health care services. Schadelbauer noted that within the United States, there is a distinct health disparity between rural and non-rural Americans, primarily as a result of demographics and limited access to health care.

Telehealth and telemedicine, or the remote delivery of health care services and clinical information using telecommunications technology, holds potential to improve the quality, cost and availability of health care in rural areas. However, telemedicine is not viable without access to robust, reliable broadband service, Schadelbauer wrote. “Rural areas currently lag in broadband deployment, but continue to make impressive gains due in large part to the efforts of small telecommunications providers. Wireless applications require wireline infrastructure in order to be viable options,” he wrote.

The white paper examines the rural health care challenges, telehealth adoption and the potential benefit of telehealth technologies, both non-quantifiable and quantifiable. And the white paper drills down into challenges for rural health, such as reimbursement, cost, patient privacy and licensing.

According to the paper, the non-quantifiable benefits of telehealth are numerous: improved access to specialists, speedier treatment, the comfort of remaining close to home, eliminating the need for long-distance transportation, the ability for health care providers to sharpen their skills, and improved patient outcomes.

The white paper also quantifies several categories of quantifiable benefits of telehealth: transportation cost savings (median cost savings: $5,718 per medical facility, annually); lost wages savings ($3,431 per medical facility, annually); hospital cost savings ($20,841 per medical facility, annually); and increased revenues for local labs ($145,109 per medical facility, annually) and pharmacies ($8,558 per medical facility, annually.)

More specifically, hospitals in rural communities could potentially save more than $81,000 a year on employing doctors, and the white paper presented as one example a hospital that reduced its use of a full-time radiologist from five days a week to one. And, at the same time, hospitals could potentially generate revenue from lab work and pharmacy services that would remain local as a result of telemedicine, according to the white paper. For example, the authors estimated that tens of thousands of dollars could generated by local MRIs, CTs and other lab and pharmacy billings.

“The decision to implement telemedicine is unique to each medical facility, and should take into account not only costs but also non-quantifiable benefits and quantifiable benefits accruing to parties other than the medical facility, such as the patient and local labs and pharmacies located in the communities where telemedicine takes place,” the authors wrote.

As potentially significant as the potential benefits to telehealth—both non-quantifiable and quantifiable—may be, , Schadelbauer wrote that “it is critically important to remember that rural telehealth’s role in addressing the significant health problems inherent to rural areas will depends upon the availability of an underlying, future-proof, fiber-based broadband infrastructure. Further investment in, and expansion of, broadband infrastructure is a critical need not only for rural Americans but also our country as a whole.” Further, he noted, “Absent access to such an infrastructure, the benefits of telemedicine will remain merely theoretical.”

NTCA will use the findings to push for more fiber-based broadband in rural communities.

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