How Telehealth Improves Revenue, Cost, and Quality

September 8, 2020

Article Summary

With COVID-19 sending health systems reeling, leaders understand the only way organizations can survive the pandemic is by driving improvement in three key areas: revenue, cost, and quality. Many traditional healthcare delivery methods, such as in-person visits, are on hold, leaving health system leaders considering how telehealth solutions allow organizations to excel in the new industry normal.

Although many health systems see telehealth as a temporary healthcare delivery solution because of COVID-19, it is here to stay. And, if health systems invest in telehealth, they will be more likely to succeed in revenue, cost, and quality, even in a pandemic.

A female medical professional utilizing telehealth

As health systems have adapted to their COVID-19-driven new normal, the most successful organizations recognize they have to excel in three specific areas to not only survive but thrive in a rapidly evolving industry: revenue, cost, and quality. While health systems are finding new ways to adapt to the pandemic, telehealth solutions offer a practical alternative that allows for success in all three of these areas.

The onset of COVID-19 forced health systems, payers, and patients to buy into telehealth solutions as the primary method of healthcare delivery. While the health effects from COVID-19 are still unknown, replacing face-to-face visits with telehealth services seems to have little negative impact on patients’ health in the short term. In fact, the number of higher-profit telehealth visits can positively impact a health system’s bottom line.

With the new insight that virtual care can be the same quality as in-person care, healthcare leaders and providers are realizing that telehealth is not just an effective replacement solution during COVID-19—it’s here to stay.

Telehealth Is Healthcare’s New Future

The new reality of widespread telehealth and fewer patients seeing providers in a clinic setting has had a ripple effect across the healthcare industry, from health systems to payers and providers. The growth of virtual healthcare delivery has encouraged payers to shift models to reimburse for telehealth and providers to adapt to delivering care via virtual means, such as phone or videoconferencing, instead of face-to-face encounters.

Health systems and providers embraced telehealth out of necessity (e.g., to maintain revenue due to the immediate stop in nonemergent procedures). If COVID-19 hadn’t happened, providers would likely still be seeing patients in the office, letting telehealth fall by the wayside. Many health professionals saw, and continue to see, telehealth solutions as a temporary stopgap until the economy was back to business as usual. However, telehealth is proving effective and advantageous for all sides of healthcare—patients have better access, providers can see more patients while reducing waste and overhead, and the quality of care rivals in-person care.

Telehealth Drives Improvement in Three Key Areas

Healthcare providers are concerned that offering telehealth solutions will cannibalize the traditional in-person fee-for-service (FFS) business model. Still, the reality is that health systems can’t survive with the older FFS model.

Embracing telehealth as a reliable delivery method allows health systems to endure the new healthcare landscape, enabling them to reach patients in the pandemic era. While geography and access issues can limit in-person visits, telehealth can reach patients no matter where they live. Telehealth is one-way health systems can overcome COVID-19 era challenges as well as meet ongoing goals in areas of revenue, cost, and quality.

#1: Revenue

Health systems exist to promote health and well-being and deliver care when necessary. However, revenue generation is critical for health systems to survive, operate, and effectively provide care. Leveraging telehealth allows health systems to turn profits through increased patient access and capacity, especially when traditional in-person visits are on hold due to the pandemic.

Telehealth also generates higher revenue because of its convenience for patients, no matter their geographic location. It also eliminates many typical patient challenges associated with a regular office visit, such as finding transportation, taking time off work, and finding childcare. Most telehealth programs allow patients to connect from a smartphone or tablet, so location isn’t a problem. As long as patients have internet access, they can receive care anywhere—home, work, or even out of town or on vacation. Removing barriers to access means patients are more likely to contact a provider when in need.

Eliminating time-consuming processes associated with care delivery in a traditional clinic setting is another way health systems can increase revenue. For example, when a patient arrives for an appointment, she usually fills out paperwork, gets vitals taken, then waits for the doctor in the clinic room. With telehealth, the paperwork and vitals can all be done through online forms before the patient connects with the provider. That means the providers can spend more time delivering care to patients. When providers have a higher capacity to care for patients, more patients receive care and stay healthy, and the health system benefits from increased profits from additional patient visits.

#2: Cost

Another contributor to the increased revenue associated with telehealth is the lower overall operating costs compared to delivering care in person. Therefore, the increase in telehealth visits leads to a higher bottom-line margin per patient visit.

There are multiple reasons that telehealth is cost-effective for health systems. Because telehealth allows technology to do most of the work by automating routine check-in forms and information, it decreases the need for administrative staff. Reduced staffing requirements is not necessarily a way to generate new income, but it is one way health systems can eliminate unnecessary costs.

Seeing fewer patients in person and having a smaller staff allows providers to occupy smaller spaces, cutting costs by avoiding expensive building leases, reducing the number of physical exam rooms as well as costly equipment.

#3: Quality

With the forced adoption of telehealth due to the pandemic, health systems, providers, and patients have discovered that although the delivery method changed, health outcomes didn’t. Providers and patients both reported that they didn’t notice a difference in the quality of the virtual visit compared to an in-person visit. As providers were able to see patients more often, their knowledge of the patient’s situation increased, allowing them to deliver more personalized care to each individual.

Because telehealth solutions allow patients to access care with little effort, more patients are now receiving care sooner. The increase in timely care enables care teams to deliver the right care the first time, leading to lower readmissions. High-quality care via telehealth can also increase care management participation, allowing providers to implement interventions earlier and improve chronic disease management.

Telehealth, combined with better use of ancillary staff, allows care teams to close clinical care gaps more efficiently. For example, better use of non-physician providers helps health systems increase care gap closure at a lower cost, improving clinical and financial operating efficiency through cost reduction measures.

Telehealth Leads to Success in Revenue, Cost, and Quality

While telehealth is not entirely new to healthcare, providers and health systems have historically overlooked it. With the coronavirus’s unprecedented changes and an overnight stop in nonessential care (a significant source of revenue for many health systems), organizations have no choice but to embrace telehealth. Because this innovative care delivery method results in revenue generation, improved cost management, and better outcomes, telehealth has allowed health systems to survive in a tumultuous time and strengthen performance overall.

With the future of COVID-19 still uncertain, unanswered questions about a vaccine, and a hazy near- and long-term future, health systems must have the foundation to succeed in any environment. If they can flourish in three key areas—revenue, cost, and quality—they can deliver the right care to the right patients and help communities achieve optimum health.

Additional Reading

Would you like to learn more about this topic? Here are some articles we suggest:

  1. Healthcare Trends During COVID-19: Top Five Areas to Watch
  2. Hospital Capacity Management: How to Prepare for COVID-19 Patient Surges
  3. Steps for Effective Patient and Staff Contact Tracing to Defend Against COVID-19 Spread
  4. How to Scale Telehealth Solutions to Increase Patient Access During COVID-19
  5. Cross-State Nurse Licensing: One Way to Improve Care During COVID-19

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