Post-Covid, telehealth has “survived” as a mainstay modality to deliver care to patients at a distance. And many healthcare leaders now more fully understand that telehealth is much more than just video visits, including patient portals, patient education, and a full host of virtual care modalities including remote physiological monitoring (RPM), virtual exams, and digital therapeutics.
What many healthcare leaders fail to appreciate is the positive financial impact telehealth can have on their organization’s bottom line by increasing revenue, reducing losses, decreasing costs.
As I wrote about before, Telehealth can add to the bottom line through an increase in revenue in multiple ways:
- Increasing Patient Loyalty
- Geographic Expansion
- Filling Schedule Holes
- Reducing cancellations
- Reducing No Shows
- Expansion of Services
In this article I’ll explore how telehealth can reduce losses and decrease cost, to create a tremendous financial case for investing in telehealth.
Using Telehealth to Reduce Losses
Losses in healthcare come in multiple (bitter) flavors and we’ll be considering three of those: lost revenue, penalties, and missed gains.
There are a few ways that healthcare providers can miss out on revenue opportunities — when existing patients stop using your organization for their care; when potentially new patients use a competitor (physical or virtual) to receive the care they seek; and when you do not have sufficient clinical staff to meet the demand.
Patient Attrition: In management there is the axiom that “employees don’t quit their job, they quit their bosses”. The corollary is also true in healthcare: patients are very loyal to their physicians, nurse practitioners, physician assistants and other providers. The relationship they cherish is with the human being on the other end that is “taking care” of them.
Yet in competitive environments and for patients who use healthcare infrequently and more or less “transactionally”, factors such as cost and convenience often outweigh the providers’ bedside manners. Yet it is that fairly healthy patient population that often yields the biggest contribution to the organization’s bottom line. Thus losing those patients (which may be hard to detect at first) can significantly impact a clinic’s profitability.
Telehealth — especially virtual visits, same-day virtual appointments, and a more user-friendly “digital front door” for self-scheduling appointments or downloading medical records — can greatly improve the patients’ opinion of how well the healthcare organization can take care of them. Failing to offer these “modern modalities” of access to care means running the risk of losing those patients to organizations that do this well.
New Patient Drought: New customers are the lifeblood of any organization and healthcare is no different. Most healthcare organizations rely on a small number of select profitable healthcare services to offset the losses incurred by other services. This ranges from elective surgeries for health systems to 340B pharmacy programs for community health centers.
To bring in new patients that would (eventually) leverage those services, iot is thus imperative that healthcare organizations position themselves as modern, forward-thinking organizations that acknowledge the modern healthcare consumers’ desire for convenient and speedy access to quality care. Similar as above, telehealth in its various forms can greatly contribute to improving the organization’s reputation in the eyes of the future patients.
Staff Attrition: Another way a healthcare organization can miss out on revenue is when there is not sufficient staff capacity to meet the existing or potential demand. Telehealth, as I explored in more depth in these linked articles, can be used to improve clinician satisfaction, combat clinician burnout, and help address the nursing shortage (click on each of the links for more guidance).
Penalties: Penalties are most often imposed by government payors when an organization is not meeting its quality goals. One prominent example is the avoidance of readmission penalties (in particular the lack of reimbursement of avoidable rehospitalizations) through RPM programs. This strategy often served as my go-to strategy for financial sustainability of telehealth programs when working with health systems before Covid.
And the need to expand RPM programs has seemingly not vanished: In 2022, 2,499 hospitals (82% of all assessed hospitals!) were called out by Medicare for failing to meet readmission standards, with an average penalty of $208,000 per penalized hospital. With proven, sustainable RPM programs having been around for more than 10 years, this lack of progress is, for me, shocking.
There are plenty of other quality metrics (e.g., UDS measures) where telehealth can be used as a strategic tool to move the needle into the right direction and to avoid the penalties associated with poor performance (set up a call with me if you’re interested in discussing your organization’s quality metric that you want to improve through telehealth).