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Compensation & Benefits Advisor Update, June 4, 1997

Telemedicine Services Expanding in Rural Areas

A new study by the Office of Rural Health Policy (ORHP), Health Resources and Services Administration (HRSA), has found a correlation between the length of time a telemedicine system has been in place and the amount of utilization it re­ceives. As facilities gain experience with telemedicine, utilization increases dramatically.

Since 1988, the Department of Health and Human Services (HHS) and other state and federal govern- mental agencies have devoted con­siderable financial support to rural telemedicine demonstration projects. These projects use modern telecommunication technology to improve access to health care for rural populations. ORHP currently funds 11 telemedicine projects through its Rural Telemedicine Grant program, a large demonstration project in West Virginia, and six telehealth projects through its Rural Health Outreach grant program.

One of the missing pieces in assessing the value of telemedicine was a comprehensive study of the use of this technology throughout rural America. Accordingly, MRS funded a nationwide survey of rural telemedicine and examined the status of rural telemedicine. It also developed evaluation tools and methods for agencies and individual programs to use in assessing the contribution of telemedicine to rural health care delivery.

The Exploratory Evaluation of Rural Applications of Telemedicine, a 90-page report. was the result. The study was designed by ORHP and conducted by Abt Associates, Inc., assisted by the University of Colorado.  The survey was mailed to all 2,472 non-federal U.S. hospitals that are outside metropolitan areas, as defined by the U.S. Census. Those that did not respond were interviewed via telephone. The final response rate was 95 percent. All those who reported that they had same form of telemedicine capability, and all the telemedicine affiliates they named, became the sample for the follow-up survey. Affiliates included metropolitan medical centers, rural clinics, mental health centers, and nursing homes.

Findings and conclusions. The study had the following key findings:

  • Telemedicine networks are complex, with an average of four spoke sites, two hubs, and four facilities that both provided and received consults.

  • Most rural telemedicine sites (excluding those doing only teleradiology) offered full-motion interactive video for live interviews, meetings, and educational sessions.

  • Despite the growth and expansion of telemedicine technology, the cost of telemedicine remains high, with average equipment purchases, excluding switches and new lines, ranging from $134,378 for spoke sites to $287,503 for hub sites.

  • Utilization was low in the first years of most rural telemedicine programs. The average number of total sessions per month (clinical and nonclinical combined) was 24, with a median of 11. The median or typical telemedicine facility conducted approximately one clinical session per week and one or two nonclinical sessions per week in early 1996.

  • High costs, combined with low utilization in the early years of operation, yielded high unit costs. A teleconsult cost the median or typical hub site $1,181, while the median spoke site spent $476 per consult, exclusive of any reimbursement to clinicians.

  • Federal and state grants were common sources of direct funding for telemedicine programs, and the majority of sites also received hospital financial support. Third-party reimbursement for telemedicine was elusive: fewer than 25 percent of hub facilities had successfully negotiated payment with insurance carriers and many had not yet undertaken such negotiations.Lack of reimbursement, lack of clinical standards, scheduling, and time commitment remain challenges to further development and use of rural telemedicine.

The findings of this study confirmed many issues previously identified in grant projects relating to organizational challenges and barriers to expansion. At the same time, the survey pointed out some new developments in the field. First, most of the surveyed programs were quite new. This may in part explain the relatively low utilization figures reported on the survey and the high resulting unit costs. The study notes that those systems able to survive and expand experience higher utilization after the second year of operations. It is also clear that more rural hospitals were turning to telemnedicine as a tool for improving health care delivery, despite the fact that there is limited reimbursement for these services from third-party payers.

Some clinicial applications appear to gain earlier acceptance in telemedicine than others.  Radiology and cardiology were the most common clinical applications reported, followed by orthopedics, dermatology, and psychiartry.  The most common nonclinical applications were education, administrative meetings, and demonstrations of the system to health care personnel.

Another interesting finding was that by the end of 1996 nearly 30 percent of rurual hospitals will be using some sort of telemedicine technology to deliver patient care.  Of these, 68 pecent will offer only teleradiology.

A copy of the full report is available from HHS on the World Wide Web at http://www.hrsa.dhhs.gov/news.htm.


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© 2002, Daniel N. Steven