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Breaking Down the ROI for a Telemedicine Solution in Long-Term Care Facilities

3d man with roi (return on investment) buttonMuch has been made of telemedicine’s potential to reduce costs for hospitals, long-term care facilities, skilled nursing facilities and other medical institutions. There has also been plenty of talk about the technology’s ability to improve patients’ quality of care, morale and health outcomes.

A Widening Range of Reimbursements

Medicare, Medicaid and private insurers now reimburse for an impressive range of telemedicine services. In nearly all states,CMS has a reimbursement program that covers several broad types of telemedicine services:

  • Face-to-face consultations between specialists/caregivers and patients (the patient must be physically present)
  • Non-face-to-face services that involve video conferencing or store-and-forward technology
  • Home telehealth services

These services can originate from several different types of healthcare outposts, including long-term care facilities. Many came into effect in the early part of the 2010s, marking a dramatic improvement from the reimbursement framework of the previous decade.

However, it’s important to note what services Medicare and Medicaid won’t cover – and where. For instance, Medicare’s guidelines require “originating facilities” to be located outside Metropolitan Statistical Areas as defined by the U.S. Census Bureau. There are no geographical restrictions on the location of receiving facilities and/or specialists.

Finally, state-by-state regulations may complicate considerations for long-term healthcare facility administrators and caregivers. In particular, Medicare and many state Medicaid programs have been reticent to allow reimbursements for store-and-forward telemedicine services that don’t involve radiology or pathology. Only seven states, including Alaska, Hawaii, California and Illinois, currently reimburse for these services. Stakeholders are actively lobbying lawmakers in other states to broaden reimbursement frameworks for services like teledermatology.

Despite uneven progress, Medicare and Medicaid – along with many private insurance companies that take their cues from these organizations – have greatly expanded the telemedicine services eligible for reimbursement. As this trend continues, ROI for telemedicine at long-term care facilities will continue to improve.

Reductions in Hospital Readmissions

Telemedicine also boosts ROI by reducing the number of unnecessary hospital readmissions and overall hospital bed days in residents of long-term care facilities that utilize it. For instance, a VA study found that health monitoring via telemedicine reduced hospital bed days by 20 percent for patients with diabetes and 56 percent for patients with depression. Another study found that Lee Memorial Health System eliminated 950 readmissions during a pilot program that utilized telemedicine to remotely monitor patients. This saved more than $5 million in less than three years.

Ancillary Cost Savings</5>
Some additional cost savings boost telemedicine’s ROI even further:
  • Patient Transportation and Travel Time: By reducing hospital readmissions and eliminating the need for in-person visits with specialists, telemedicine can dramatically reduce transportation costs – both financial and temporal – for patients and their caregivers.
  • More Convenient and Productive Family-Patient-Provider Meetings: Telemedicine facilitates face-to-face meetings between patients, care providers and family members who may not be in the same physical location. By eliminating the need to arrange an in-person meeting, providers can provide more frequent and informative updates. In turn, this may improve patient morale and family satisfaction with their care.
  • Streamlined Education and Training Protocols: Telemedicine offers opportunities to educate and train long-term care facility staff members who might not be exposed to certain specialties, procedures and knowledge areas. Needless to say, a highly competent and experienced staff can pay dividends.
A Bright Future for Telemedicine

Telemedicine is a flexible technology, and it’s increasingly clear that it has the potential to positively impact multiple aspects of the long-term care environment. While it’s critical to emphasize the technology’s power to improve patient quality of life metrics and health outcomes, especially for family members who evaluate their relationships with caregivers on the basis of such factors, facility administrators have a fiduciary responsibility to ensure that telemedicine offers a net financial benefit. On this front, a growing body of evidence suggests that the ROI for telemedicine solutions in long-term care is impressive. That’s good news for everyone involved.


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