A analysis–and challenging takedown–of the RAND telehealth cost study (updated)

March 25, 2017 | by

A must read on telemedicine and telehealth cost. One of our Readers, Bruce Judson, commented on our earlier coverage of RAND Health’s new study published in Health Affairs [TTA 8 Mar] finding that telemedicine virtual visits (here called telehealth) drove up utilization of care by 88 percent and cost by $45 per year for respiratory illnesses that typically resolved on their own.

He has written his own analysis based on the full study. Telehealth Costs: RAND’s Questionable Rant (Huffington Post), considers the full study and compares it to a 2014 RAND study by the same authors. Mr Judson notes inconsistencies in sampling and definitions; the illogical attachment of a waiting period cost (77 minutes=$30) to a telehealth visit (perhaps to level it with an office visit?); the misinterpretation of results; small sample size; and the fact that the CalPERS sample is ancient (2011-13), representative of a time when telemedicine (here provided by Teladoc) was a new notion. There are inconsistencies with an earlier RAND study based on the same data! (He does not count in costs outside the study such as lost time at work or the cost of spreading infection to co-workers.)

Mr Judson, after many years in publishing, digital marketing and strategy (from when it was called ‘new media’), and currently an advisor to a UK firm investing in IoT, has cast his lot with us in health tech, heading a firm in the Hudson Valley of NY, Telehealthworks, which markets an employer telemedicine and wellness program called freshbenies. While he discloses that he’s not a disinterested observer or researcher, he has that in common with most of our Readers, who are very interested in determining the truth about costs and savings. He gives many reasons to be skeptical of the RAND findings.

Telemedicine may drive up medical utilization, increase cost for respiratory illness: RAND Health

March 8, 2017 | by | 2 Comments
[grow_thumb image=”https://telecareaware.com/wp-content/uploads/2017/03/business-163464_960_720.jpg” thumb_width=”150″ /]Is convenience the culprit? Researchers from RAND Corporation’s Health program conducted a three-year study of telemedicine (here called telehealth) usage by employees of CalPERS for respiratory illness and came to a surprising conclusion. From the study abstract: “12 percent of direct-to-consumer telehealth visits replaced visits to other providers, and 88 percent represented new utilization. Net annual spending on acute respiratory illness increased $45 per telehealth user.”

The study examined 2011-2013 claims information for over 300,000 people insured through the California California Public Employees’ Retirement System, which despite the name provides health benefits to active state employees as well as retirees. It targeted common acute respiratory infections (sinus infections, bronchitis and related) to determine patterns of provider utilization and the change after the introduction of telehealth. Of that group, 981 used the Teladoc system for video consults, adopted by CalPERS in 2012.

The objective of the study was to determine whether the telehealth visits were new care or substituted for other types of care such as doctor, clinic, or ED visits. Even though the telehealth services were far cheaper–about 50 percent lower than a physician office visit and less than 5 percent the cost of a visit to the ED–they did not make up for the calculated 88 percent rise in utilization.

Similar results were reported by RAND in last year’s research on retail clinics, which estimated that 58 percent of visits for low-severity illnesses were new and not shifted from EDs or doctor’s offices. What is in common? Convenience. Convenience opens up greater use. If you have a store down the street, you may pop in daily versus once-weekly.

Updated: Some further insights from Mobihealthnews were that the study stated that telehealth visits may be more likely to result in additional costs, such as follow-up appointments, testing or prescriptions. In other words, the telehealth visit starts off less expensive, but the standard of care in follow-up adds to that initial cost.

The RAND recommendation is thus not a surprise: make more telemedicine visits a shift from office or ED to restrict telemedicine growth. Raise the cost of co-pays for the service to reduce demand. On the ‘high side’, encourage ED ‘frequent flyers’ to use telehealth services instead. Pass the painkillers. Health Affairs (abstract only; paid access required for full study), RAND Health press release.

Analysis: instead of self-doctoring, and suffering at home and in the workplace, the small group of CalPERS policyholders in the study actually used their new benefit to check their health–as intended! The additional cost is not staggering; (more…)