Sunday, May 30, 2010

The Promise of Telemedicine: And the challenge of fully accounting for its benefits. Will the federal government calculate all the savings from productivity and efficiency?

The New York Times' reports on the promise of telemedicine, the long dreamed-of idea of long-distance medicine, in which doctors and other healthcare providers are instantaneously connected to patients who might not otherwise be able to get to a doctor, because they are in remote locations, are incarcerated, or are otherwise not mobile.   As the Times'  Milt Freudenheim notes, a fifth of all Americans live in places where primary-care physicians are "scarce," to say nothing of specialists.

The telemedicine idea speaks for itself, described ably by Freudenheim, but the Times reporter raises one interesting point that deserves much further exploration: We know how much we spend on telemedicine, but how much do we save?    Freudenheim reports that interactive diagnosis--of the sort pictured above, showing a Houston physician, Dr. Jerry Jones, working from home--is a $500-million-a-sector, a part of the $3.9 billion in annual expenditures for telemedical devices such as smart phones and other kinds of sensors.

So let's see: That's $3.9 billion expenditure, out of the $2.4 trillion that the US spends annually on healthcare.   But President Obama, and just about everyone else, says that we are spending too much on healthcare. So should telemedicine share in the austerity that we are supposed to be imposing on the healthcare sector? The austerity--some call it rationing--that Uncle Sam is supposed to impose on this dynamic sector of the economy--is that really a good idea?

Here at Serious Medicine Strategy, we are skeptical of the a priori assumption that the US spends too much on healthcare.   But even if we do spend too much on certain aspects of healthcare, a moment's reflection tells us that telemedicine is a winner, not a loser, for the US economy.  And so we should have more telemedicine, not less.   Why?  Three reasons:

First, with telemedicine, a new niche within the healthcare sector is being pioneered, in which people get better healthcare, and are thus made healthier.    (Now, if we can just keep the trial lawyers from destroying it, through liability lawsuits targeted not just at doctors, but also at the telemedicine pipelines, such as the phone companies and the cable companies.  As legal expert James Wootton has warned, creative legal buccaneering will strive to find some theory, no matter how dubious, that holds deep-pocketed pipelines somehow responsible when something goes wrong.)

Second, along the way, a new industry is being created--lots of high-tech jobs, building out and servicing the telemedicine industry, as it evolves in ways that we can't foresee, not only here in the US, but also, potentially, around the world. (See iPad.)   How much is that new industry worth to us?   It should be worth a lot.    And as a matter of dynamic-accounting fairness, the gains from this nascent industry should be deducted from the overall cost of our healthcare, so that we come up with "net" number (healthcare costs minus telemedicine industry gains) for the overall sector.

Third, the savings of telemedicine are already accruing to various institutions, and those savings should be factored in, too, as part of our healthcare bill. It's not fair, and it's not smart, to measure the costs without measuring the benefits--which, in some cases, will way outweigh the costs.   For example, the Times reports that moving a oil-rig worker off an offshore oil platform in some faraway place to a doctor can easily be a $10,000 roundtrip.  So the telemedicine-induced savings for the crew of a single rig might total $500,000 a year.    An even bigger issue is moving prisoners around as they receive medical treatment; obviously it is extremely expensive to move prisoners from prison to a doctor and back.   The Times cites a further estimate that the annual savings of telemedicine to the state of California alone could total $1.2 billion. Which is to say, measured across the whole of the economy, the savings from telemedicine could be enormous.   Shouldn't those savings be subtracted from the net of our national healthcare bill?   Of course they should.

The point here is that telemedicine is a paradigm-shifting approach not only to better medical care, but also to  more jobs and economic growth, as well as more savings to the country.   If only Uncle Sam knew how to account for all that good news.


  1. Yes, I caught the article in the NYT yesterday. Great isn’t it?
    My son & his wife ‘the Doctors” liked it too.
    The government should take a hands-off approach to Telemedicine and let it blossom.
    The Reporter asked: “We know how much we spend on telemedicine, but how much do we save?”
    To hammer my point home, this reminded me of an old story from 80 years ago:
    There was this wealthy Dowager who brought her hat into a Madison Avenue shop for a new bow, a new look!
    The Haberdasher selected a fine silk ribbon and with a few swirls of his hands created and put a beautiful bow on the bonnet.
    The Lady said that’s wonderful. He said that will be $5. She said $5 for a ribbon? He unfurled the bow before her eyes and handed it to her saying, “No Madame, the ribbon is only .75 cents!"
    My fear is that the government will view Telemedicine much like the Dowager did the bow.

  2. As with many paradigm shifting possibilities, the government has an initiative with the name of the possibility on it:
    What kind of convergence is it when both Jim and the government are touting the same innovaitons?

  3. The austerity you mention that may be imposed on telemedicine fails to recognize that the Obama administration had seeded $1 billion of the stimulus package towards video-conferencing in hospitals and related innovations (the American Telemedicine Association believes the true figure is $400 million). It is also not clear to me that telemedicine will emerge as an industry that won't take away from other kinds of health spending. For example, if more people use telemedicine, that could mean less physical doctor visits and less overall charges. Paradigm shifts in healthcare don't necessarily have to add to health spending if it replaces other less productive uses of resources. For any new jobs created by telemedecine, will some other health service industry job be peeled back? This reallocation of resources would be driven by market forces.

    I discuss about telemedicine in my most recent blog ( but I try to understand what it might mean for the future of the doctor-patient relationship.

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