A report to the Teleplans
project (HC 4301)
WP5: Technology Assessment and Guidelines
by
Stefan Håkansson, Ph.D.
Associate Professor
The National Board of Health and Welfare
Office of Health and Welfare Economics
SE - 106 30 Stockholm - Sweden
http://www.sos.se
Phone :+46 8 55553241
Fax: +46 8 55553718
Mobile: +46 708 833241
e-mail:stefan.hakansson@sos.se
The TELEPLANS project (telemedicine for citizens) is the latest Concerted Action funded by the European Commission (DGXIII) concerning telemedicine. The objective of TELEPLANS is to establish a forum that brings together national health-care authorities, decision makers and users of telemedical applications, to share their views and experiences on the requirements, results of assessment studies and planning for telemedicine services. The partners in the TELEPLANS project represents various member states of the European Union, and also Australia and Canada.
Even if the term telemedicine is of recent origin the concept is a relative old one. It is over 90 years since Einthoven (1906) published his work with distant consultation on electrocardiography. In Norway, the Haukeland hospital in the city of Bergen, pioneered in 1922 with medical consultations between ships and the hospital by using Bergen radio. The establishment of the International Radio-medical Center in Rome in 1937 is recognized as the start of what is now called Telematics (Danielsen, 1997).
In Sweden telemedicine was also used for the first time in 1922, when the Sahlgrenska hospital in Gothenburg on the Swedish west coast give medical advice to sick or injured sailors in the Swedish merchant fleet. Conventional telemedicine was tested for the first time in 1968 in Uppsala within neurophysiology and in Lund within radiology (Holm-Sjögren L, Sandberg C, Schwieler, 1998).
In April 1924, an imaginative cover for the magazine Radio News foreshadowed telemedicine in its depiction of a "radio doctor" linked to a patient not only by sound but also by live picture. At that time, radio had just begun to reach into American homes, and the first experimental television transmission did not actually occur until 1927 (Field, 1996)
The term telemedicine encompasses a wide range of telecommunications and
information technologies.A common definition of telemedicine is "Medicine at a
distance". In a study by the American Institute of Medicine telemedicine is defined
as:
The use of electronic information and communications technologies to provide and support health care when distance separates the participants. |
Derivative terms include: teleconferencing, teleconsultation, telemonitoring, telepresence, and telemonitoring as well as terms related to specific clinical fields such as teleradiology, teledermatology, and telepsychiatry (Field MJ, 1996).
The American Telemedicine Association (AMA) has used the following broad
definition of telemedicine:
| Telemedicine is the use of medical information exchanged from one site to another via electronic communications for the health and education of the patient or health care provider and for the purpose of improving patient care. |
Dr Fernando Antezana, Deputy Director-General of WHO, at a meeting in Geneva December, 1998, made a distinction between two different fields of activity telemedicine and telehealth:
| If telehealth is understood to mean the integration of telecommunications systems into the practice of protecting and promoting health, while telemedicine is the incorporation of these systems into curative medicine, then it must be acknowledged that telehealth corresponds more closely to the international activities of WHO in the field of public health. It covers education for health, public and community health, health systems development and epidemiology, whereas telemedicine is oriented more towards the clinical aspect. |
According to Grigsby and Sanders (1998) the term telemedicine can be defined in so many ways that discussions of such issues as the cost-effectiveness of telemedicine become meaningless. "It makes no sense to say that telemedicine is or is not cost effective – you really can only say whether a particular use of telemedicine is effective for a particular condition in a particular setting" (Grigsby, 1998). They have also come up with a somewhat narrower definition of telemedicine:
| The use of telecommunications and information technology to provide health care services to persons at a distance from the provider. |
Regardless of the proposed definition there are three common elements of these definitions: (a) informations or telecommunications technologies, (b) distance between participants, and (c) health or medical uses
Even if pioneering work on telepsychiatry through interactive video conferencing took place about 40 years ago it is not until the 1990s that telemedicine begins to be applied more widely. This has much to do with technological advances in communications technologies during the last decade. The hardware becomes better and cheaper year after year. For instance, the price of a videoconferencing system has fallen dramatically during 1997-98, from $25-$40,000 to $6,500, and a really capable system can be had for $10-12,000. (Wheeler T, 1998).
Telemedicine has been applied in almost every medical specialty with radiology, cardiology, dermatology and psychiatry as perhaps the most actively involved (Grigsby and Sanders, 1998).
USA, Canada, Japan, Australia, United Kingdom, Norway and Sweden are the countries with the largest telemedicine programs in the world.
During the last decade the interest and implementation of different applications in Telemedicine (TM) has increased very much in the industrialized nations. As survey in 1995 gave a response rate of 59 countries of which 35 said they were using TM in some form or another.(Journal of Telemedicine and Telecare 1998;4(Suppl 2):74-8).
A 1996 survey of almost 2400 nonfederal rural hospitals in the US found about 17% were participating in a telemedicine network of some kind (including services as limited as facsimile) and that another 13% had definite plans to begin using telemedicine. The number of clinics and outpatient facilities participating in such networks is unknown (Hassol A, Gaumer G, Grigsby J, Mintzner CL, Puskin DS, Brunswick M.1996).
In a survey of telemedicine interactions in the US in 1997 reveled that diagnostic X-rays dominated by 80% (n=250,000), followed by specialty consults 15% (n=46,000) and home health 5% (n=15,000). (Allen A, Wheeler T, 1998).
In a similar survey in the US 19,358 interactive video consultations were done in 1997 among the 12 responding programs, with a range from 546 to 4,921 (Allen A, Wheeler T, 1998a).
Regarding teledermatology, which in the US started rather late, 1,992 consultations were performed in 1997, which means a monthly average of 166 consultations. This can be contrasted to the largest program in Tromsö, Norway, where about 85 consultations per month are done. (Wheeler T,1998).
Telepsychiatry, which pioneered in USA in 1961, is expanding in the US. In an 1997 survey among the 19 programs covered an aggregated total of about 720 consultations per month are being done, or about 8,640 per year. This is nearly a 10-fold increase since 1994. There are now at least 5 programs doing over 500 telepsychiatry consultations per year. The survey identified 29 active telepsychiatry programs: 25 in the US, and one each in Canada, England and Norway (Allen A, Wheeler T, 1998b).
Four of the ten most active telemedicine programs in the US were based on prison care. The University of Texas Medical Branch at Galvestone and the Texas Department of Criminal Justice together operate the second-most-active telemedicine program in the country, with more than 3,400 patients/clinician interactions in 1997 and more than 1,000 in the first quarter of 1998 (Telemedicine today 1998;5: (June):38-44).
According to a study published by Financial Times Ltd, the number of telemedicine trials in the US grew from under five in 1990 to an estimated 110 in 1995. A study of telemedicine activities in the UK for the Department of Health found over 20 telemedicine programmes in 1996. The report identified three main applications for telemedicine as 1) remote diagnosis and consultation, 2) continuing medical education and 3) medical informatics. A fourth application, telerobotics, was identified as having high capital costs, thus making its practical implementation unlikely for a considerable time (Lobley, 1997).
In a market survey it was found that investment in telemedicine is still very small in Europe, with only £80m worth of equipment – less than 3,000 units – sold in 1997 The estimate includes teleradiology but excludes PACS (picture archiving and communications systems). It is expected that the introduction of direct-to-digital radiography technology will ignite the teleradiology market, because it will become much more natural and economic to store x-rays on computer rather than film. Videoconferencing for teleconsultations, which represents 70 per cent of today´s telemedicine, is expected to increase five times by year 2004.(Anonymous.Health Service Journal, 10 December 1998, p 16)
The telemedicine video equipment sales in the US are growing at a compounded rate of about 18.8% per year. In 1997 there were $81.2 million in sales, and these are expected to grow to $147.9 million by the year 2000, and to $210.9 million by 2002. (Wheeler T. Distance healthcare education: Technology overview. Telemedicine Today 1998;5:(October):38-9).
According to Jonathan D. Linkous, Executive Director of American Telemedicine Association, measuring the market for telemedicine is difficult for several reasons. First, telemedicine products and services are often part of a larger investment by health care institutions in communications technology and the delivery of medical care. Telemedicine is not a separate specialty and is often integrated with the overall delivery of health. Second, telemedicine is a very new investment for many institutions and there is little history from which to draw projections. Finally, there is no commonly recognized definition or set of services and devices that constitute telemedicine. Different health care institutions and consulting firms define telemedicine in quite different ways.
Business Communications Company (BCC) estimates that the current U.S. market for telemedicine is $65 million and will reach $3 billion by the year 2002 based on the high growth rates of leading market segments and an assumption that full reimbursement for telemedicine services will continue to become more common. They predict the overall growth rate for telemedicine to be 35 percent per year over the next five years with a 42 percent increase in public sector investments and an 89 percent growth in sites over the same period. The report cites provider plans for predicting a 280 percent growth in prison telemedicine sites over five years and a doubling of military investment over seven years. The predicted rates of growth for telemedicine is particularly important given the firm’s prediction that the market for overall health-care related information is expected to grow only three percent per year.
Another American firm, Feedback Research Services (FRS) states that the current U.S. market for telepathology, teleradiology, and videoconferencing telemedicine systems is under $100 million. According to FRS, telemedicine-related videoconferencing equipment sales in Europe, North America, and the Pacific Rim accounted for $250 million in revenues in 1996. They estimate that worldwide sales of products and services during the 1990s reached an estimated $520 million, cumulative, through the year-end of 1996. They projected the annual worldwide growth rate to be 15 percent. They project that Europe and the Pacific Rim combined may represent cumulative telemedicine expenditures of $1.4 billion by 2001.
Still another American firm, Frost and Sullivan (F&S), forecast the current total PACS and teleradiology systems market revenue for the U.S. and Europe is estimated for 1998 at $368.8 million with the United States generating 81 percent of this market. They project a growth rate of about 28 percent over the next six years yielding a total annual market of $1.6 billion by 2004 (American Telemedicine Association: home page http://www.atmeda.org, March, 1999).
Telemedicine (TM) has increased in all Nordic countries (Denmark, Finland, Iceland, Norway and Sweden) in the 1990s. The diffusion of TM has mostly been initiated by "burning souls" and has been carried out without (comprehensive) assessment of costs and benefits, or evaluations of needs for structural and organisational change in the hospitals. Little is known of why and how TM is disseminated, and of the attitudes that the hospitals have towards implementation of TM in a day-to-day setting. The purpose of this Nordic study, which was undertaken 1996-97, was twofold: 1) to reveal the decision makers´ attitudes towards implementation of TM regarding economic and geographical aspects, education and communication, organisation of TM activities, and the role and policies of national authorities; and 2) to map diffusion on TM with regard to TM departments, initiative takers, type of TM, policies, collaboration partners, internal education and staff competence.
A survey that included mailed questionnaires to all somatic hospitals in the Nordic countries has been conducted, and we obtained valid responses from 268 hospitals (response rates between 85% and 100% in the five countries). Chief physicians, administrators or IT-specialists made the responses.
More than 50% of the responders agreed that money is saved by TM, and that education gets cheaper. Nearly forty per cent agreed that TM means more health for the money. Nearly 60% of the hospitals agreed that TM leads to equal access to specialist services, to better education of primary health care physicians, to specialists getting in contact with more local physicians. Forty per cent found that TM still is premature, and more than 50% agreed to a lack of financial incentives, lack of adjustment of financial structures in the health care system and lack of contribution of national grants. Less than 20% considered TM uncertain with regard to patient protection and safety.
More than 40% of the hospitals has TM activities. At nearly 70% of these hospitals TM was initiated by internal medical staff, more than 20% was directly supported by administration and/or politicians. Videoconferences and information acquisition from external databases were most frequent. A third of the TM-active hospitals had a stated TM policy, less than twenty per cent had their own TM department, but less than 20% had internal education.
Conclusions: Telemedicine, and especially videoconferences, is widely disseminated in all Nordic countries, mostly due to interested medical staff. The Nordic hospitals have a very positive attitude towards TM and implementation of TM. Though, these attitudes are not based on technology assessment or economic evaluation (Danneskiold-Samsoe B, et al, 1998). For more details of the attitudes towards telemedicine in the Nordic countries, see appendix 1.
During the Spring 1998 Spri did a survey of telemedicine applications in Sweden. (Holm-Sjögren L, Sandberg C, Schwieler, 1998). Two different types of questionnaires, one to all hospital managers in Sweden (n=83) and one to contacts Spri had on a telemedicine application mailing list (n=170). The questionnaires were distributed during April and May in 1998. The questionnaires to hospital managers was answered by 68 individuals. Some of the hospital managers (or equivalent) are responsible for more than one hospital, and consequently the responses concerned 74 hospitals. This is a response rate of 89 percent (74 hospitals of 83). The number of contact persons that responded was 77. We don’t know what this mean regarding response rate, but we think it is rather high. It is important to underline that the following presentation not necessarily provide a complete view of all telemedicine applications in Sweden.
Telemedicine is being used in all six health care regions in Sweden. About 75 percent of the hospitals use some form of telemedicine, representing over 100 applications. Of the 18 hospitals that do not currently use telemedicine, 12 plan to initiate applications.
Telemedicine is used primarily in radiology, but pathology applications are also common. Other medical areas where telemedicine is used - according to hospital managers- include ENT, emergency/ ambulance services (ECG- transmissions), dermatology, cardiology and orthopaedics.
More that 50 percent of the applications involve consultation of some type, for example, advice or test results from a hospital specialist, second opinions and work outside normal working hours (i.e. out-of-hour work). Other areas where telemedicine is increasingly applied are ambulance services and rounds.
Much of the activity in telemedicine (over one third of the applications reported) takes place between county hospitals and local hospitals. Applications between primary care and hospitals account for nearly 20 percent. Telemedicine applications between ambulances and hospitals is reported in all regions and accounts for 15 percent. About half of the applications described are used routinely.
Forty percent reported that telemedicine is used daily. Equally as many report that it is used once or twice a week, and 19 percent use it several times per month.
The contacts responded that that the main reason for using telemedicine concerned expectations for better access to specialists and a more efficient use of the specialist skills that are unevenly distributed across the country. They also believe that telemedicine shortens the episode of care and reduces travel for patients. Hospital managers perceive similar effects and some also mention increased collaboration among different care levels that will yield efficiency gains and improve expertise. Already today several contacts reported improved and safer diagnoses and decisions and quicker diagnosis and treatment.
The respondents to the survey believed that the potential is greatest in the areas of consultation and emergency care. Almost one third believed that there is a major potential for international collaboration in telemedicine. More than 60 percent of the contacts and 85 percent of the hospital managers believe in a future international market for telemedicine services, for example, in highly specialised care and for very specific medical applications. Fifteen responded that there was ongoing international collaboration.
The vast majority of the applications are of very late date: Nearly 40 percent of them had started or were scheduled to start in 1998, 44 percent in 1996-97, 11 percent in 1993-95, and 6 percent in 1989-92.
According to 83 percent of the respondents, the medical professions took the lead to initiative applications in telemedicine, while 22 percent reported that it was the initiative of the county council/elected officials. Also mentioned were IT/technical staff (11 percent) and administrative staff (10 percent). Many respondents marked more than one alternative, indicating it was a joint initiative of two or more groups.
The respondents also reported they perceive some risks with telemedicine appli-cations. Both hospital managers and contacts emphasise the importance of addressing legal and ethical problems; how is patient information handled and stored? Other risks mentioned are an over-dependence on technical equipment and more impersonal care. In contrast, nearly 20 percent reply they perceive no risks at all.
The development of telemedicine applications is not without problems and several contacts experience "bottlenecks" and other problems in working with telemedicine. Several mention technical problems, "inert" organisations, uncertainty and lack of knowledge in the telemedicine field. Several also describe a "wait and see" mentality in their organisations and a tendency by some to protect their "territory". High initial costs can also be an obstacle to development.
More than 50 percent of the hospital managers (41 out of 68) report that a specific person at the hospital co-ordinates the development of telemedicine. Five hospitals plan to appoint such a co-ordinator. Only 13 of the 68 managers report that they have a written policy for developing telemedicine at their hospitals. Ten hospitals plan to develop such a policy.
Of the 77 percent indicating they do not charge a fee for telemedicine services, 60 percent indicate they do not plan to do so in the future while 17 percent plan to charge a fee. Seven percent indicate that they charge a fee for telemedicine services. Nearly 25 percent of the responses include comments that fees will be explored in the future, but there is uncertainty about how to proceed with this issue.
There are few published evaluations of on-going projects/applications - just over 20 percent of the responses indicated that the project was evaluated, but only 12 percent indicated that the evaluation resulted in a scientific article. Thirty-six percent of the responses indicate that a follow-up/evaluation is ongoing, while 46 percent indicate that evaluation is planned for the future. Several respondents marked more than one alternative answer to this question.
"Telemedicine will do for health care what the personal computer has done for the office. Or so its proponents believe. Its opponents believe that it represents a threat to the doctor-patient relationship and is an intrinsically unsafe way of practicing medicine. What is more, they suspect that its costs vastly exceed its benefits and that it is yet another example of "toys for the boys" (Wooton, 1996)
The purpose in using telemedicine may be to improve efficiency in using expert knowledge or to eliminate differences in access to health services in different geographical areas. Telemedicine makes it possible for primary care and municipalities to have access to medical expertise in a new way. The method is also expected to create new opportunities for organisational and structural change- in out-of-hour work, rounds and home care. Telemedicine can also be used as a tool to improve continuity in the care process from the patient’s perspective. Telemedicine is also moving forward in education within the field of health care (Holm-Sjögren, L, Sandberg C, Schwieler, 1998).
There is also a hope that telemedicine will lead to a reduction in costs.
According to a study by Little (1992) the annual health care costs in the U.S.A. are estimated to be reduced by $36 billion through four telecommunications information applications: (1)Electronic management and transport of patient information will decrease costs by almost $30 billion, (2) Electronic submission and processing of health care claims offers a potential reduction of almost $6 billion, (3)The use of electronic inventory management system will reduce the cost of hospital materials, and supplies will be diminished by more than $600 million, and (4) The use of videoconferencing for professional training and remote medical consultations will reduce costs by more than $200 million.
According to Wooton (1996) there are basically two reasons why telemedicine is used: (a) because there is no alternative: in case of emergencies in remote environments such as the Antarctic, on ships, in aeroplanes, and possibility on the battlefield, or (b) because it is in some sense "better" than traditional medicine:
It improves access to health care in remote or rural areas by reducing the need for patients or doctors to travel; to speed up the referral process in urban areas to improve the consistency and quality of health care; by improving the contacts between the professional staff involved produce educational benefits (continuing medical education) for them and to reduce professional isolation; by improving communication between the periphery and the tertiary hospitals, telemedicine facilitates higher quality medicine; by allowing the possibility of changing the mix of skills at the periphery, such as by means of nurse practitioners; and finally, telemedicine may be cheaper than conventional practice, although relevant studies are only just starting to appear.
Wooton also lists some disadvantages with telemedicine: Possible legal implica- tions,having to rely on an amanuensis during teleconsultation, depersonalisation, bureaucracy, overdependence on technology that may be unreliable, and clinical risk.
In an editorial in Lancet (1995) some complementary drawbacks are given: patients may increasingly demand specialist consultation and thereby overburden provision, there will be pressure on specialist centres to provide service with rapidity, but the overriding drawback is the lack of formal cost-effectiveness: the economic benefits of telemedicine have yet to be proved.
However, a number of actual and potential constraints to the widespread use of telemedicine should also be considered. According to Lobley (1997) these constraints vary between countries and include:
The introduction of telemedicine should, according to Wooton (1996) be guided by the principle of:
In the literature there are mentioned many barriers against the expansion of telemedicine. One of the most often named is reimbursement. Sanders and Bashshur (1995) have noted that "without reimbursement, telemedicine would not simply lose its charm, it would be rendered unsustainable".
In many countries, reimbursement for telemedicine consultations is likely to be one of the most crucial issues governing the potential adoption of the technique. At present, many telemedicine consultations are carried out without payment, on the basis of goodwill, but such arrangements are unlikely to withstand a rapid expansion of telemedicine (Lobley, 1997).
In the United States there has not yet been established a general reimbursement policy for temeledicine. The Health Care Financing Administration (HCFA) has adopted some coverage for diagnostic radiology and pathology. But from 1999 HCFA will reimburse interactive videoconferencing. Medicare will pay for telemedicine consultations at 80% of the physician fee schedule but only when both practioners are present at a video terminal. The consulting physician would then be responsible for forwarding 25% of that amount to the referring physician (Weissenstein, 1998). According to HCFA telemedicine does not meet the requirements of HCFA for in-person, face-to-face contact between providers and patients. Thus, most medical consultation through telecommunications technology is ineligible for payment. (Lobley, 1997)
One of the reasons to HCFA´s reluctance to reimburse telemedicine is that they are concerned about the lack of solid cost data but is studying the issue and is funding demonstration projects. The American Health Care Financing Administration (HCFA) estimates that Medicare will spend about $270 million for telemedicine services from 1999-2003 (Weissenstein, 1998).
According to the American Telemedicine Association (ATA) the interest among Washington leaders for expanded Medicare reimbursement for telemedicine is limited, despite the increasing populatity of telemedicine among elected officials. Despite this interest, HCFA has been reluctant to expand coverage for telemedical services for Medicare and no Congressional bill has been introduced that expands reimbursement beyond the current limits for teleradiology and for patients living in rural health personnel shortage areas (HPSAs). Several reasons have been given for this reluctance including:
For fiscal year 1999 several federal departments will spend $130 million for telemedicine programs and projects.
Public and private regulation and payment may affect the diffusion of telemedicine. Lack of insurance coverage for telemedicine services has been considered an impediment to adoption with fee-for-service payment. Under capitatation payment and fixed budgets, however, providers have financial incentives to use the most efficient method to deliver services, and these arrangements would favor telemedicine if it is the less costly alternative. If telemedicine were most costly and the health benefits worth the cost, monitoring might be needed to ensure the quality of care. (Sisk and Sanders, 1998).
Other payers have been slow to set policies of their own, although in several states, some commercial insurance companies, Blue Cross/Blue Shield, and Medicaid pay for telemedicine services.
Because of the high costs of equipping and using an interactive video telemedicine system (especially the cost of broad-bandwidth transmission media), many telemedicine providers are moving toward desktop store-and-forward systems.
Outside the United States there are to my knowledge very few countries that have adopted a reimbursement policy. In Norway, which perhaps is the leading country in Europe regarding telemedicine, all telemedicine services have since October 1996 been reimbursed. For instance, teleradiology, is reimbursed at 150 NOK (ca.US$23) (Uldal SE, Stormer J, Sund T. Teleradiology experiences from northern Norway. Telemedicine Today 1997;4:26-27, 39)
Lapolla and Millis (1997) question that the reimbursement issue for the expansion of telemedicine is a real barrier. Since the first two states to pass state legislation eliminating barriers to telemedicine reimbursement: California (September, 1996) and Oklahoma (July, 1997) no single practitioner has submitted a claim for telemedicine services provided by Medi-Cal beneficiaries, or who has made any meaningful inquiries to private insurers. The expected rush of healtcare providers to develop telemedicine has not occurred. Instead the barriers are more likely:
Ace (1998) in a commentary agrees to their views in this matter and even kill another "darling" about liability and quality concern: "To my knowledge there has never been a telemedicine lawsuit related to quality of care. If you know about one, let me know!"
In the Institute of Medicine´s study of telemedicine several major challenges confronting the evaluation of clinical applications (Field, 1996):
Fuchs and Garber (1990) describe three stages of technology assessment, which focus in turn on: 1) technical characteristics; 2) efficacy (performance under optimal, controlled conditions), often in randomized clinical trials using intermediate endpoints; and 3) clinical (patient), social, and economic outcomes. Most evaluators of telemedicine technologies performed to date fall into the first or second stages of Fuchs and Garber´s classification.
One problem in assessing a telemedicine application appropriately is that the impact it has on the health care delivery system may extend well beyond the original purpose for which it was designed. De Chant et al (1996) has proposed a staged approach to technology assessment which focus on access, quality, and cost and considers the communication pathway employed in the telemedicine application. It is proposed that technology assessments evaluate telemedicine along three axes: the stage appropriate to the application´s level of development, the communication path in the application, and the domain(s) of interest (access, quality and cost). (DeChant HK, Tohme WG, Mun SK, Hayes WS, Schulman KA. Health systems evaluation of telemedicine: a staged approach. Telemedicine Journal 1996;2:303-312).
According to Donabedian (1985) quality in medical care has two components: technical quality, judged relative to the best in current knowledge and technology, and interpersonal quality, which uses individual and social standards to judge performance in such areas as privacy, confidentiality, informed choice, and empathy. Brook (1991) defines quality in medical care as having three components: appropriateness of care, technical competence, and human dignity.
Accessibility has many possible meanings in the context of telemedicine, each of which may have different implications for cost and quality.
There have been significant developments in recent years in the methodologies and methods for the evaluation of a wide range of health technologies. There remain, though, many technologies which are difficult to evaluate. Often the difficulty stems from the complexity of the technologies themselves, which are in effect hybrids, comprising combinations of several distinct elements. Keen et al (1995) termed these as "diffuse" technologies, because the different elements exert different costs and effects, often across several different services. They outline a seven-stage framework for the evaluation of diffuse technologies. The methodology emphasizes the crucial role of framework-building in understanding both how and why particular patterns of costs and benefits are found. (Keen J, Bryan S, Muris N, Weatherburn G, Buxton M. Evaluation of diffuse technologies: the case of digital imaging networks. Health Policy 1995;34:153-166).
Despite a large number of telemedicine trials, little information has been published on its economic costs and benefits. Most telemedicine initiatives have been funded as special projects which were not subject to normal budgeting procedures.
Telemedicine has the potential to introduce cheaper ways of delivering services, but also increase costs through additional capital expenditure and the expansion of treatment into areas where it is currently absent. The availability of telemedicine might increase demand for services in much the same way that the introduction of any new advance has led to increased demand in the past.
Since many telemedicine trials have been financed by additional funding from external bodies they have not been subject to the same decision-making processes as normal expenditure. There is, consequently, a lack of data about the economics of telemedicine and a lack of a coherent framework for analysis. (Lobley D. The economics of telemedicine. Journal of Telemedicine and Telecare 1997;3:117-125).
According to Sisk and Sanders (1998) telemedicine raises particular challenges for evaluators: a telemedicine system may have multiple uses and joint costs that are difficult to apportion to one service, the existence of a system may lead to expanded indications for use, and technological change may rapidly make an evaluation outdated.
Grigsby et al (1995) discusses two conceptual models intended to facilitate research on the effects and effectiveness of telemedicine. The first is a conceptual framework to study the efficacy of telemedicine as a diagnostic medium. Using conditions that are carefully chosen to serve as indicators of effectiveness, we recommended the analysis of sensitivity and specificity to establish the accuracy of telemedicine in relation to conventional health care delivery. Suggested guidelines for interpretation of the results are discussed. The second model is a scheme for classification of telemedicine applications that is based on processes of care rather on specialties or disorders. The purpose of this classification scheme is to facilitate research on such variables as costs, access, acceptability, and effects on practice patterns.
In studying the effectiveness of telemedicine, it is helpful to have a scheme for categorizing different applications. There are many ways to approach this task. Perhaps the most obvious is to classify telemedicine by the specialties that are using it. While analyzing data by specialty, or by disease category within specialty, which may be preferable if one is interested in studying diagnostic accuracy, this mode of classification results in a large number of categories and a very limited ability to make generalizations.
From the perspective of health services research, it may be preferable to formulate one´s categories somewhat differently. In developing the categories described here, we were interested primarily in the ways in which telemedicine is utilized and only secondary in the specialties using telemedicine. Furthermore, we did not address uses that were strictly educational, such as continuing medical education or graduate nursing training. This classification system therefore is based on various processes of healthcare rather than on specific organ systems.
Categories of telemedicine applications
The approach to classification of telemedicine applications proposed here focuses on general applications and processes of care and not specialties or conditions. This approach has the advantage of simplifying the study of the effects of telemedicine. For example, in examining the cost-effectiveness of telemedicine systems overall, it might be of greater value to ask whether chronic disease management via telemedicine is cost-effective rather than to look individually at disorders such as diabetes, congestive heart failure, and multiple sclerosis.
According to Bashshur (1995) three conditions must be met before evaluation commences: 1) the identification of the appropriate environments and the specific healthcare needs of communities and providers that can be met through telemedicine systems; 2) the specification of informational requirements necessary for remote diagnosis, treatment, and follow-up as well as education; and 3) the attempt to exploit to the extent possible the technological and system capabilities that are in place.
Essential two types of research questions are appropriate for telemedicine evaluation. The first is biomedical research, which encompasses issues of clinical effectiveness and safety. Specifically, it seeks to ascertain the accuracy, precision, reliability, and sensitivity as well as the safety of specific technological components (rather than total systems of care) in providing diagnostic and therapeutic information. The basic question concerns the extent to which specific telecommunications and computer systems meet clinical standards of performance compared with in-person observation and measurement. The second type of questions pertains to health service research, which focuses on the effects of telemedicine on health care delivery and its acceptance by the providers and clients. The focus, dimensions, concerns, and methodologies of these two kinds of research for telemedicine evaluation are depicted in Table 1.
Table 1. Types of research for the evaluation of telemedicine
| Biomedical | Health services | |
| Focus | Clinical performance | Acceptance and effects on health care delivery |
| Dimensions | Efficacy | Accessibility |
| Effectiveness | Quality | |
| Safety | Cost | |
| Concerns | Accuracy | Perspectives of client, provider, and society |
| Reliability | ||
| Precision | ||
| Sensitivity/specificity | ||
| Methodology | Performance studies | Field studies Surveys Field observations |
| Clinical trials | Experimental studies Controlled Quasi-experiment |
Source: Bashshur (1985).
Taylor (1998) in a survey of research in telemedicine deals with tests of the safety and efficacy of telemedicine systems. This work can be seen as moving through three phases: (1) identify the technical specification of equipment required, (2) test that this is appropriate in particular settings, and (3) establish a set of standards and guidelines to ensure that telemedicine systems is used to the best advantage. Work in teleradiology seems to be in the second phase. Work in teledermatology, for example, is still in the first phase. In the survey he cites Fryback and Thornbury´s study (1991), where they distinguished six different effects which diagnostic imaging systems can have:
Taylor writes that it is worth noting that imaging systems which have a better technical specification are not guaranteed to improve the performance of clinicians and even if a laboratory study proves that a system does improve the performance of the clinician reading an image, this is no guarantee of its impact on the thinking of the clinician responsible for patient management. In order to have an accurate assessment of the value of telemedicine it is necessary to consider the effects on patient management and the societal benefits.
According to Taylor (1998a) much of the published work concentrates on the power of the technology and the content and quality of interaction it supports. There are other parameters to be considered in assessing telemedicine as a component of a health-care system, parameters which in practice determine the nature of the service being provided. Despite the fact that much work in telemedicine is published as short accounts of pilot projects. Many such articles do little more than present preliminary results, which are by their nature inconclusive. It is easy to understand the motivation behind such publications, but they often fail do describe what was learnt in the pilot. There is little research that explicitly addresses the difficulties involved in setting up new telemedicine services. Some studies have been performed which attempt to evaluate telemedicine services, but relatively few studies have been able to collect the data required to provide an unambiguous demonstration of their value.
Binkhuysen et al (1995) found that a telemedicine link (MRI) was used in only 3% of cases and had an effect on treatment in approximately 0.3%
In Finland, a project of telemedicine assessment was started in 1996 as a joint operation between Finnish Office for Health Care Technology Assessment, Oulu University hospital and Turku university hospital. The study includes five specialties: radiology, surgery, psychiatry and ophthalmology in Oulu and pathology in Turku. The first step was to develop a common national framework of assessment. The on-going clinical assessment project lasts until the end of 1998 and is conducted independently by each participating clinic. In the study design randomization was preferred but also before/after comparisons were used. The analyzed components include cost analysis, transaction costs, effects and changes in diagnostic and treatment processes, technical characteristics of the applications, user and patient satisfaction and cost-benefit as well as cost-effectiveness analyses (Ohinmaa and Reponen, 1997).
Costs of medical care can be direct (the cost of medical services), direct nonmedical (the cost of receiving medical services such as the cost of transportation to a provider), indirect (the costs of morbidity and mortality from a disease), or intangible (the cost of pain and suffering related to the disease or treatment).
The cost and cost-effectiveness studies in the literature so far do not address costs on this systematic basis and often have a limited perspective, such as the cost to a provider of setting up a telemedicine application (DeChant et al, 1997).
Lobley (1997) proposes a comprehensive list of questions that should be answered in an analysis of the costs and benefits of telemedicine. At present, very little information is available about any of these issues and there is growing awareness of the need to understand the economic factors to help decision makers in the quest to improve health services.
There is a lack on information about the costs and benefits of implementing telemedicine. Existing trials have been funded as individual projects rather than as part of an overall health-care system. The lack of protocols and mechanisms for reimbursement of telemedicine consultations is likely to be an important inhibitor of g
A basic principle of economics is opportunity cost. Because there are insufficient resources to satisfy all demands, choices must be made as to how limited resources will be allocated. Therefore, it is inevitable that "opportunities" to use resources in some activities will be given up, or forgone. The benefits (in terms of wellbeing or satisfaction) which would have accrued from such forgone opportunities are called opportunity costs. Essentially, for every choice made in health care there is an opportunity cost attached. For example, one of the opportunity costs of investing in teleradiology are the benefits forgone from not investing in teledermatology.
The basic tasks of any economic evaluation are to identify, measure, value and compare the costs and consequences of the alternatives under consideration (Drummond, Stoddard and Torrance, 1994).
McIntosh and Cairns (1997) describes the economic issues associated with the introduction of telemedicine systems and the main challenges to their evaluation. An approach to the economic evaluation of telemedicine is described based on a cost-consequences framework. The paper links these costs and consequences more formally within a set of evaluative questions which in turn forms the basis for an economic model for evaluating telemedicine. By outlining the key questions, a number of issues relevant to the evaluation of telemedicine are identified and considered. The main challenges to the economic evaluation o telemedicine include: (1) constantly changing technology; (2) lack of appropriate study design to manage the frequently inadequate sample sizes; (3) inappropriateness of the conventional techniques of economic evaluation; and (4) the valuation of health and non-health outcomes. The present study addresses these challenges and suggests ways of advancing the techniques for the economic evaluation of telemedicine.
According to McIntosh et al, (1997) there are three main techniques which can be used for comparison of costs and consequences so that opportunity costs can be minimized. These are (1) cost-effectiveness analysis, (2) cost-benefit analysis, and (3) cost-utility analysis.
The cost implications of any proposed change can be classified in one of four categories: (1) cost savings, (2) little difference in cost, (3) greater costs, and (4) insufficient cost evidence.
Similarly, the evidence about the consequences of change can be divided into one of four classes: (1) beneficial consequences, (2)little difference, (3) negative consequences, and (4) insufficient consequence evidence.
In this way, every technology or particular application can be categorized into on of the 16 cells (Table). Cells indicating that an application or service is worthwhile/not worthwhile are shown with a + respectively a -, a matter of judgement with +/-, or insufficient evidence with a ?.
Table 2 Cost-consequence matrix
| Costs | Consequences | |||
| Beneficial consequences | Little difference | Negative consequences | Insufficient consequence evidence | |
| Cost savings | + | + | +/- | ? |
| Little diffe-rence in costs | + | +/- | - | ? |
| Greater costs | +/- | - | - | ? |
| Insufficient cost evidence | ? | ? | ? | ? |
Source: McIntosh and Cairns (1997)
The possible costs (and savings) of telemedicine would include:
The consequences (positive or negative) may be directly related to health or not. The health benefits would include:
Non-health benefits would include:
Understanding the main objectives of a telemedicine project should provide an indication of where costs may be incurred and where benefits may be achieved, and thus aids in the identification of key questions for the evaluation. The cost-consequence approach outlined above can be used as a starting point but the main objectives can be more formally identified using a set of key questions:
Framework for the economic evaluation of telemedicine:
The main challenges associated with the economic evaluation of telemedicine are as follows:
The introduction of new technologies has generally been accompanied by claims of efficacy and cost-effectiveness. To date, however, there are only limited data concerning the costs and cost-effectiveness of telemedicine systems. Many technological advances have, in fact, increased the costs of medical care. Any decision to introduce telemedicine must ensure that the opportunity costs are less than the benefits accrued from allocation of resources to telemedicine (McIntosh et al, 1997)
Crowe (1998) has proposed a model to assist in strengthening the evidence base for telemedicine. It includes the following components: project establishment costs; equipment costs; maintenance costs; communication costs; staffing costs. All need to be considered in arriving at an annual cost figure for operating a telemedicine service. The inclusion of all these costs, prepared in the standard manner outlined in the model, will ensure that a realistic cost figure is available when evaluating the cost-effectiveness of a telemedicine service.
Telemedicine has been talked about for more than twenty years, without it entering daily use with any success. None of the American experiments in telemedicine that were conducted before 1986 led to any routine use, as demonstrated by the literature published up to 1993 (Grigsby J, Kaehny MM, 1993). In Europe too, the use of such technologies is confined to research projects which are publicly funded, mainly by the European Community, and which disappear when funds run out (Thierry JP, 1993).
Although much is claimed of telemedicine (equal access to health care for all, an improvement in the quality of care), there is no explanation as to why diffusion is limited. Based on transaction cost economies Pelletier-Fleury et al (1997) present an analysis of the exchange relationships between health care producers highlights certain characteristics of the current technical and legislative context, which leads to transaction costs. It also demonstrates that the introduction of telemedicine shifts the costs associated with agents´ opportunism from patients to health-care producers themselves. All these costs may be considered nowadays to thwart the use of telemedicine. It is argued here that the Public Authorities and professionals of health care could act upon telemedicine in two fields: 1) intervention in the institutional environment aims notably at better defining the property rights of telemedicine, and so constitutes an unavoidable means of encouraging health-care producers to invest in new technology; and 2) implementation of organisational forms and mechanisms susceptible to regulating such telemedical relationships between health care producers-given the present institutional environment-constitutes an essential means for overcoming the immediate barriers blocking the diffusion of telemedicine.
Allen (1998) presents an overview of mostly peer-reviewed economic analyses of various telemedicine applications. None of the studies he summarizes are formal cost-effectiveness research, where the economic costs are compared to a clinical outcome such as "years of life gained". Rather, these simple cost analyses are "cost-effectiveness studies" only in a generic sense. Also in any economic analysis, the perspective or viewpoint from which the analysis is performed is critical. Allen mention four major viewpoint categories: that of society, third-party payers, the health provider, and patients. Each viewpoint has its unique information needs and evaluation criteria. What is cost-effective from one viewpoint may not be cost-effective from another viewpoint. According to Allen most of these studies are done from the perspective of the health provider to aid decision making to buy and deploy telemedicine equipment.
Baer, Elford and Cukor (1997) examined all articles describing video applications of telemedicine for psychiatry (i.e. "telepsychiatry") that have been published in peer-reviewed journals. They found three reports of video application to continuing education, eight uncontrolled studies or anecdotal clinical reports of video application to assessment or consultation, five clinical investigations including a control group or control condition, three studies evaluating the reliability of administering psychological rating scales by video, and two studies of the cost-effectiveness of telepsychiatry (Jerome, 1986 and Preston, 1995). Although the conclusions of all studies reviewed recommend the use of telepsychiatry, evidence currently available is insufficient to suggest its widespread implementation. Additional studies are needed to determine when and for what age groups and conditions telepsychiatry is an effective way to deliver psychiatric services, and whether it is cost-effective. They recommend that telepsychiatry be employed on a limited basis and be restricted to research settings and underserved communities (where it may be the only option) until further evidence is available.
The following literature survey covers three databases. Medline, Healthstar and Spri-line (Swedish Institute for Health Services Development) from 1990-98. As can be seen from Table 3 there has been a steady increase in publications during the 1990s. Medline is updated to August 25, 1999, which means that the real figure for 1998 will be higher when all the articles in 1998 have been indexed. In the table we have used "Telemedicine" which is a specific search term from 1993. Before 1993 you have to perform a "free text" search including all possible words concerning telemedicine, e.g. teleradiology and telepsychiatry. In a "free text" search, you also retrieve the references which are only remotely related to the subject. In the search we also combined "Telemedicine" with "Economics". The search term "Economics", N3.219 in Medline, and the subheading "economics" were used. During the period 1990-98 over 1500 articles on Telemedicine have been published in Medline. Of these articles 246 dealt also with economic aspects (16.2).
From the middle of the 1990s several journals of telemedicine started, e.g. Telemedicine Today (1994), Telemedicine Journal (1995), and the Journal of Telemedicine and Telecare (1995)
From reading the abstracts a selection of more then 50 papers were reviewed, of which 29 are covered in the following survey. Many of the articles were included in the search just because "cost" or "economics" were in the abstract. Several of the articles did not have any economic analysis, but just said that it was important or that economic aspects should be taking into account.
Table 3. Articles in Medline on Telemedicine and Economics 1990-98*.
| Year | Telemedicine, TM | TM + Economics | Per cent |
| 1998 | 417 | 69 | 16.5 |
| 1997 | 374 | 68 | 18.2 |
| 1996 | 276 | 45 | 16.3 |
| 1995 | 237 | 37 | 15.6 |
| 1994 | 55 | 6 | 10.9 |
| 1993 | 38 | 7 | 18.4 |
| 1992 | 61 | 8 | 13.1 |
| 1991 | 37 | 6 | 16.2 |
| 1990 | 17 | 0 | 0 |
| 1990-98 | 1512 | 246 | 16.2 |
*)The literature search has been done by Ms Kerstin Karlström, B.A. at Spri´s library (Swedish Institute for Health Services Development) with the latest update on August 25, 1999.
The final selection consists of 29 studies, published during the period 1995-99, of which one from 1995, five from 1996, eight from 1997, eleven from 1998, and four from 1999.
Nineteen of the articles came from the USA, four from Norway, two from the UK, and one each from Australia, Canada, Austria, and Germany.
The studies dealt with radiology (5), psychiatry (5), prisons (4), dermatology (2), neurosurgery (2), home-care (2), ultrasound (2), otolaryngology (1), oncology (1), ships (1), psychotherapy (1), neonatal intensive care (1), trauma surgery (1), and mixed (1).
Thirteen studies were published in the Journal of Telemedicine and Telecare, 12 in the Telemedicine Journal, one each in four other journals.
I agree with Grigsby and Sanders (1998) that the term telemedicine can be defined in so many ways that discussion of such issues as cost-effectiveness of telemedicine can be meaningless. They argue that telemedicine applications must be examined individually.
The reviewed studies are the following:
Preston J. Texas telemedicine project: a viability study. Telemedicine Journal 1995;1:125-132.
Brecht RM, Gray CL, Peterson C, Youngblood B. The university of Texas medical branch: Texas department of criminal justice telemedicine project: findings from the first year of operation. Telemedicine Journal 1996;2:25-35.
Dewey CF, Thomas JD, Kunt M, Hunter IW. Prospects for telediagnosis using ultrasound. Telemedicine Journal 1996;2:87-100.
Bergmo ST. An economic analysis of teleradiology versus a visiting radiologist service. Journal of Telemedicine and Telecare 1996;2:136-142.
Gammon D, Bergvik S, Bergmo T, Pedersen S. Videoconferencing in psychiatry: a survey of use in northern Norway. Journal of Telemedicine and Telecare 1996;2:192-198.
Halvorsen PA, Kristiansen IS. Radiology services for remote communities: cost minimisation study for telemedicine. BMJ 1996;312:1333-36.
McCue MJ, Mazmanian PE, Hampton C, Marks TK, Fisher E, Parpart F, Krick RS. The case of Powhatan correctional center/Virginia department of corrections and Virginia commonwealth university/Medical college of Virginia. Telemedicine Journal 1997;3:11-17.
Stoeger A, Strohmayr W, Giacomuzzi SM, Dessl A, Buchberger W, Jaschke W. A cost analysis of an emergency computerized tomography teleradiology system. Journal of Telemedicine and Telecare 1997;3:35-39.
Bailes JE, Poole CC, Hutchison W, Maroon JC, Fukushima T. Utilization and cost savings of a wide-area computer network for neurosurgical consultation. Telemedicine Journal 1997;3:135-9.
Davis MC. Teleradiology in rural imaging centres. Journal of Telemedicine and Telecare 1997;3:146-153.
Bergmo TS. An economic analysis of teleconsultation in otorhinolaryngology. Journal of Telemedicine and Telecare 1997;3:194-199
Burgiss SG, Julius CE, Watson HW, Haynes BK, Buonocore E, Smith GT. Telemedicine for dermatology care in rural patients. Telemedicine Journal 1997;3:227-233.
Kaye LW. Telemedicine:extention to home care? Telemedicine Journal 1997;
3:243-6.
Zincone LH Jr, Doty E, Balch DC. Financial analysis of telemedicine in a prison system. Telemedicine Journal 1997;3:247-55
Brunicardi BO. Financial analysis of savings from telemedicine in Ohio´s prison system. Telemedicine Journal 1998;4:49-54.
Doolittle GC, Williams A, Harmon A, Allen A, Boysen CD, Wittman C, Mair F, Carlson E. A cost measurement study for a tele-oncology practice. Journal of Telemedicine and Telecare 1998;4:84-88.
McLaren P, O´Kane M. Remote psychotherapy (letter to the editor). Journal of Telemedicine and Telecare 1998;4:122
Duerinckx AJ, Kenagy JJ, Grant EG. Planning and cost analysis of digital radiography services for a network of hospitals (the Veteran Integrated Service Network). Journal of Telemedicine and Telecare 1998;4:172-178.
Cameron AE, Bashshur RL, Halbritter K, Johnson EM, Cameron JW. Simulation methodology for estimating financial effects of telemedicine in West Virginia. Telemedicine Journal 1998;4:124-144.
Stoloff PH, Garcia FE, Thomason JE, Shia DS. A cost-effectiveness analysis of shipboard telemedicine. Telemedicine Journal 1998;4:293-304.
Loane MA, Bloomer SE, Corbett R, Eedy DJ, Gore HE, Hicks N, Mathews C, Paisley J, Steele K, Wooton R. Patient cost-benefit analysis of teledermatology measured in a randomised control trial. Journal of Telemedicine and Telecare 1999;5(Supplement 1):1-3.
Chodroff PH. A three year review of telemedicine at the community level-clinical and fiscal results. Journal of Telemedicine and Telecare 1999;5 (Supplement 1):28-30.
Doze S, Simpson J, Hailey D, Jacobs P. Evaluation of a telepsychiatry pilot project. Journal of Telemedicine and Telecare 1999;5:38-46.
Trott P, Blignault I. Cost evaluation of a telepsychiatry service in northern Queensland. Journal of Telemedicine and Telecare 1998;4 (suppl 1):66-68.
Werner A, Anderson LE. Rural telepsychiatry is economically unsupportable: The Concorde crashes in a cornfield. Psychiatric Services 1998;49:1287-90.
Rendina MC, Downa SM, Carasco N, Loonsk J, Bose CL. Effect of telemedicine on health outcomes in 67 infants requiring neonatal intensive care. Telemedicine Journal 1998;4:345-351.
Malone FD, Athanassiou A, Craigo SD, Simpson LL, D’Alton ME. Cost issues surrounding the use of computerized telemedicine for ultrasonography. Ultrasound Obstet Gynecol 1998;120-124.
Stieglitz SP, Gnann W, Schächinger U, Maghsudi M, Nerlich M. Telekommunikation in der Unfallchirurgie. Vernetzung medizinischer Versorgungseinrichtungen in Ostbayern. Chirurg 1998;69:1123-1128.
Brownsell SJ, Williams G, Bradley DA, Bragg R, Catlin P, Carlier J. Future systems for remote health care. Journal of Telemedicine and Telecare 1999;5:141-152.
Studies not published in scientific journals.
The following review is based on papers published in scientific journals. There are of course several interesting studies that belong to the "grey" area but nevertheless can be of relevance. One such example is given from Sweden.
Hessfelt M, Olsson S, Lundgren G, Tufveson G, Ericczon B-G, Holm-Sjögren L. Videokonferenser: lönar det sig?. Erfarenheter och konsekvenser av en telemedicinsk tillämpning vid transplantationskirurgiska kliniken Huddinge sjukhus-Akademiska sjukhuset, Uppsala (Videoconferences: do they pay off? Experiences and consequences of a telemedical application at the departments of transplantation surgery at the University hospitals of Huddinge and Uppsala). Stockholm: Spri (Spri report no 475), 1998.
Preston J. Texas telemedicine project: a viability study. Telemedicine Journal 1995;1:125-132.
The purpose of this research was to investigate viability factors in the implementation of telemedicine systems. The Texas Telemedicine Project examined the viability of a rural network where multiple facilities shared a switchable long-distance network rather than using fixed point-to-point connections. During Phase I, conducted in 1989, staff at participating institutions analyzed applications for the proposed network and developed methodologies for data collection. The capital costs and potential savings of a telemedicine network linking institutions in Austin and Giddings, Texas, were estimated. In April of 1991, Phase II of the system was implemented, and the first year´s actual capital expenditures and savings (e.g., trips avoided, salaries of traveling specialists saved, reduced mileage and patient transport expenses, redundant tests avoided, reducing long distance telephone charges) attributed to the network were calculated.
On the basis of the data collected in Phase I, it was projected that each $1.00 applied toward installation and operation of the network should yield $1.50 in benefits, with return on investment (break-even) within 1 year. In practice, there was a net deficit during the first year, although linear extrapolation predicted return on investment in 2.7 years. Linking multiple users over a shared infrastructure has the benefit of distributing cost among the participants and achieving an economy of scare for telecommunications services. The chief barriers to greater savings were the failure of five or the six networks sites to design mission-oriented telemedicine policies and the absence of Medicare reimbursement.
The findings in this study suggest two principles for guiding the deployment of telemedicine. First, in a small community, the greater the number of users, the more financially viable is the system. The second principle is that the projected benefits of a telemedicine system are not necessary immediate.
Brecht RM, Gray CL, Peterson C, Youngblood B. The university of Texas medical branch: Texas department of criminal justice telemedicine project: findings from the first year of operation. Telemedicine Journal 1996;2:25-35.
The University of Texas Medical Bransch (UYMB) and Texa Tech Health Science Center (TTHSC) are responsible for providing health care for approximately 130,000 inmates of the Texas Department of Criminal Justice through a health maintenance organization (HMO). Telemedicine was considered a way to solve some of the problems presented. The objective was to develop approaches to patient care, technology, support systems, evaluation, and uses of the system for applications other than patient care as part of the first stage implementation. Four prison delivery unit models were utilized. After a pilot study, the first patients were seen from October 1994 to November 1994, when 1715 consults were conducted in 18 scheduled telemedicine clinics. Patients and providers were surveyed by interviews and questionnaires for their views on this form of providing care.
Ninety-five per cent of the telemedicine consults saved one or more trips to UTMB for outpatient specialty appointments. User surveys indicated a high degree of satisfaction on the part of patients, presenters, and specialty consultants. Preliminary review of the data indicated favorable care outcomes, and initial economic analyses suggested that telemedicine is likely to be cost-effective in this environment. The project will be continued.
One of the main deterrents for emergency and non-emergency use of telemedicine service is the lack of reimbursement for consultative services by public and private payers.
Dewey CF, Thomas JD, Kunt M, Hunter IW. Prospects for telediagnosis using ultrasound. Telemedicine Journal 1996;2:87-100.
Ultrasound imaging is currently used as a primary diagnostic tool in cardiology, abdominal disorders, pulmonary medicine, trauma, and obstetrics. Because of its relatively low capital and operating costs as well as its growth potential, it represents one of the major diagnostic modalities of future health care. However, the use of ultrasonography as a mobile and powerful modality is controlled by the availability of a highly skilled technician to acquire the images and an experienced physician to interpret them. This paper discussed the technology required to increased the availability of a diagnosing physician by employing telerobotics. With this technology, the physician can guide the motion of the transducer by the technician from a remote location. Thus, the physician controls the examination and renders the diagnosis. It is shown that communication lines at 1.5 Mbits/s (T-1 speed) can, with appropriate compression, support both real-time viewing of the ultrasound images and telerobotic manipulation of the transducer. The incremental costs of telediagnosis for an examination are estimated to be a small fraction of the base charges and significantly less than the expense of bringing a physician to a remote location or transporting a patient to a regional medical center. However, the projections remain to be verified in practice. Telediagnosis can, in addition, provide benefits from immediate interpretation and consultation that cannot be duplicated using store-and-forward scenarios.
Bergmo ST. An economic analysis of teleradiology versus a visiting radiologist service. Journal of Telemedicine and Telecare 1996;2:136-142.
An economic analysis of the teleradiology provided by a university hospital (UHT) to a local hospital (TMH) without radiologists was carried out. The average workload at the local hospital was 6000 patients (8000 examinations) per year. In these circumstances teleradiology cost Norwegian Crowns (NOK) 108 per patient, in comparison with NOK 178 per patient for the visiting radiologist service which had previously been provided. The total cost of the teleradiology service amounted to NOK 646,900 per year; in comparison the visiting radiologist service cost NOK 1,069,000 per year. Calculations showed that assuming a shorter equipment lifetime, for instance four years rather than six years, made the threshold value 2320 patients per year instead of 1576.
The THM is a local hospital situated 160 km from the UHT; the journey takes 2.5 hours by car. Since 1992 all X-ray images have been digitized at high resolution and transmitted using a 64 kbit/s analogue line. 1995 years prices were used. A social discount rate between 3% and 10% and a maintenance cost ranging from 5% to 15% did not produce any significant change in the results. An emergency transfer rate of 5% was assumed along with the cheapest possible transportation method. Emergency transfer rates of 2.5% and 10% make the threshold value 3296 and 770 patients per year, respectively. This calculation shows that the emergency transfer rate is a very sensitive variable for the threshold value.
Whether teleradiology is cost-effective with the assumptions made in this paper depends on the utilization rates. If the patient population is small it is not likely that implementing teleradiology will be cost-effective, because the large set-up costs. If patients travel to the nearest radiology centre and the travel cost per patient is NOK 400, the number of patients that would make the two options equally costly is 777 per year. This implies that teleradiology for a smaller patient population with larger travel costs may also be cost-effective.
Gammon D, Bergvik S, Bergmo T, Pedersen S. Videoconferencing in psychiatry: a survey of use in northern Norway. Journal of Telemedicine and Telecare 1996;2:192-198.
Telemedicine began in northern Norway in 1988 with the assistance of Norwegian Telecom (now named Telenor). In 1993, with the support of the Ministry of Health and Welfare, the Department of Telemedicine at the University Hospital in Tromsö was established, and is now a leader in telemedicine in Norway. Telemedicine efforts in northern Norway are motivated by the goal of equal access to quality health care for its population of 475,000.
A survey of the use of videoconferencing in mental health care was carried in northern Norway. A questionnaire was distributed to all user institutions in northern Norway at the same time that ISDN became available, in mid-1995. The questionnaire completion rate for locations recorded as participants in videoconferencing sessions was 62%.
Is the use described cost-effective? Fourteen per cent of the sessions, it was reported, could have been carried out over the telephone, and it is fairly simple to calculate the costs of such "luxury telephone" use.
The results related to travel do not allow a straight-forward assessment of cost-effectiveness. While the results indicate that 59% of the sessions replaced travel, it is unreasonable to assume that 59% of the 1028 participants would have traveled had videoconferencing not been available. For example, it is more likely that the lecturer who delivered a lecture to 20 participants would have traveled, rather than the participants would have traveled, rather than the participants, who, in our study, typically came from the same area.
Thus, an assessment of cost-effectiveness related to travel must be built upon a series of assumptions. Use of a cost-effectiveness formula developed for teleradiology (Bergmo, 1996) indicates that a typical mental health institution in northern Norway would have to save 18 trips per year over a distance of 800 km (e.g. Tromsö to Kirkenes) in order to break even, or 34 trips per year if the distance is 300 km (e.g. Tromsö to Harstad). While some of the use was between locations of greater and lesser distances, these are distances which typify doctors´journeys in northern Norway. The estimate of the number of saved trips necessary to break even is based upon fixed set-up costs of NOK 47,000 for six years and an assumed average of 40 videoconferencing sessions per year for one institution. The estimate is further based on two-hour meetings requiring a full day´s absence for professionals with hourly wages of NOK 200, including social costs, food NOK 225, airplane ticket NOK 2520 (800 km) of fuel NOK 500 (300 km), and NOK 155 in communication costs per hour. While cost-effectiveness clearly depends upon frequency of use and travel distance, it appears safe to predict that telepsychiatry will be cost-effective for many institutions in northern Norway.
Halvorsen PA, Kristiansen IS. Radiology services for remote communnities: cost minimisation study for telemedicine. BMJ 1996;312:1333-36.
The objective was to determine the social costs of providing a rural population with radiology services under three different systems: the existing system (a small x ray unit at the remote site and all other examinations at the nearest radiology department (the host site); a teleradiology system (most examinations at the remote site and more advanced examinations at the host site); and all examinations at the host site.
The municipality of Alta (pop 18,000 of which 14,000 live in the town itself) in northern Norway was chosen. Nearest hospital (Hammerfest) is located 140 km away. The method used was a random selected sample (n=597) of all patients (n=1793) having radiological examinations in 1993.
After exclusion of costs common to all three systems the direct medical, direct non-medical, and indirect costs of the three options were, respectively, £9000, £51000, and £31500 (total £91500) for the existing system; £108000, £2000, and £13500 (total £123500) for the teleradiology option; and £0, £75000, and £42000 (total £117000) for the "all at host" option. Sensitivity analyses indicated that the existing system is the least costly option except when lost leisure is valued as highly as lost production.
Whether interfacility teleradiology systems are cost saving will depend on the size of the populations served, the utilization rates, the travel distances, and the relative magnitude of the cost components. In our study, the total costs of the different options were not very different, but teleradiology systems may be justified on equity and quality grounds even if they are not cost saving. The conclusion was that teleradiology option did not seem to be cost saving in the study community. Such systems, however, may be justified on the grounds of access and quality of care.
Table 4. Annual costs (£000s) of three different programmes providing radiological examinations for the population of Alta, Norway
| Costs | Existing system | Teleradiology | All at host |
| Direct medical | 9.0 | 108.0 | 0 |
| Patient travel | 51.0 | 2.0 | 75.0 |
| Production losses | 31.5 | 13.5 | 42.0 |
| Total | 91.5 | 123.5 | 117.0 |
McCue MJ, Mazmanian PE, Hampton C, Marks TK, Fisher E, Parpart F, Krick RS. The case of Powhatan correctional center/Virginia department of corrections and Virginia commonwealth university/Medical college of Virginia. Telemedicine Journal 1997;3:11-17.
The objective was to implement a cost-benefit analysis of telemedicine subspeciality care provided between the Powhatan Correctional Center (PCC) of the Virginia Departments of Corrections (Corrections) ant the Medical College of Virginia campus of Virginia Commonwealth University (MCV/VCU).
We evaluated the costs and benefits of the implementation of telemedicine for HIV-positive inmates. Benefits included dollar savings in transportation and medical reimbursement. Costs included those of operating the telemedicine system and of medical care. Non-dollar benefits included implementing more consistent and timely treatment of inmates and reducing security risk. Over the 7-month study period, the total number of HIV consults by telemedicine was 165. The Department of Corrections was able to achieve transportation and medical savings of $35,640 and $21,123, respectively. The operating costs for the telemedicine services totaled $42,277. The net benefit, which is the difference between cost savings and total operating costs, was $14,446. The conclusion was that telemedicine increased access to care for HIV-positive inmates and generated cost savings in transportation and care delivery.
Given a net savings of $14,486 over 7 months, the projected annual cost savings exceeds $24,833. Assuming an annual savings of $24,833 and given an initial dollar investment of $110,000 for equipment (video conference system $46,000, software $14,000, networking electronics $11,000, cameras/scopes $39,000), the expected time to recover the initial investments is less than 5 years for their service alone.
Stoeger A, Strohmayr W, Giacomuzzi SM, Dessl A, Buchberger W, Jaschke W. A cost analysis of an emergency computerized tomography teleradiology system. Journal of Telemedicine and Telecare 1997;3:35-39.
We carried out a cost analysis of a teleradiology system for emergency computerized tomography (CT) examinations. Teleradiology was implemented by connecting two spiral CT scanners in the University Hospital in Innsbruck and the Regional Hospital in Zwettl. It enabled the remote hospital in Zwettl to get fast and competent reports of emergency CT examinations when there was no specialist radiologist available. In 13 months´use for routine night and weekend service, the system proved fast and reliable. During the study period 121 emergency examinations of 116 patients were transmitted from Zwettl to Innsbruck. The fixed cost of teleradiology were for the ISDN connection and amounted to DM230 plus DM696/year rental. The average cost of one emergency CT for reporting elsewhere, was cheaper (estimated cost DM156), but would have been much slower. Another alternative, transporting the patient to the nearest central hospital for scanning, was much more expensive: DM524 by road or DM4667 by helicopter ambulance. The savings resulting from earlier diagnosis, shorter time to treatment and reduction of transport risks are difficult to calculate but it is widely accepted that these factors are important in improving recoveries and shortening hospitalization times. Although the teleradiology service worked successfully there are some unsolved issues: technical issues like system security and reliability have to be guaranteed and legal issues like data security and personal liability have to be discussed. Hardware standards in teleradiology have to be defined and, last but not least, regulation of remuneration must be established. In summary we can say that in our experience teleradiology is suitable for the implementation of a practical emergency CT service in a remote hospital. The benefit for emergency patients is obvious and cost-efficient operation possible. Therefore a continuation of this project seems reasonable until the radiology staffing at the remote hospital can be improved.
Bailes JE, Poole CC, Hutchison W, Maroon JC, Fukushima T. Utilization and cost savings of a wide-area computer network for neurosurgical consultation. Telemedicine Journal 1997;3:135-9.
Telemedicine systems offer many potential advantages for health care delivery. Most report have centered on the delivery of primary and medical subspecialty care rather than or its impact on patient care and the potential for cost savings. In 1993 we implemented NeuroLink®, a wide-area teleradiology network for delivery of specialty care in neurologic surgery at Allegheny Generel Hospital (AGH). This study was designed to determine the potential cost savings of such a network. We prospectively reviewed 100 consecutive telemedicine neurosurgical consultations from 20 western Pennsylvania community hospitals participating in the NeuroLink network. Data related to referring hospital, diagnosis, disposition of the patient, and mode of transportation were reviewed. To determine the potential cost savings, the differential of hospital-based charges between AGH and western Pennsylvania primary hospitals was calculated based on an average length of stay (LOS), patient bed costs, and transportation charges. Of the 100 patients, 33 did not require transfer to a tertiary facility but were instead managed at the community hospital as a direct result of the remote diagnosis and image review disclosing that neurosurgical procedures or intensive care were not required. Cost analysis, comparing the average LOS at AGH with that of the average community hospital, including transportation, showed savings of $502,638. The neurosurgical wide-area computer network has led to more appropriate transfer of patients to a tertiary hospitals and significant estimated cost savings.
Table 5. Estimated cost savings for 100-patient series Total ($)
Room rate savings for patients not requiring transfer (N=33) 90,750
Air transport savings for patients not requiring transfer (N=33) 227,454
Transport by ground rather than air (N=38) 184,434
Total 502.638
Davis MC. Teleradiology in rural imaging centres. Journal of Telemedicine and Telecare 1997;3:146-153.
An economic analysis of private commercial magnetic resonance (MR) imaging service was carried out. At an expected case-load of 2000 per year, a mid-field MR unit was predicted to cost $470 per case using teleradiology and $544 per case using film and a courier service. Routine and emergency MR services were provided to two communities in Maryland. In a two-year study, 8083 teleradiology examinations were performed. Digital images were acquired and transmitted without data compression via ISDN at 128 kbit/s to a central diagnostic workstation for interpretation by a team of radiologists. The average transmission time for a typical case of 50 images was 6-8 minutes. Preliminary interpretations were normally available with 2 hours and the final transcribed reports were usually faxed to the physicians´offices with 24 hours. The results of a survey indicated that the system was well received by both referring physicians and patients. Costs per case in practice were similar to those predicted.
Bergmo TS. An economic analysis of teleconsultation in otorhinolaryngology. Journal of Telemedicine and Telecare 1997;3:194-199
The study was based on the delivery of ENT examination and treatment to a small primary-care centre without an ENT specialist in northern Norway (Alta). The three alternatives evaluated were teleconsultation, a visiting specialist and patient travel to the nearest secondary-care level. Patient travel was cheaper for patient workloads below 56 per year. For patient workloads above 56 and below 325 patients per year teleconsultation was the cheapest alternative. Above 325 patients per year, the visiting specialist service cost less than either teleconsultation or patient travel. Transfer of medical skills from the specialist to the general practitioner was also accounted for, separately from the main cost calculation. Teleconsultation then became cost-effective for patient workloads above 52 patients per year. A sensitivity analysis showed that the choice of the discount rate had little effect on the results due to the short equipment lifetime. The actual equipment lifetime is uncertain. Assuming a 10-year lifetime puts the break-even point between patient travel and teleconsultation at 42 patients per year. A four-year lifetime assumption puts the break-even point at 73 patients per year. There were no costs due to maintenance and repair of the equipment, which is reflected in the 5% maintenance cost included in the present analysis. Assuming a 10% maintenance cost instead puts the break-even point at 66 patients per year. Equipment prices for teleconsultation in ENT have decreased by about 40% over the last four years. This implies that caution must be exercised in comparing results from one period with those from another. If this price decrease continues, the cost per patient (at a workload of 1000 patients per year) for tele-ENT in four years would then be 1100NKr and only 35 patients per year would be required in order to break even.
Burgiss SG, Julius CE, Watson HW, Haynes BK, Buonocore E, Smith GT. Telemedicine for dermatology care in rural patients. Telemedicine Journal 1997;3:227-233.
Rural patients who develop dermatologic disorders often do not seek specialty care because of multiple logistical and economic factors. To assess the effect of teledermatology consultation on the cost of care for a given episode of illness. Telemedicine records were reviewed for 119 visits by 87 patients referred for teledermatology consultation over a 17-month period. Seven patients (8%) required follow-up in the dermatologist office for extended care, while 20 patients (23%) (52visits) underwent follow-up teledermatology evaluation. The average duration on the dermatologic condition for each patient prior to the telemedical consultation was 17 months. The average cost of care for the diagnosed dermatologic condition for all patients during an average period of 8 months prior to teledermatology was $294, compared with $141 for the 6 months after diagnosis by teledermatology. Telemedicine can be effective for dermatology consultation in new patients referred from rural communities. Our data indicate teledermatology can decrease the cost of care for the diagnosed condition.
Kaye LW. Telemedicine:extention to home care? Telemedicine Journal 1997;3:243-6.
The extension of telemedicine to the home is a logical progression, given the current home health care market. For example, estimates indicate national home health care expenditures of approximately $28 billion in 1995, representing the fastest-growing segment of the health sector. The following analysis suggests that significant increases in productivity and savings are possible by utilizing telemedicine rather than a traditional model of service delivery in the provision of home health care. Increasing the ratio of televisits of traditional home visits results in higher productivity as expressed in the provision of more total visits of all kinds within a given period of time. Using the documented statistic of an average of five traditional home visits per day for 220 days per year per RN, a baseline scenario may be created. In hypothetical cases various ratios of televisits to traditional home visits are presented. It can be deducted that the total time required to arrive at a home and conduct a traditional visit is 1.4 hours (7 working hours per day/5 visits daily). Given this figure and the fact that an average televisit requires 30 minutes, the maximum number of televisits per day and per year may be calculated for each case. Although no agency will conduct televisits exclusively, Case C represents a compelling picture of productivity gains as the ratio of visit approaches the extreme.
These increases in productivity accruing from the implementation of televisits can enhance home-care agency operations in three possible ways: 1) an increase in the average number of visits of all types per existing patient; 2) an increase in the toal number of patients per RN; or 3= a decrease in the number of agency RNs or full-time equivalents.
A simple cost analysis indicates that including a telemedicine system in an agency´s service delivery scheme can reduce the overall cost of home visits. The higher the ratio of televisits to traditional home visits, the lower the average cost of visits. In the baseline scenario of 1100 traditional home visits per nurse per year at a rate of $94, the total annual cost of a full-time RN and expenses related to conducting his/her home visits is $103,400. At a rate of $73 per televisit, total costs are reduced, even with the cost of a telehealth system added.
Zincone LH Jr, Doty E, Balch DC. Financial analysis of telemedicine in a prison system. Telemed Journal. 1997;3:247-55
The objective was to quantify the costs and benefits of medical care under a telemedicine agreement. Two telemedicine contracts between the North Carolina Prison (NCCP) and the East Carolina University School of Medicine were analyzed, first from the point of view of the prison using break-even analysis and secon from the societal point of view examining whether the arrangements were positive for the taxpayers of North Carolina. While the prison system never broke even with the first contract, the break-even was attainable, as it would have required an average of only one consultation per day. The prison system attained break-even status in the latest year of the second contract, and simple forecasts indicate a good chance that usage will grow beyond the break-even point. From the societal point of view, the contracts are merely transfers of funds from one state agency to another. Therefore, the difference in them are irrelevant. What is relevant is a measure of average fixed and variable spending for telemedicine and what this expenditure buys in terms of avoided costs. Thus, we examined the average full cost per visit, as determined from the actual or estimated expenditures, and concluded that the program paid its cost during year 4.
Brunicardi BO. Financial analysis of savings from telemedicine in Ohio´s prison system. Telemedicine Journal 1998;4:49-54.
The Ohio Department of Rehabilitation and Corrections (ODRC) implemented a telemedicine
pilot project in March 1995. The project brought together the Southern Ohio Correctional
facility in Lucasville, the Corrections Medical Center in Columbus, and the Ohio State
University Medical Center, also located in Columbus. Its purpose was to evaluate the use
of two-way interactive video for the delivery of health services. With two-way interactive
video, physicians in one location established audio and video links with inmates hundreds
of miles away. Data were collected on the potential savings as a result of telemedicine
usage in the Ohio prison system. Costs associated with telemedicine and those incurred
without telemedicine were determined on per-consult basis for comparison. The cost for a
medical consult to be performed at the Corrections Medical Center averaged $263.51 per
inmate. The cost for a medical consult via telemedicine varied from month to month,
depending on the utilization volume. The ODRC experienced savings for telemedicine usage
when 129 or more consults were performed each quarter. During the third quarter, 145
telemedicine consults were performed. The cost per consult for telemedicine usage during
this quarter was $255.19. There was a savings of $8.48 per consult, resulting in a
quarterly savings of $1206. As the utilization of telemedicine continued to increase in
the fourth quarter, the amount of savings increased.
Doolittle GC, Williams A, Harmon A, Allen A, Boysen CD, Wittman C, Mair F, Carlson E. A cost measurement study for a tele-oncology practice. Journal of Telemedicine and Telecare 1998;4:84-88.
The costs of providing oncology services in three different ways were measured. Services were provided to a peripheral hospital by: conventional clinics, in which the oncologist worked at the hospital concerned; outreach clinics, in which an oncologist was flown in periodically from a central hospital; and telemedicine clinics, in which the oncologist at the central hospital practiced via a video-link. During a one-year study period, 2400 patients were seen in conventional clinics, 81 in outreach clinics and 103 in telemedicine clinics. At these workloads the average costs per patient were $149, $897 and $812 respectively. However, the average costs cannot be compared directly without further information about the shape of the unit cost curves. If clinics had been conducted for two hours, six times per month, with five patients per clinic, the maximum number of patient visits would have been 360 in a year. The average cost per patient visit would have been $301. The primary goal of the present study was to measure the costs related to a teleoncology practice as the first stage in a future cost-effectiveness analysis. Although our data are limited, it appears that telemedicine exhibits a steeply falling unit cost. Before the costs can be compared directly, it is necessary to know the unit cost at the same workload. Our data do not allow us to estimate that. Clearly, further work to define the shape of the unit cost curves will be required. Nonetheless, the present study represents the first published information about the cost of delivering tele-oncology services. As such, it provides the basis for a future study of cost-effectiveness.
McLaren P, O´Kane M. Remote psychotherapy (letter to the editor). Journal of Telemedicine and Telecare 1998;4:122
A remote service for teaching and supervision in psychotherapy from Guy´s hospital in London to trainee psychiatrists in Belfast. The psychotherapy modality is cognitive analytic therapy (CAT), a brief focused therapy which was developed at Guy´s and St Thomas´s United Medical and Dental Schools (UMDS) for use in the National Health Service. Traditionally, psychiatrists have traveled outside Northern Ireland, usually to London, for psychotherapy training. Telemedicine offers a potential alternative. The London-Belfast service uses low-cost videoconferencing units connected by ISDN at 128kbit/s. So far, five senior trainees have received four 1.5h initial teaching sessions and they are currently receiving 16 weekly sessions of clinical supervision.
A preliminary analysis shows that the cost of conventional supervision is £15,650 and requires 850 h of trainees´ time. In comparisons, remote supervision costs £2223 and requires 250 h of the trainees´ time. The net difference between these two methods of accessing the same duration of supervision are £13,427 and 600 h of trainees´ time. Currently the service is undergoing formal evaluation, including a comparison with traditional face-to-face training and supervision. Early result are encouraging but the ultimate measure of success is the clinical outcome of the patients treated by the trainees.
Table 6. Costs of conventional and telemedical psychotherapy supervision
| Conventional | Telemedicine | |||
| Cost (£) | Time (h) | Cost (£) | Time (h) | |
| Air fares | 13,640 | N/A | ||
| Telecommunications cost | N/A | 213 | ||
| Supervision cost | 2010 | 2010 | ||
| Travelling time | 700 | 100 | ||
| Training time | 150 | 150 | ||
| Total | 15,650 | 850 | 2223 | 250 |
Duerinckx AJ, Kenagy JJ, Grant EG. Planning and cost analysis of digital radiography services for a network of hospitals (the Veteran Integrated Service Network). Journal of Telemedicine and Telecare 1998;4:172-178.
This study analysed the design and cost of a picture archiving and communication system (PACS), computerized radiography (CR) and a wide-area network for teleradiology. The Desert Pacific Healthcare Network comprises 10 facilities, including four tertiary medical centres and one small hospital. Data were collected on radiologists´workloads, and patient and image flow within and between these medical centres. These were used to estimate the size and cash flows associated with a system-wide implementation of PACS, CR and teleradiology services. A cost analysis (net present value) model was used to estimate the potential cost savings in a filmless radiology environment. A strategic plan and business plan were successfully developed. The cost model predicted the cost-effectiveness of the proposed PACS/CR configuration within four to six years, if the base costs were kept low. The experience gained in design and cost analysis of a PACS/teleradiology network will serve as a model for similar projects.
Cameron AE, Bashshur RL, Halbritter K, Johnson EM, Cameron JW. Simulation methodology for estimating financial effects of telemedicine in West Virginia. Telemedicine Journal 1998;4:124-144.
Acccording to Cameron et al (1998) the understanding the full financial effects of telemedicine systems on payers, providers, and patients has been hampered by the lack of data from full-fidelity systems operating at a steady state. The vast majority of telemedicine systems in the United States have yet to achieve their full potential in serving their target populations and are operating well below capacity. The purposes of their research are two-fold: 1) to develop a methodology that compensates for the limited availability of empirical data on the financial effects of telemedicine; and 2) to test methodology in a comprehensive telemedicine system in West Virginia. The proposed methodology utilizes simulation modeling techniques for evaluating the financial performance of a mature telemedicine system.
The model shows that there is substantial potential for telemedicine to produce savings in the cost of medical care. Most of the savings come from inpatient teleconsultations and the subsequent reductions in patient transfers to higher-cost tertiary-care centers. The monthly cash flows produced by the simulation enable a straightforward net present value (NPV) analysis. With an initial investment of about $4.6 million, the system would save society about $6.7 million in present-value terms (at an 8% discount rate). Thus, the NPV of the investment in this telemedicine network is about $2.8 million. This analysis suggests that a full-fidelity telemedicine system in the state of West Virginia probably would be financially feasible when run under steady-state conditions.
Stoloff PH, Garcia FE, Thomason JE, Shia DS. A cost-effectiveness analysis of shipboard telemedicine. Telemedicine Journal 1998;4:293-304.
The U.S. Navy is considering the installation of telemedicine equipment on more than 300 ships. Besides improving the quality of care, benefits would arise from avoiding medical evacuations (MEDEVACs) and returning patients to work more quickly. Because telemedicine has not yet been fully implemented by the Navy, we relied on projections of anticipated savings and costs, rather than actual expenditures, to determine cost-effectiveness
The objectives were to determine the demand for telemedicine and the cost-effectiveness of various technologies (telephone and fax, e-mail and Internet, video teleconferencing (VTC), teleradiology, and diagnostic instruments), as well as their bandwidth requirements.
A panel of Navy medical experts with telemedicine experience reviewed a representative sample of patient visits collected over a 1-year period and estimated the man-day savings and quality-of-care enhancements that might have occurred had telemedicine technologies been available. The savings from potentially avoiding MEDEVACs was estimated from a survey of ships´medical staff. These sample estimates were then projected to the medical workload of the entire fleet. Off-the-shelf telemedicine equipment prices were combined with installation, maintenance, training, and communication costs to obtain the lifecycle costs of the technology.
If telemedicine were available to the fleet, ship medical staffs would initiate nearly 19,000 consult in a year, 7% of all patient visits. Telemedicine would enhance quality of care in two-thirds of these consults. Seventeen percent of the MEDEVACs would be preventable with telemedicine (representing 155,000 travel miles), with a savings of $4400 per MEDVAC. If the ship´s communication capabilities were available, e-mail and Internet and telephone and fax would be cost-effective on all ships (including small ships and submarines). Video teleconferencing would be cost-effective on large ships (aircraft carriers and amphibious) only. Teleradiology would be cost-effective on carriers only. Telemedicine´s bandwidth requirement is small, 1% of a month´s time. However, if the ships´medical departments need to resort to a commercial satellite, E-mail and Internet would be the only telemedicine modality generating enough benefits to offset the costs.
Loane MA, Bloomer SE, Corbett R, Eedy DJ, Gore HE, Hicks N, Mathews C, Paisley J, Steele K, Wooton R. Patient cost-benefit analysis of teledermatology measured in a randomised control trial. Journal of Telemedicine and Telecare 1999;5(Supplement 1):1-3.
A randomised controlled trial of the cost-benefits of teledermatology consultations to patients compared with traditional hospital consultation was carried out. 197 patients were referred from general practice for a dermatological opinion over a nine month period, 98 for a teledermatology consultation and 99 for a hospital consultation. 80 required an additional subsequent hospital appointment. Patient were asked co complete an economic questionnaire following each consultation. 164 questionnaires were returned. 62% of those randomised to the teledermatology consultation responded compared with 58% of those randomised to the hospital consultation. Patients seen by teledematology at their own health centre had shorter distances to travel and spent less time overall attending the appointment compared with those seen at the hospital. However the teledermatology consultations were more time-consuming for the general practitioner and dermatologist. These findings indicate that teledermatology has more benefits for the patients than for the health care delivery team.
Table 7.Average mean time involved in attending appointment, including waiting, consultation and travel (min) for teledermatology and conventional treatment
Teledermatology Hospital
| Waiting time to see a doctor (min) | 5.4 | 20.0 |
| Consultation time with doctor (min | 22.0 | 16.8 |
| Total travel time (min) | 31.6 | 48.0 |
| Total distances involved in attendiing appointments (miles) | 6.5 | 15.9 |
| Total time involved (min) | 59.3 | 84.4 |
Chodroff PH. A three year review of telemedicine at the community level-clinical and fiscal results. Journal of Telemedicine and Telecare 1999;5 (Supplement 1):28-30.
TENN, the Telemedical Emergency Neurosurgical Network, was developed to established community level access to neurosurgical critical care services for an underserved urban population. Since October 1994, the system has provided round-the-clock connectivity between a single peripheral hospital and a ten station receiving network which includes physicians´homes and offices. Data from the first 35 months of operation confirms clinical efficacy and cost-effectiveness. The primary benefit was in providing rapid access to care for an "at-risk" underserved population in emergencies. This undoubtedly resulted in the actual saving of life and prevention of permanent disability. The total costs over the 35 month period were calculated as $64,375 and the total savings (mainly in avoided air transport, $495,000) were $626,149, a net saving of $561,774.
Because of the success of the TENN project, staff at the Muir Centre requested an expansion of the network to additional sites. TENN is also serving as a nucleus for the initiation of other telemedical project; currently, fifteen additional non-surgical telemedicine projects are in design. (See also article in Health Management Technology 1998;19:29-30: "TENN rates an 11: Northern California telemedicine project saves $500,000.
Doze S, Simpson J, Hailey D, Jacobs P. Evaluation of a telepsychiatry pilot project. Journal of Telemedicine and Telecare 1999;5:38-46.
We assessed a telepsychiatry pilot project in which a psychiatric hospital was linked with mental health clinics in five general hospitals in the province of Alberta in Canada. Information was collected through questionnaires administered to patients, service providers and psychiatric consultants, and by interviews. The technology was considered easy to use by participating health care professionals and patients, and the quality of the sound and picture was adequate. Survey data suggested acceptance and satisfaction on the part of patients, service providers and psychiatric consultants. An economic analysis indicated that at 396 consultations per year the service cost the same as providing a travelling psychiatrist (C$610 per consultation); with more consultations, telepsychiatry was cheaper. Information gathering during the evaluation suggested that the use of videoconferencing for psychiatric consultations was a viable option for an integrated, community-based mental health service.
The evaluation covered the first six months of the project. Since that time, use of the service has remained constant. By the beginning of April 1998, the service had had a total of 360 referrals from 53 general practitioners. The evaluation, combined with growing support in the medical community, resulted in the approval to expand the project to an additional five sites. In addition, the coordinating body in the province chose telepsychiatry as one four areas for the development of a province-wide model for the provision of telemedicine services
Trott P, Blignault I. Cost evaluation of a telepsychiatry service in northern Queensland. Journal of Telemedicine and Telecare 1998;4 (suppl 1):66-68.
A comparison of the cost associated with delivering mental health service by telepsychiatry and conventional methods was conducted. The telepsychiatry rural outreach service was delivered to a mining town 900 km from the regional hospital in Townsville. When the telemedicine service was established, 40 cases a month were seen for general adult psychiatry, four for child and adolescent mental health, four for psychology and two for forensic services. Costs and quality-of-life issues were considered. The savings to the health authority were estimated to be $85,380 in the first year and $112,790 in subsequent years, not allowing for maintenance and equipment upgrading. We also estimated a 40% reduction in patient transfers due to the introduction of telemedicine. Based on the previous year’s figures of 27 transfers at $8920 each, this would produce an annual saving of $96,336 for the Royal Flying Doctor Service. The result of the study showed considerable savings from reduced travel by patients and health-care workers.
Werner A, Anderson LE. Rural telepsychiatry is economically unsupportable: The Concorde crashes in a cornfield. Psychiatric Services 1998;49:1287-90.
The study is about the feasibility of implementing a telepsychiatry system to link psychiatrists at Michigan State University with patients at a community mental health center (CMHC) in rural Michigan. The target county has a population of 58,000 and is approximately 75 miles from the university. The problem that needs solving is how to provide affordable high-quality mental health care to patients in areas with few psychiatric resources. Costs were calculated using currently available desktop systems, a single ISDN line, and an ordinary office without special lighting. Because every encounter involves two sites, costs estimates must be doubled for each session. Average total cost per year was $19,167 for CMHC and $11,167 for university. It was assumed that the maximum number of telepsychiatry consults would be 260 per year. Given that, the cost of a single telepsychiatry session between the university and the CMHC was $179 (which include a $4 time charge for using the ISDN line and a $15 charge for the time spent by the social worker who is present with the patient at the CMHC). The cost of a single telepsychiatry session between the CHMC and another rural site was estimated to $244. The cost of a session of direct-service medication management at the CMHC is $78.50 ($52.50 for clinic costs plus $26 for the psychiatrist). For a telepsychiatry medication management session, which is a common application in psychiatry, the cost would depend on which two sites are linked to the technology. For a telepsychiatry contact between the university and the CMHC, $78.50 would be added to the lower per session cost of $179, yielding $257.50. For a contact between the CMHC and another rural site, $78.50 would be added to the higher per-session cost of $244, yielding $322.50. The above costs are based on the use of three sites-the university, the CMHC, and another rural site. If more sites were used, the total number of contacts might increase, but the cost per remote contact would increase dramatically because volume per site would inevitably fall. In the calculations "hidden costs" were calculated as 33 percent of identifiable costs and include costs for using space, record keeping, billing, and other infrastructure costs averaged over four years. The university´s lower hidden costs reflect the lower line charges. The conclusion was that telepsychiatry services are technologically feasible, pragmatically difficult, and not economically supportable at this time.
Rendina MC, Downa SM, Carasco N, Loonsk J, Bose CL. Effect of telemedicine on health outcomes in 67 infants requiring neonatal intensive care. Telemedicine Journal 1998;4:345-351.
This is an evaluation of a telemedicine system for the rapid interpretation of neonatal echocardiograms from a regional, level III neonatal intensive care unit (NICU). The primary hypothesis tested was that the utilization of a telemedicine system for the interpretation of neonatal echocardiograms reduces the intensive care length of stay of low birthweight (LBW) infants. All infants who were admitted to neonatal intensive care at New Hanover Regional Medical Center during the first six months of the system were studied by the use of echocardiograms. They were compared with infants who were born in the same period of the previous year. The outcome measures were the intensive care length of stay, rate of transfer to academic medical centers, and mortality rate.
The costs included initial purchase of hardware, installation and maintenance, and monthly communications line charges. In order to determine the net costs, the averted costs of shipping videotapes by overnight courier were subtracted from the costs of the intervention. Only infants with a birthweight less than 2500 grams who survived until appropriate discharge were included in the regression analysis.
A statistical non-significant reduction of 5.4 days in the intensive care length of stay (LOS) of low birthweight infants was observed (p=0.37). The cost per echocardiogram transmitted was calculated at $33 compared to previous method of sending videotapes via overnight courier. The authors conclude that, while the sample size was inadequate to demonstrate improvements in health outcomes, the magnitude of the change and the low costs of the system suggest that this intervention is practical for obtaining rapid diagnostic and treatment support. Larger studies are warranted to confirm these findings and determine whether faster diagnosis and earlier initiation of treatment improve health outcomes of newborn infants.
Malone FD, Athanassiou A, Craigo SD, Simpson LL, D’Alton ME. Cost issues surrounding the use of computerized telemedicine for ultrasonography. Ultrasound Obstet Gynecol 1998;120-124.
The purpose of this study was to describe the cost implications of converting an established videotape review network for obstetric ultrasonography to one based on telemedicine technology. The design of the study was a retrospective review of fixed and non-fixed costs associated with interpreting obstetric ultrasound examinations using both videotape and telemedicine transmission. A network of three community offices transmitting 600 obstetric ultrasound examinations per month to a central tertiary facility was used.
Sonographers at the community offices record ultrasound examinations onto videotape, which are then sent by courier to a central facility for interpretation. At the completion of this videotaped examination, sonographers repeat the ultrasound scan while transmitting real-time images over a telemedicine link to the central facility. Costs associated with the videotape review technique that can be avoided by converting to telemedicine interpretation were derived and compared with the fixed and non-fixed costs associated with establishing the telemedicine network.
For this network, the fixed costs for establishing telemedicine are $101 750. Monthly non-fixed cost savings by eliminating videotape review include $1620 to $2700 for printing still images, $1200 for courier charges and $7000 for fewer repeat ultrasound examinations. Monthly non-fixed costs for the telemedicine network are 2415. Net monthly savings in non-fixed costs for a telemedicine network are therefore $7405 to $8585, which may pay for the initial fixed costs in 12 to 14 months. The authors conclude that the high cost of a telemedicine network may be offset by possible savings in non-fixed cost compared with alternative systems for interpreting obstetric ultrasonography.
Stieglitz SP, Gnann W, Schächinger U, Maghsudi M, Nerlich M. Telekommunikation in der Unfallchirurgie. Vernetzung medizinischer Versorgungseinrichtungen in Ostbayern. Chirurg 1998;69:1123-1128.
The growing complexity of the performance processes in makes it mandatory that the flow of information is faster and more consistent, especially when the sites of health care are away from each other. The Regensburg model, a realization of lean telemedicine from a low-cost domain, using PC-based standard telecommunications, especially in trauma surgery. In 203 prospectively evaluated teleconsultations between 15 participants a total of 697 images were transmitted via videoconferencing. In 95% of the trauma cases the transmitted material was judged as at least sufficient. In project-attending evaluations the efficacy of these systems and their use were clearly demonstrated. Savings in transportation costs up to 4.400 DM per chase were achieved. Through quicker flow of information quality improvements for all participants resulted; to some extent considerable costs for health care were avoided or reduced. Based on these thoughts, a new platform of communication will be established in Regensburg as a closed medical intranet for the region of eastern Bavaria.
Brownsell SJ, Williams G, Bradley DA, Bragg R, Catlin P, Carlier J. Future systems for remote health care. Journal of Telemedicine and Telecare 1999;5:141-152.
As the number of elderly people in society increases, the use of technology to support the care system is being examined. However, there is no agreed model of a technology-based health-care system that fully integrates the technical and social aspects to meet the needs of both clients and care providers. This paper examines a possible model from the perspective of both the client and the service provider, and estimates the costs, and hence the potential savings, associated with the introduction of a health-care system based on this model. Cost data are presented in the context of an installation as might be anticipated within a city such as Birmingham, UK. Expected savings in control centre costs and emergency services costs would be small. However, a reduction in the average annual length of hospital stay by one day and a reduction in the proportion of elderly people being treated in hospital from 32.4% to 32.0%, directly as a result of the use of advanced telecare, would produce significant savings. A financing scheme with a 5-year or 10-year repayment period would then be financially viable for a 10,000-home advanced telecare system. The authors also conclude that before telecare can be widely introduced, it will be necessary to demonstrate that it achieves significant cost savings in relation to conventional care systems. The figures presented in the present study are based on an initial analysis of costs and on likely developments in technology. Though relatively simplistic and based on estimations of performance, the results appear to suggest that there is scope significant savings through the increased use of technology. It should also be noted that under present funding arrangements, the costs of installing an advanced telecare system would be incurred in a different budget area from that in which the savings would be made. This means taht for the benefits to be realized, a more holistic approach to the funding of such systems needs to be established.
Hessfelt M, Olsson S, Lundgren G, Tufveson G, Ericczon B-G, Holm-Sjögren L. Videoconferences: do they pay off? Experiences and consequences of a telemedical application at the departments of transplantation surgery at the University hospitals of Huddinge and Uppsala. Stockholm: Spri (Spri report 475), 1998.
In 1992 the transplantation units at Huddinge University hospital in Stockholm and Akademiska University hospital in Uppsala decided to merge - thereby forming a common department with two "halves" situated about 90 km apart. In order to make the medical and administrative decision making process more efficient and improve communications between the two halves, telemedicine through video conference system was introduced in 1995. The purpose is to facilitate the communication between the two halves and hereby strengthen the management function, co-ordination, more efficient meetings, but also to create a feeling of solidarity between the two halves and reduce the travel costs.
Between the transplantation surgery units, the use of telemedicine has become a new way of holding meetings on a regular basis as well as ad hoc when needed. Video conferences include follow-up of night activities and planning for the day every morning, planning and case discussion concerning liver transplantation every week, transplantation co-ordination conferences once a week, and ad hoc meetings. The telemedicine application is based on video consultations and allows document imaging and transfer.
Table 8 Time requirement per type of meeting. Sum of all participants time (#hours/year)
With Telemedicine Without Telemedicine Difference
_______________________________________________________________
Time of which Time of which Total
Meeting travel time travel time _________
Morning 1041 - 1531 - 490
Transplantation 531 - 1005 686 474
Coordination 265 53 288 105 23
Total 1837 53 2824 791 987______
The study period was 15 April to 15 July 1997. The response rate was 73% (78% in Uppsala and 68% in Huddinge), which means that 111 of 152 protocols were analysed.
The investment cost in Huddinge and Uppsala was SEK 600,000 (approx. $75,000)
| Author(s) | Published | Application | Type of study | Main results | Comments |
| Preston | 1995 | USA (Texas) Psychiatry, dia- Lysis, juvenile Offenders |
Cost-min | It was projected that each $1.00 should yield $1.50 in benefits, with break-even within 1 year. In practice, there was a net deficit during the first year, but linear extrapolation predicted return on investment in 2.7 years. Failure of five of the six networks sited to develop mission-oriented TM policies and the absence of Medicare reimbursement were chiefs barriers to greater savings. | The findings in this study suggest two principles for guiding the deployment of telemedicine. First, in a small community, the greater number of users, the more financially viable is the system. The second principle is that the projected benefits of a telemedicine system are not necessary immediate. |
| Brecht et al | 1996 | Prison USA |
Cost-min | During October-November 1994, 1715 consults were conducted in 18 scheduled telemedicine clinics. 95% of the telemedicine consults saved one or more trips for outpatient specialty appointments. User surveys indicated a high degree of satisfaction on the part of patients, presenters, and specialty consultants. | Preliminary review of the data indicated favorable care outcomes, and initial economics analyses suggested that telemedicine is likely to be cost-effective in this environment. The project will be continued. |
| Dewey et al | 1996 | Ultrasound (Telerobotics) USA |
Cost-min | The incremental costs of telediagnosis for an examination are estimated to be a small fraction of the base charges and significantly less than the expense of bringing a physician to a remote location or transporting a patient to a regional medical center. | However, the projections remain to be verified in practice. |
| Bergmo | 1996 | Radiology Norway |
Cost-min | With an equipment life time of six years, the threshold value is 1576 patients per year. Using four years needs 2320 patients per year. Emergency transfer rates of 2.5% and 10% make the threshold value 3296 and 770 patients per year | Whether teleradiology is cost-effective with the assumptions made in this paper depends on the utilization rates. If the populations is small it is not likely that teleradiology will be cost-effective. But teleradiology for a smaller patient population with larger travel costs may by cost-effective |
| Gammon et al | 1996 | Psychiatry Norway |
Cost-min | A typical mental health institutions in northern Norway would have to save 18 trips per year over a distance of 800 km (e.g. Tromsö to Kirkenes) in order to break even, or 34 trips per year if the distance is 300 km | While cost-effectiveness clearly depends upon frequency of use and travel distance, it appears safe to predict that telepsychiatry will be cost-effective for many institutions in northern Norway. |
| Halvorsen et al | 1996 | Radiology Norway |
Cost-min | Whether teleradiology systems are cost saving will depend on the size of the populations served, the utilization rates, the travel distances, and the relative magnitude of the cost components. | The conclusion was that teleradiology option did not seem to be cost saving in the study community. Such systems, however, may be justified on the grounds of access and quality of care. |
| McCue et al | 1997 | Prison (corrections) USA |
Cost-min | The study evaluated the costs and benefits of telemedicine for 165 HIV-positive inmates. Benefits included dollar savings in transpor- tation and medical reimbursement. Costs in- cluded those of operating the telemedicine system and medical care. Non-dollar benefits included implementing more consistent and timely treatments of inmates and reducing se- curity risk. Savings in transportation and me- dical care ($35,640 and $21,123) was greater than the operating costs for telemedicine ($42,277). The net benefit was $14,446. | Given a net savings of $14,486 over 7 months, the projected annual cost savings exceeds $24,833. Assuming an annual savings of $24,8333 and given an initial dollar investment of $110,000 for equipment (video conference system $46,000, software $14,000, networking electronics $11,000, cameras)scopes $39,000), the expected time to recover the initial investments is less than 5 years for their service alone. |
| Stoeger et al | 1997 | Radiology (CT) Austria |
Cost-min | In our experience teleradiology is suitable for the implementation of a practical emergency CT service in a remote hospital. The benefit for emergency patients is obvious and cost-efficient operation possible. | A continuation of this project seems reasonable until the radiology staffing at the remote hospital can be improved. |
| Bailes et al | 1997 | Neurosurgery USA |
Cost-min | 100 consecutive telemedicine neurosurgical consultations from 20 community hospitals were reviewed. Cost savings was calculated based on average length of stay, patient bed costs, and transportation charges. Of the 100 patients, 33 did not require transfer to a tertiary facility but were instead managed at the community hospitals. Cost analysis showed savings of $502,638. | The neurosurgical wide-area computer network has led to more appropriate transfer of patients to a tertiary hospitals and significant cost savings. |
| Davies | 1997 | Radiology (MR) USA |
Cost-min | At an expected case-load of 2000 per year, a mid-field MR unit was predicted to cost $470 per case using teleradiology and $544 per case using film and a courier service | The results of a survey indicated that the system was well received by both referring physicians and patients. Costs per case in practice were similar to those predicted |
| Bergmo | 1997 | ENT Norway |
Cost-min | Three alternatives were evaluated: teleconsultation, a visiting specialist, and patient travel to the nearest secondary-care level. Patient travel was cheaper for patient workloads below 56 per year. For patient workloads above 56 and below 325 patients per year teleconsultation was the cheapest alternative. Above 325 patients per year, the visiting specialist service cost less than either teleconsultation or patient travel | In a sensitivity analysis, a 10 year lifetime for equipment decreases the break-even point between patient travel and teleconsultation to 42 patients per year. A 4 year life time increases break-even to 73 patients. Given the decrease cost of equipment of 40% during the last four years only 35 patients required in order to break even. |
| Burgiss et al | 1997 | Dermatology USA |
Cost-min | The average cost of care for the diagnosed dermatologic condition for all patients during an average period of 8 months prior to teledermatology was $294, compared with $141 for the 6 months after diagnosis by teledermatology. | Telemedicine can be effective for dermatology consultation in new patients referred from rural communities. Our data indicate teledermatology can decrease the cost of care for the diagnosed condition. |
| Kaye | 1997 | Home care USA |
Cost-min | A simple cost analysis indicates that a telemedicine system can reduce the overall cost of home visits. The higher the ratio of televisits to traditional home visits, the lower the average cost of visits. In the baseline scenario of 1100 traditional home visits per nurse per year at a rate of $94, the total annual cost of a full-time RN and expenses related to conducting his/her visits is $103,400. At a rate of $73 per televisit, total costs are reduced, even with the cost of a telehealth system added. | While the savings achieved through substitution of the telemedicine model of home care delivery for traditional service provision are in themselves compelling, further savings may be achieved through the reduced use of other costly medical services. |
| Zincone et al | 1997 | Prison USA |
Cost-min | The prison system attained break-even status in the latest year of the second contract, and simple forecasts indicate a good chance that usage will grow beyond the break-even point | We examined the average full cost per visit, as determined from the actual or estimated expenditures, and concluded that the program paid its cost during year 4. |
| Brunicardi | 1998 | Prison USA |
Cost-min | The cost for a medical consult to be performed at the Corrections Medical Center averaged $263.51 per inmate. The cost for a medical consult via telemedicine (two-way interactive video) varied from month to month, depending on the utilization volume. There was an experienced savings for telemedicine usage when 129 or more consults were performed each quarter. During the third quarter, 145 telemedicine consults were performed. The cost per consult for telemedicine usage during this quarter was $255.19. There was a savings of $8.48 per consult, resulting in a quarterly savings of $1206. | As the utilization of telemedicine equipment continued to increase in the fourth quarter, the amount of savings increased. |
| Doolittle et al | 1998 | Oncology USA |
Cost-min | The costs of providing oncology services were measured during one-year study period: 2400 patients were seen in conventional clinics, 81 in outreach clinics and 103 in telemedicine clinics. At these workloads the average costs per patient were $149, $897, and $812 respectively. If clinics had been conducted for two hours, six times per month, with five patients per clinic, the maximum number of patient visits would have been 3600 in a year. The average cost per patient visit would have been $301 | Although the data are limited, it appears that telemedicine exhibits a steeply falling unit cost. Before the costs can be compared directly, it is necessary to know the unit cost at the same workload. Our data do not allow us to estimate that. Nonetheless, the present study represents the first published information about the cost of delivering tele-oncology services. As such, it provides the basis for a future study of cost-effectiveness. |
| McLaren et al | 1998 | Psychoterapy UK (London-Belfast) |
Cost-min | A remote service for teaching and supervision in psychotherapy from Guy´s hospital in London to trainee psychiatrists in Belfast by videoconferencing shows that the cost of conventional supervision i £15,650 and requires 850 h of trainees’ time. In comparison, remote supervision costs £2223 and requires 250 h of the trainees’ time. The net difference between these two methods of accessing the same duration of supervision are £13,427 and 600 h of trainees’ time | Currently the service is undergoing formal evaluation, including a comparison with traditional face-to-face training and supervision. Early result are encouraging but the ultimate measure of success is the clinical outcome of the patients treated by the trainees. |
| Duerincks et al | 1998 | Radiology (PACS/CT) USA |
Cost-min | A cost analysis (net present value) model was used to estimate the potential cost savings in a film-less radiology environment. The cost model predicted the cost-effectiveness of the proposed PACS/CR configuration within 4 to 6 years, if the base costs were kept low. | The experience gained in design and cost analysis of a PACS/teleradiology network will serve as a model for similar projects. |
| Cameron et al | 1998 | Comprehensive USA |
Cost-min | The proposed methodology utilizes simulation modeling techniques for evaluating the financial performance of a mature telemedicine system. The model shows that there is substantial potential for telemedicine to produce savings in the cost of medical care. With an initial investment of about $4.6 million, the system would save society $6.7 million in present value terms Thus the NPV of the investment in this telemedicine network is about $2.8 million. | This analysis suggests that a full-fidelity telemedicine system in the state of West Virginia probably would be financially feasible when run under steady-state conditions. |
| Stoloff et al | 1998 | Shipboard US Navy |
Cost-min | The US Navy is considering the installation of telemedicine
equipment on more than 300 ships. If telemedicine were available to the fleet, ship
medical staffs would initiate nearly 19,000 consultations in a year, 7% of all patient
visits. Telemedicine would enhance quality of care in two-thirds of these consults. 17% of
the medical evacuations would be preventable with telemedicine, with a savings of $4,400
per MEDVAC. If the ship´s communication capabilities were available, e-mail and Internet and telephone and fax would be cost-effective on all ships (including small ships and submarines). |
Video teleconferencing would be cost-effective on large ships (aircraft carriers and amphibious) only. Teleradiology would be cost-effective on carriers only. Telemedicine´s bandwidth requirement is small, 1% of a month´s time. However, if the ships´medical departments need to resort to a commercial satellite, E-mail and Internet would be the only telemedicine modality generating enough benefits to offset the costs. |
| Loane et al | 1998 | Dermatology UK |
Cost-min | Patients seen by teledermatology at their own health centre had shorter distances to travel (31.6 versus 48.0 miles) and spent less time overall attending the appointment compared with those seen at the hospital (59.3 vs 84.4 min). However, the teledermatology consultations were more time-consuming for the general practitioner and dermatologist (22.0 versus 16.8 min). | These findings indicate that teledermatology has more benefits for the patients than for the health care delivery team. |
| Chodroff | 1998 | Neurosurgery USA |
Cost-min | The primary benefit was in providing rapid access to care for an "at-risk" underserved population of emergencies. This undoubtedly resulted in the actual saving of life and prevention of permanent disability. The total costs over the 35 month period were calculated as $64,375 and the total savings (mainly in avoided air transport, $495,000) were $626,149, a net saving of $561,774. | Because of the success of the TENN project, staff at the Muir Centre requested an expansion of the network to additional sites. |
| Hessfelt et al | 1998 | Transplantation surgery Sweden |
Cost-min | Two transplantation units at two university hospitals (90 km apart) have been merged to a common department. The main outcome is that it is economical advantage to use video conference compared with the traditional form of meetings. The savings in less travel costs and less working time was about SEK50,000 (app.$7,000). That means that the video conference system had saved almost 1000 hours per year. | The study period was 15 April to 15 July, 1997. The response rate was 73%, which means that 111 of 152 protocols were analyzed. |
| Doze et al | 1999 | Psychiatry Canada |
Cost- Min |
An economic analysis, where a psychiatric hospital was linked with five general hospitals, indicated that at 396 consultations per year the service cost the same as providing a travelling psychiatrist (C$610 per consultation); with more consultations, telepsychiatry was cheaper. | Information gathering during the evaluation suggested that the use of videoconferencing for psychiatric consultations was a viable option for an integrated, community-based mental health service. The evaluation resulted to expand the project to additional five sites. |
| Trott and Blignault |
1998 | Psychiatry Australia |
Cost- Min |
The savings were estimated to be $85,380 in the first year and $112,790 in subsequent years, not allowing for maintenance and equipment upgrading. A reduction of 27 patient transfer (40%) produced an annual saving of $96,336 for the Royal Flying Doctor Service. | The results of the study showed considerable savings from reduced travel by patients and health-care workers. |
| Werner and Anderson | 1998 | Psychiatry USA |
Cost-min | The cost of a single telepsychiatry session between the university and a community mental health center (CMHC) was $179 and the cost between CMHC and another rural site was $244. The cost of a session of direct-service medication management at the CMHC was $78.50. If this cost is added to the above costs, the cost for a total telepsychiatry medical management session can be calculated to $257.50 and $322.50, respectively | The conclusion was that telepsychiatry services are technologically feasible, pragmatically difficult, and not economically supportable at this time. |
| Rendina et al | 1998 | Neonatal intensive care USA |
Cost- Min |
Utilization of telemedicine for the interpretation of neonatal echocardiograms led to a non-significant reduction of 5.4 days in the intensive care unit. The cost per echocardiogram transmitted led to a net increase in cost by $33 compared to previous method of sending videotapes via overnight courier. | While the sample size was inadequate to demonstrate improvements in health outcomes, the magnitude of the change and the low costs of the system suggest that this intervention is practical for obtaining rapid diagnostic and treatment support. Larger studies are warranted to confirm these findings. |
| Malone et al | 1998 | Obstetric ultrasonography USA |
Cos- Min |
The fixed costs for establishing telemedicine are $101750. Monthly non-fixed cost savings by eliminating videotape review include $1620 to $2700 for printing still images. Net monthly savings in non-fixed costs for the telemedicine network are therefore $7405 to $8585, which may pay for the initial fixed costs in 12 to 14 months. | The authors conclude that the high cost of a telemedicine network may be offset by possible savings in non-fixed cost compared with alternative systems for interpreting obstetric ultrasonography. |
| Stieglitz et al | 1998 | Trauma surgery Germany |
Cost- Min |
In 203 prospectively evaluated teleconsulta-tions between 15 participants a total of 697 images were transmitted via videoconferenc-ing. In 95% of the trauma cases the transmitted material was judged as at least sufficient. Savings in transportation costs up to 4,400 German Marks were achieved. | Through quicker flow of information quality improvements for all participants resulted; to some extent considerable costs for health care were avoided or reduced. Based on these thoughts, a new platform of communication will be established in Regensburg as a closed medical intranet for the region of eastern Bavaria |
| Brownsell et al | 1999 | Remote health care Birmingham UK |
Cost-min | A simulation of a future system for remote health care were modeled for the city in UK. Installation costs of an advanced telecare system would be higher than the set-up costs of conventional systems. Expected savings in control centre costs and emergency services costs would be small. However, a reduction in the average hospital stay by one day and a reduction in the proportion of elderly treated in hospitals from 32.4% to 32.0% would produce significant savings. | A financing scheme with a 5-year or 10-year repayment period would be financially viable for a 10,000-home advanced telecare system. But, before telecare can be widely introdu-ced, it will be necessary to demonstrate that it achieves significant costs savings in relation to conventional care systems. It should also be noted that under present funding arrange-ments, the costs of installing an advanced telecare system would be incurred in a different budget area from that in which the savings would be made. |
A study from USA (psychiatry, dialysis, juvenile offenders) showed that the greater the number the users, the more financially viable is the system, and projected benefits are not necessary immediate (Preston, 1995). Two studies from the US in neurosurgery found a positive financial effect of telemedicine (Bailes et al, 1997 and Chodroff, 1999).Three of four studies about telemedicine in American prisons also found a positive economic result, besides the fact that the inmates were very positive about telemedicine consultations instead as an alternative to being transported to a distant hospital (McCue et al 1997, Zincone et al 1997, Brunicardi 1998). The fourth reported preliminary data and concluded that telemedicine is likely to be cost-effective (Brecht et al, 1996).
A recent study about telepsychiatry in Canada found that at least 396 patient video-consultations per year were needed in order to break even (Doze et al, 1999).The Australian psychiatry project in Queensland over a distance of 900 km demonstrated the clear economic advantage of telemedicine because of a 40% reduction of patient transfers (Trott and Blignault, 1998). A Norwegian study on telepsychiatry estimated that a typical mental health institution in northern Norway would have to save 18 trips per year over a distance of 800 km in order to break even, or 34 trips per year if the distance were 300 km (Gammon et al, 1996). In a telepsychiatry project in rural Michigan, USA, it was concluded that telepsychiatry services are technologically feasible, pragmatically difficult, and not economically supportable at this time -"The Concorde crashes in a cornfield" (Werner and Anderson, 1998). The Belfast-London medical education link via videoconferencing in psychotherapy estimated a saving of £13,000 and 600 hours of trainee time (McLaren and O’Kane, 1998).
In a Norwegian study on telemedicine in ear, nose and throat work it was found that patient travel was cheaper for patient workloads below 56 per year. At workloads between 56 and 325 patients per year telemedicine was the best alternative. Over 325 patients the visiting specialist cost less than either teleconsultation or patient travel (Bergmo, 1997).
Two studies about teleradiology in Norway came to somewhat different conclusions. Bergmo estimated that with an equipment lifetime of six years, 1576 patients per year were needed to break even-2320 patients at four years (Bergmo, 1996). Halvorsen and Kristiansen found in a retrospective study of a random sample (n= 597) of all patients (n=1793) that teleradiology was not cost-effective, but may be justified on the grounds of access and quality of care (Halvorsen and Kristiansen, 1996).
In the UK randomized study on dermatology, Loane et al showed that telemedicine saved time for the patients but was more time-consuming for the general practitioner and dermatologist, and so teledermatolgy had more benefits for the patients than for the health-care team (Loane et al, 1999). In a study from the USA, it was found that teledermatology consultations in new patients referred from rural communities can decrease the cost of care (Burgiss et al, 1997).
In an effort to simulate what would happen in a mature, full-fidelity telemedicine system, Cameron et al. found that telemedicine in West Virginia had a net present value of $2.8 million (Cameron et al, 1998). In some studies hypothetical savings have been estimated in home care (Kaye, 1997 and Brownsell et al, 1999) , magnetic resonance imaging (Davis, 1997), ultra-sound (Dewey et al, 1996 and Malone et al, 1998), computerized tomography (Stoeger et al, 1997), picture archiving and communications systems/computerized radiography (Duerinckx et al, 1998), ships (Stoloff et al, 1998) ,neonatal intensive care (Rendina et al, 1998), and trauma surgery (Stieglitz et al, 1998).
Telemedicine is still in its infancy but its development is very rapid. The literature survey shows what was happening some years ago, not what is happening today. Even though telemedicine had been tried in pilot projects more than 40 years ago, it was not until the mid-1990s that a real breakthrough in diffusion occurred. But there are still several barriers to the wide acceptance of telemedicine: ignorance and resistance from health-care professionals, administrators and health-care policy makers.
In order to utilize the potentials of telemedicine, its integration with traditional health care is crucial. Up to now, telemedicine in general has not had much effect on the medical practice, structure and organization of health-care. There is a broad consensus among health economists that introduction of new technology often leads to increased cost. Few technologies are cost-reducing. The reason is that new technology may lead to expanded indications for use.
It is very difficult to evaluate telemedicine. Constantly changing technology, multiple applications and joint costs, inappropriateness of the conventional techniques of economic evaluation and possibly expanding indications are examples of factors that have to be taken into account. The evaluations which have been done have mostly been limited to feasibility studies. Very few, if any, have evaluated the outcomes of care. The studies have usually been limited with respect to the number of patients and the length of the study period. Only in about 10 % of the evaluations has there been some sort of economic evaluation, even if very modest definition of this is used.
It makes little sense to talk about cost-effectiveness of telemedicine in general. One must be more specific about which use and in which setting. It is also important to distinguish between cost-effectiveness for whom: society, third-party payers, health provider or patients? If telemedicine is going to expand beyond its present use, the question of reimbursement must be solved. In Norway all telemedicine services since October 1996 have been reimbursed according to a fixed price list (Uldal et al, 1997). But the importance of reimbursement has been questioned (Lapolla and Millis, 1997).
Telemedicine makes it possible to provide more medical care in the home. That would in many instances merely shift, rather than save, costs (Strode et al, 1999).
There are country-specific variations in the health systems that make it difficult to generalize the results from one country to another. Many analysts have written that perhaps the most vital factor for the increased use of telemedicine is solid demonstration of its cost-effectiveness, which is still unproven.
(Denmark, Finland, Iceland, Norway and Sweden. (N=268). Response rate: 85%. )
Table 1 Agreement in statements concerning economic aspects as arguments for introduction of telemedicine, per cent. (N=268).
| Agree | Disagree | Neither/nor | Missing | |
| Health care system saves money on TM | 57 | 10 | 28 | 5 |
| TM means more health for the money | 38 | 11 | 47 | 4 |
| TM means cheaper education and training | 53 | 11 | 32 | 4 |
| Investment costs are too high | 39 | 26 | 31 | 4 |
Table 2. Agreement in statements concerning geographical aspects as arguments for introduction of telemedicine, per cent. (N=268)
| Agree | Disagree | Neither/nor | Missing | |
| TM makes the supply of services less vulnerable of geographic distances | 87 | 1 | 6 | 5 |
| TM equalizes access to specialist services | 58 | 16 | 21 | 4 |
| TM increases readiness of supply in remote areas | 75 | 5 | 16 | 4 |
| TM strengthen small units in remote areas | 85 | 1 | 10 | 4 |
| TM is best for remote areas | 29 | 46 | 19 | 5 |
Table 3. Agreement in statements concerning education and communication as arguments for introduction of telemedicine, per cent. (N=268).
| Agree | Disagree | Neither/nor | Missing | |
| Better education of primary care physicians | 59 | 10 | 27 | 4 |
| Specialists get better contact with local physicians | 71 | 4 | 21 | 4 |
| Local physicians can make more precise diagnoses | 72 | 4 | 19 | 5 |
Table 4. Agreement in statements concerning health care organisation and telemedicine development as arguments for introduction of telemedicine, per cent. (N=268).
| Agree | Disagree | Neither/nor | Missing | |
| Health care organization not adjusted to TM | 49 | 24 | 23 | 4 |
| TM development necessary to meet challenges of the future | 81 | 3 | 12 | 4 |
| Biggest obstacle to dissemination is lack of adjusted financial structure | 53 | 12 | 31 | 5 |
| General TM development is still too poor | 44 | 30 | 21 | 6 |
| TM is still too premature and underdeveloped | 41 | 29 | 26 | 4 |
| TM demands too much education | 11 | 51 | 34 | 4 |
| TM is too complicated | 5 | 65 | 27 | 4 |
| Uncertainty regarding patient protection | 18 | 46 | 32 | 4 |
| Uncertainty regarding patient safety | 15 | 48 | 33 | 4 |
Table 5. Agreement in statements concerning the actual role and priorities of national authorities in dissemination of telemedicine, per cent. (N=268).
| Agree | Disagree | Neither/nor | Missing | |
| National authorities delay dissemination of TM | 15 | 28 | 53 | 5 |
| National authorities obstruct dissemination of TM | 8 | 40 | 47 | 6 |
| National authorities have a healthy skepticism towards TM | 21 | 15 | 59 | 5 |
Table 6. Agreement in statement concerning the future role and priorities of national authorities in dissemination of telemedicine, per cent. (N=268).
| Agree | Disagree | Neither/nor | Missing | |
| TM ought to be a national policy promotion area | 57 | 11 | 27 | 5 |
| National authorities have to grant more money for TM R&D | 73 | 4 | 19 | 4 |
| National authorities have to adjust health care service structure to TM | 54 | 16 | 25 | 5 |
| National authorities have to adjust the financial structure to TM | 53 | 13 | 27 | 6 |