A Framework for Evaluating the Return on Investment of Telehealth

Virtual Care

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A Framework for Evaluating the Return on Investment of Telehealth

March 31, 2020

Healthcare providers are increasingly investing in and deploying telehealth capabilities that will extend services to patients in rural areas, deliver higher-quality care to individuals with complex conditions, and reduce costs associated with unnecessary emergency department (ED) visits, transfers and admissions, among other benefits.

Telehealth programs require institutions to make upfront investments in technology, program design and staffing. While payers are increasingly expanding coverage for telehealth services, receiving reimbursement across all payers at a level commensurate with costs continues to be a challenge. To that end, providers are eager to think beyond reimbursement and understand the potential comprehensive return on investment (ROI) of various telehealth programs.

The ROI of telehealth programs can vary dramatically based on the size, nature, clinical capacity and payment model of the organization. For instance, academic medical centers (AMCs) typically have a highly specialized workforce that treats high-acuity patients across a wide range of clinical domains. In contrast, many community hospitals are smaller, have a more generalized workforce and may not provide comprehensive services at all hours of the day. Similarly, an integrated healthcare delivery system that operates on a value-based versus a fee-for-service basis may be more interested in the cost-saving potential of telehealth programs. The characteristic differences of these institutions make their ROI considerations around various telehealth investments fundamentally different, as summarized in Table 1.

Since the decision to invest in telehealth is highly dependent on institutional objectives and the estimated financial impact of the telehealth program, this brief has been developed with the following aims:

• To propose a framework for calculating the ROI of a given telehealth program;
• To demonstrate how this framework can be applied to two distinct telehealth case studies; and
• To illustrate the financial impact of these specific telehealth programs.