As healthcare organizations are realizing that telehealth is here to stay, the attention quickly turns to three important questions: what should our telehealth services roadmap look like, what is the right technology we should be using and how can we make telehealth financially sustainable?
In this week’s article, I’ll provide some ideas on the last question: how to maximize the ROI of Telehealth.
Elements of Telehealth ROI
ROI, or return on investment, is a simplified calculation that, generally speaking, calculates the value of an investment: If for every 10 dollar invested you generate 25 dollars worth of return, your return on that 10 dollar investment is 15 dollars, or 150%.
A positive ROI is obviously important to sustain the service, otherwise it needs to be subsidized. Across any given health systems a number of health services are “money losers” that need to be subsidized by those services with a high return on investment.
When we work with our clients we aim to develop a program-level telehealth accounting system that looks at the cost and the benefits (“value generated”) of all telehealth services. The idea behind that approach is to ensure the overall sustainability of the telehealth program by ensuring that those services that may provide a negative ROI are offset by those that provide a positive ROI.
For example, some readmission RPM programs return $130 dollars for every $10 invested, an ROI of 13:1 or 1,300%! (I’d like to have that kind interest on my savings account 😉 Other services, due to issues with collections on copays or lower reimbursement, may have negative ROIs of -20%, i.e., a loss of $2 on every $10 invested.
Qualitative and Quantitative Value
The value in an ROI calculation can be measured both quantitatively and qualitatively.
Qualitative value measures intangible things such as patient or physician satisfaction or the net promoter score (NPS) that measures patients willingness to recommend, to promote the service to others. While they can be measured, they are qualitative in the sense that they cannot easily and reliably be converted into dollar amounts.
The most obvious quantitative value measure is the reimbursement or cash pay for the rendered telehealth service. Other quantitative measures that we’ll discuss in more detail below, include other means of generating revenue as well as increasing savings or securing grants.
The Cost of Telehealth
To calculate the ROI, you first need to comprehensively account for all the costs associated with providing the service. This includes the salary of the clinicians as well as the clinical and administrative support staff; and ongoing technology licensing fees as well as the depreciation of one-time investments, such as hardware or software acquisition and installation cost.
A note on the licensing cost: these days most telehealth solutions are very reasonably priced and don’t offer much differentiation to boost the ROI of a telehealth service. Given the typical volume of telehealth visits per month — even if only practiced part time — the per-visit fees of the technology can be as low as $0.50.
The highest cost of any telehealth services is thus by far the cost of the clinicians, though the cost of support staff (especially in services whose workflows are not optimized or when highly cumbersome or non-intuitive technology is used) can also contribute significantly to this side of the ROI equation.