Telemedicine's value proposition

UPMC talks about the ROI of telemedicine

Ironically, Andrew Watson's first telemedicine procedure was with a rural patient who was a Mennonite. At first, the patient and physician looked at each other warily. 

"He didn't have a TV," said Watson, a colorectal surgeon and vice president at Pittsburgh-based UPMC, with a wry laugh. "And I'd never done this."

[See also: Telemedicine: The cost effective future of medicine?]

But the procedure worked. And it was worth it. "He didn't drive," Watson said. "And I spared him an expensive trip to Pittsburgh."

But that's far from the only value derived from telemedicine. In a session Monday at the American Telemedicine Association's 18th Annual International Meeting & Trade Show titled "The Telemedicine Value Proposition: ROI & Sustainability," Watson laid out the numbers, so far, for UPMC's forays into virtual care since 2009.

He cautioned that his is not a "boil the ocean" tale – it's simply the perspective of a single surgeon at a single medical center based in a single area of the country. But UPMC's experience, he said, offered an example of "how one model can work for telemedicine."

UPMC Bedford Memorial is a 59-bed acute-care community hospital based in tiny Everett, Pa. (population: barely 2,000), about 115 miles from Pittsburgh. Travel time between Bedford and UPMC's main campus takes about two hours, and many patients aren't willing to make the trip.

It's not because they're lazy. There's a financial cost, too. Telemedicine has helped alleviated that burden. 

Watson crunched the numbers and found that the past four years or so have seen a total patient benefit of some $25,000.

That's based on multiplying the total of 173 telemedicine encounters so far by a conservative back-of-the-envelope cost of $145 per four-hour round-trip (factoring in gas, tolls, meals and less tangible costs such as lost wages and child care).

"It's right for the patients," said Watson.

It's also proven worthwhile to rural hospitals. He calculated revenues accrued via telemedicine encounters since 2009 for Bedford to be about $32,000, thanks to ancillary services, procedures, admissions, etc. 

Deduct the not-insignificant $25,000 capital expense of one Polycom Practitioner Cart, and the facility is left with a profit of some $7,000.

"It's small numbers," Watson admitted. But when one considers that typical critical access hospital margins might hover around 2.5 percent, "this adds up."

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