According to a report by the National Center for Health Statisticsthe percentage of adults who used telemedicine in the past 12 months decreased by 6.9%.
While virtual care numbers Back down to earth, the industry is adapting. For example, when Amazon consolidated and repositioned its own telehealth offerings this summer, it announced $49 per visit consults.
A recent study reported on telehealth trends in U.S. hospitals — and explored opportunities and barriers to growth. Meanwhile, the American Telemedicine Association is pleading with the Centers for Medicare and Medicaid Services for more flexibility and further guidance on payment and coverage.
Industry experts also see the need for clarity. Matt Wolf, senior healthcare analyst at consulting firm RSM US, believes it’s likely that without regulatory reform, the United States will see telehealth services stagnate — and perhaps even decline. Despite a continued focus on telehealth, the industry faces numerous setbacks that could limit virtual care’s ability to find success, he said.
We interviewed Wolf to gain a better understanding of his perspective on the state of telemedicine and regulation, and his belief that when payers and providers are incentivized to improve patient outcomes, it can make economic sense to use technology to expand access.
Q. You believe that without regulatory reform, it is likely that we will see telehealth services stagnate and possibly decline. Why is that?
A. The economics of healthcare services in the US is inextricably linked to the regulatory and reimbursement environment. With respect to telehealth, this current environment is extraordinarily complex to navigate.
Ultimately, patients want access to healthcare services when, where, and how it suits them best. This is how we interact with most services in our lives. We shop, entertain, socialize, bank—and even, to some extent, work—through whatever physical or digital channels we choose, at times of our choosing.
This is the promise of telehealth and virtual care: massively expanded access to the point of customizable convenience. The current regulatory and reimbursement framework prevents that. Instead of a single labor market that can serve patients virtually, we have 50 localized markets.
Convenience comes from matching a patient’s need in Pennsylvania with the right provider, regardless of where that provider is located. A telehealth or virtual platform that must match a provider in the same state as the patient is only incrementally more convenient for most patients than simply going to a physical location for care.
Furthermore, the cost of many virtual visits is simply additive. Patients are referred to the emergency department or their physician, and the cost of the virtual visit does not apply to the referred care. This also results in patients having to pay the existing Telehealth and virtual care options.
While there are use cases for telehealth and virtual health applications, we’re not going to see broad solutions that significantly expand access and convenience without a regulatory overhaul. The economics simply don’t work, and we’re not going to see mass adoption of a system that isn’t convenient and on-demand for patients. It’s what they’ve come to expect in almost every other aspect of their lives, and anything short of that is going to be of limited use in healthcare.
Q. Licenses that allowed physicians to practice across state lines and ensured reimbursement parity due to the pandemic have now expired. How is healthcare overcoming this challenge?
A. The health care industry disagrees that state licensing needs to be overhauled. There are stakeholders on both sides of the debate. Proponents of our current model often cite patient safety as a reason for more restrictive licensing. Others argue that overhauling the current system will improve access and that any quality disparities between states should be addressed, regardless of the licensing model.
Rapid development in generative AI and other advanced technologies offers a ray of hope for reform. Such technologies can, over time, augment, but not replace, the ability of providers to care for patients at a consistent level of quality regardless of the patient’s physical proximity to the provider.
Of course, every provider has an upper limit on the number of patients they can see, serve, treat, or operate on in a given day or week. The appeal of advanced technologies lies in reducing the time spent on provider workflows that do not directly touch the patient.
By using such technologies, the burden of communicating with patients can be reduced, potential complications can be identified by merging data from multiple medical records, potential complications can be highlighted while prescribing medications, and so on. These technologies help healthcare providers to focus more on clinical care without having to work more hours, thereby reducing the shortage of healthcare workers.
In addition, such technologies can be used to evaluate quality and keep busy healthcare providers up to date on the latest medical research and best practices, thereby addressing disparities in care and outcomes.
Q. Telehealth services are built on accessibility, although many rural communities still don’t have the bandwidth to use the technology. How can this hurdle be overcome?
A. Infrastructure spending. It could be cable, fiber, satellite, or something else yet to be discovered, but this is the only answer. The The US has historically underinvested in its own infrastructure. In the 15 years leading up to 2022, we enjoyed very low, even negative, interest rates. This led to a period of underinvestment by both the private and public sectors.
The period of so-called ‘easy money’ meant few opportunities for most as long as interest rates remained low.
To drive sustainable financial growth, both the private and public sectors need to invest, and we’re seeing elements of both. In the private sector, we’re seeing significant investment in everything AI-related – semiconductors, data centers, data itself – and energy – both traditional and renewable – among other sectors.
Fiscal policy also directs infrastructure investment through the Inflation Reduction Act, the Creating Helpful Incentives to Produce Semiconductors Act, and the Bipartisan Infrastructure Law.
It’s hard to say whether this will be enough to fully expand broadband access to rural areas. The IRA and the Bipartisan Infrastructure Act allocate $274 million and $65 billion to the task, and the private sector is certainly interested in expanding broadband access in its own way.
However, groups such as the American Society of Civil Engineers and the FCC have questioned whether this amount of government spending will be enough to fully cover every corner of the US with broadband. According to a Study 202165% of US counties have internet speeds lower than the FCC’s definition of “broadband.”
Many health care providers struggle with the economics of providing free preventive care. They cannot be burdened with also providing free broadband access to their rural patients. Government must take the lead.
Q. You point out that when payers and providers are incentivized to improve patient outcomes, using technology to increase access — which will also increase utilization — can make economic sense. What can hospitals and health systems do to make this happen?
A. Providers who want to engage in this kind of alignment also need to control the financing of health care—that is, they need to be integrated with a payer themselves. By controlling the delivery and economics of care, a so-called payer can theoretically align incentives and better promote outcomes.
Of course, this structure alone does not guarantee success. Organizations in this model must leverage data about their patients, data about their clinical process, and understand the costs of delivering each unit of care to a specific patient. However, Generative AI and other advanced technologies make this a much more manageable prospect.
With the right alignment and analysis, a payer can be reasonably confident that delivering X level of care to patient Y at Z levels of cost will improve patient outcomes in a way that is financially sustainable for the entire organization. Or, if that care plan is not financially sustainable on an individual patient basis, the organization can budget for it and try to offset the cost elsewhere, identify clinical or operational improvements in that care plan, or both.
Ultimately, health care is a scarce resource. Scarce resources can generally be allocated through a market-based pricing mechanism or through a direct allocation method. Many observers and analysts worry – and rightly so – that expanding access to care will drive up utilization in a financially unsustainable way.
One possible way to address concerns about overutilization is to first use technology to augment clinical care, so that our existing labor pool can provide more care without working more hours. This effectively reduces the scarcity of health care.
The second step involves using advanced technologies to ensure that each patient receives the precise care they need at the precise time, in a way that improves outcomes and is financially sustainable. These steps were not possible with the technology available even three years ago.
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