Understandably, telemedicine is an inevitability in these extraordinary times. It is predicted that telemedicine could soon replace up to 30%-40% of in-person consultations. Technology adoption to the propagated scale will bring immense changes to the health system. Here we discuss some of the critical factors for a hospital to consider.
Patient volumes
Telemedicine is a great tool to improve geographic accessibility. However, it may not increase the number of consultations offered unless a physician’s working hours are increased perhaps by starting the day earlier/ending later. Experts opine that the time taken to consult a patient via telemedicine will be far higher than a patient-in-person consultation if the time spent on connectivity issues and post-consultation documentation are taken into consideration. Further, as doctors engage on multiple telemedicine platforms, the number of consultations offered in/through a hospital may decrease.
Revenue loss
A study among the hospitals in the USA identifies that the aggregate share of the total hospital revenue from outpatient services was nearly half (48%) in 2018 [1]. The proportion of revenues generated through outpatient diagnostic and pharmacy services in hospitals vary depending on the hospital’s service configuration and the pricing. Structured research data on this perspective is limited. We can safely assume that outpatient triggered downstream revenue will constitute between 20% and 30% of the total revenue in Indian hospitals. Most Indian hospitals typically do not have high margins on consultation services. Physician’s share of the consultation revenue is around 80%, and it is even 100% in some. Most hospitals work on this model only considering the diagnostic, pharmacy and inpatient referrals that arise from the consultations.
Necessarily, the patient after a teleconsultation will fulfil his/her prescription and diagnostic tests from the nearest pharmacy and diagnostic centre, respectively. This is a direct loss of revenue to the hospital, as the patient otherwise would have mostly used the hospital’s services. Considering that the income from outpatient diagnostic and pharmacy services accounts for even 25% of the total hospital revenue, the hospital may end up losing a maximum of 7.5% of its top line, if 30% of the consultations are conducted through telemedicine. The impact will intensify as the number of teleconsultations increase. While door-step services are a solution, they have their costs and service and geographic limitations.
The aggregate impact may be less for extensive healthcare networks having their chain of hospitals, pharmacies and diagnostic centres. Such chains can leverage their geographic presence and attempt to retain patients within their health system/network of facilities.
Cost
Telemedicine saves travel costs for a patient. For a hospital, providing teleconsultations through a software platform with proper recording and documentation may prove costlier than in-person consultations.
Health seeking behaviour
A significant positive and equally negative aspect of the Indian health system is that it allows physician and hospital shopping. Every patient/family wishes to be cared for by star physicians. Also, domestic medical tourism, especially towards hospitals in southern India and Delhi, is rampant. As a teleconsultation network expands, a physician from these destination hospitals can consult patients from anywhere. Say, a patient in West Bengal/Tripura/Assam will directly consult a physician in Chennai/Bengaluru/Hyderabad for chronic disorders/elective surgical needs. Further, as consulting a physician becomes a flexible and easy process, the number of second opinions will increase, and that may also result in local/regional spillage of patients. Such change in health-seeking behaviour may have an impact (even if minimal) on local standalone hospitals.
Conclusion
Telemedicine has a lot of evident benefits. It is keeping the physician/hospital-patient relationship alive during these extraordinary times. Many hospitals have now implemented telemedicine as part of their services. Soon it is going to be essential to assess the impact and start innovating service models to improve utilization and revenue. As telemedicine becomes inevitable and ultimately indispensable – hospitals have a lot to think about. The game has begun, and the rules are just being written.
[1] Inpatient no longer king as hospital outpatient revenue grows; Revenue Cycle Intelligence; https://revcycleintelligence.com/news/inpatient-no-longer-king-as-hospital-outpatient-revenue-grows accessed on 26 May 2020.
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