It's a simple but troublesome truth that, as The New York Times puts it, “How much you spend on medical care depends on what you get, but also where you get it.”

And in an age when the whole medical community is pushed to increase efficiency, this reality is challenging to providers and to hospital systems. How are we to cut costs and provide high-value and high-efficiency care when costs vary not only by the care provided, but by where it’s provided, and who pays for it?

Costs of the same operation or care can vary dramatically in different places. This is due to different prices (and costs), of course, but it also has to do with the "intensity" of care. 

If you deliver a baby in a teaching hospital, it costs $2,000 more (on average) than delivering at a community hospital. Part of that is because of the difference in prices, but part of it is because the "intensity" of care (number of providers, specialization of providers, services provided) is greater at the teaching hospital. 

As the healthcare system struggles to provide care that is high-value for patients and efficient for providers and hospital systems, it's hard to know whether and when high-intensity care is worthwhile and when it's just, well, expensive.

So a recent study of Medicare hospitalizations -- led by Laura Burke and Ashish Jha at Harvard -- is interesting. It analyzed about 11 million Medicare hospitalizations and found that almost all patients had lower mortality rates at teaching hospitals.

But, as the New York Time synthesizes, "Among patients admitted for operations like hip replacements, the patients with the most health problems over all were the ones likeliest to benefit from a teaching hospital. On the other hand, among people admitted with conditions like pneumonia or heart failure, though all groups did better at the teaching hospitals, the difference was greatest for the relatively healthy patients."  So, interestingly, the high intensity care lead to better outcomes overall, but there are situations in which the difference is not significant. 

This led us to wonder whether there are ways that community hospitals or individual providers could provide the advantages of teaching hospitals, but at a lower cost, and in their care setting. As the study shows, "The more advanced technologies available at teaching hospitals explained some, but not all, of the difference. Other factors like subspecialty expertise, more clinicians involved in care, and greater availability of ancillary services may also be playing a role.”

The importance of subspecialty expertise and the inclusion of more providers in care points to the potential of healthcare collaboration, especially where supported by a tool or technology like iClickCare. If a community hospital can loop in sub-specialists that are not based at that hospital (but on their schedule, asynchronously)... and if the tool supports team collaboration in a meaningful way... it raises the question whether telemedicine-based healthcare collaboration could provide the benefits of the intense care at teaching hospitals, but at a much lower cost. 

Of course, this will need to be studied on a large scale for conclusive results -- but anecdotal results from our colleagues indicate this does work. You can get the benefits of high-intensity care, but from a community hospital, at a lower cost.

Looking for a low-cost way to implement a telemedicine program? Download our Quick Guide to explore hybrid store-and-forward telemedicine:

The most common questions that we get about iClickCare are related to cost and ROI.  What is the return on investment of telemedicine? Can doing healthcare collaboration bring additional income into the organization? Will iClickCare help us cut costs? (To which we answer: the ROI is excellent; definitely; and for sure.)

It makes sense, given the cost pressures that providers, practices, and hospital systems face these days. So much of what we do boils down to cutting costs or increasing income for the institutions that we work for.

This focus on costs makes sense in a lot of ways. But it is also a shame, given the profound impacts of using telemedicine for healthcare collaboration that go far beyond cost savings. Ultimately, for us, iClickCare is about good medicine, not just good economics. We find that healthcare providers, who do telemedicine and do healthcare collaboration, experience less burnout, better outcomes, AND increased income and decreased costs. It simply goes back to providing the best care that we possibly can for our patients: a principle we all learned in medical school.

That said, we were intrigued by a recent study that gets deep into healthcare costs in the US — with some surprising conclusions. Fierce Healthcare elaborates on the study by Papanicolas et al., which was published in the Journal of the American Medical Association last week. It's an exploration that lends some good science to the conversation around costs.

There are fascinating findings, some of which debunk drivers of healthcare that we tend to take as “obvious” causes of high costs. Conventional wisdom says, "Sure, medicine in the US is more expensive than in other places, but outcomes are better, and the costs generally come from use of high-tech interventions and pro specialists." 

The reality is more complicated than that. In 2016, the US spent 17.8% of its GDP on healthcare. That's significantly higher than in the 10 other high income countries (United Kingdom, Canada, Germany, Australia, Japan, Sweden, France, the Netherlands, Switzerland, and Denmark) that the study looks at. Expenditures in those countries range from 9.6% (Australia) to 12.4% (Switzerland). And, sadly, life expectancy (perhaps a proxy for outcomes, or perhaps not) is lower in the US than it is in the rest of these high-income countries.

The first focus of the study was the source of these high costs. As the study authors report, “Administrative costs of care (activities relating to planning, regulating, and managing health systems and services) accounted for 8% in the US vs a range of 1% to 3% in the other countries.” It turns out that it is precisely these administrative costs, alongside pharmaceutical costs, that account for the total cost difference in the US relative to the other countries -- not costly specialists or expensive procedures. 

The study certainly raises important questions about value. And the conversation around evidence-based approaches to costs is hugely important. It's certainly detrimental to our field that we often don't tend to apply the same amount of rigor to analyses of costs and drivers as we do to the content of our medical practices. Ultimately, cost concerns drive the context in which healthcare providers work, so it's crucial that we understand these costs accurately.

But there are no easy answers. Why do we spend more on administrative costs of care? Is it because we're failing at care coordination and healthcare collaboration or is it for another reason? Why is our life expectancy lower? Is it because of poor outcomes relative to the other countries, or does our heterogenous country have different starting points than these other countries (as just one example of an additional explanatory factor.) 

While fascinating and helpful, the study certainly doesn't give us simple conclusions. It's an important conversation to be having, but it's also important not to jump to knee-jerk responses that don't really support us in moving forward.

As healthcare providers, most of what we can control is just in our patient-by-patient decisions, trying to improve care, bringing down the time that we spend playing phone tag or coordinating care, and improving outcomes. And ultimately, that may make the biggest difference of all.

Get an honest review of one of the most cost-effective telemedicine approaches available, here:

A couple of decades ago, we started one of the first telemedicine programs in the country — a pilot program at a school-based health clinic.

Using clunky cameras and imperfect software, we were able to electronically connect passionate nurse practitioners with a pediatrician. For cases that would normally necessitate the parent leaving work, and taking the child out of school for an in-office visit, the nurse practitioners were able to quickly resolve most issues and get kids back to class.

At that time, the questions we got were of functionality: Are the cameras high resolution enough to convey the rash? Is telemedicine safe? Can a case really be communicated outside of an in-person conversation? Of course, times have changed. In 2017, telemedicine’s efficacy, logic, and impact has been demonstrated repeatedly. Every smartphone has a camera with dramatically better resolution than you’d ever need — and every pocket has a smartphone. Many patients are familiar with this kind of communication and are even demanding it.

The concerns have shifted from questions of functionality (will this work?) to questions of cost-effectiveness (will this make us money?)

So we were curious to read a recent research report called, “Cost-Utility and Cost-Effectiveness Studies of Telemedicine, Electronic, and Mobile Health Systems in the Literature: A Systematic Review."

The biggest takeaway of the report is: "There are few cost-utility and cost-effectiveness studies for e-health and m-health systems in the literature. Some cost-effectiveness studies demonstrate that telemedicine can reduce the costs, but not all. Among the main limitations of the economic evaluations of telemedicine systems are the lack of randomized control trials, small sample sizes, and the absence of quality data and appropriate measures."

In other words: it's not proven whether telemedicine is cost effective because there haven't been large scale studies completed.

Of course, we've found with many hospitals, clinics, and providers, that the ROI of using iClickCare is substantial, positive, and almost immediate. The demands of value-based pricing and the exigencies of the modern healthcare system make telemedicine almost indispensable for many providers and hospitals.

But we agree that more comprehensive, sophisticated studies are needed. 

So if you are someone who is considering using telemedicine for healthcare collaboration and care coordination, then you don't need a randomized study -- you want to know if the ROI will be adequate for you. In fact, the above study pulls out some important considerations when it comes to analyzing whether telemedicine will save you money in addition to improving care.

We recommend keeping three things in mind when looking at the cost effectiveness analyses of telemedicine:

1. 1. Different kinds of telemedicine have different rates of Return on Investment. Different forms of technology need to be separated and then tested. Videoconferencing technologies and Store-and-Forward technologies both have roles in improving health. They each require totally different approaches and resources -- and have different ROIs.
   
   
2. 2. Different approaches to delivery sites have different costs. Mobile and fixed-site use varies dramatically when it comes to the cost of devices, as well as the economic benefits of the programs. To further confuse things, the technology is evolving rapidly and can significantly affect any cost calculation.
   
   
3. 3. Cost effectiveness is a macro-economic issue. Even very robust studies tend to not reflect the bigger dynamics at play in our megalith of a healthcare system. Overall, the cost effectiveness of telemedicine will vary the most depending on the macro-economic and policy decisions being made at a large scale. That said, a given healthcare provider or hospital system can see immediate, positive benefits to using telemedicine if expensive hardware isn't involved. While the overall trend waits for the nation, we see providers and hospitals finding phenomenal ROI in the meantime. 

To learn more about what we believe is the highest ROI, most cost effective, variety of telemedicine, download our Hybrid Store and Forward Quick Guide: