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Telemedicine empowers patients, but challenges physicians


The rapid expansion and evolution of telemedicine in the U.S. brings with it increased access at lower costs for patients and growing competition for physicians from providers with regional, national and international reputations.

The rapid expansion and evolution of telemedicine in the U.S. brings with it increased access at lower costs for patients and growing competition for physicians from providers with regional, national and international reputations.

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What used to be local marketplaces, in which physicians treated patients in their immediate geographic areas, has the potential to develop into a national marketplace characterized by a small number of providers dominating the healthcare landscape .

To date, 29 states and the District of Columbia have enacted legislation requiring some form of reimbursement by private insurers for telemedicine services, many times at levels equivalent to in-person services. In the past year alone, more than 200 pieces of telemedicine-related legislation have been introduced in 42 states. 

Approximately 15 million people used telemedicine services in 2015, according to the American Telemedicine Association, a 50% increase from 2013. National insurers such as Cigna and Aetna continue to expand their coverage of telemedicine services. Meanwhile, telemedicine providers continue to increase the number of patient visits and are raising millions of dollars in the capital markets to fuel further growth. 

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The expansion of telemedicine has been slowed by state regulatory requirements and federal and state laws limiting reimbursements. For example, Medicare currently reimburses for telemedicine only for a limited number of Part B services in specific geographic areas. Medicare beneficiaries are eligible for telemedicine services only if they present from an originating site in a rural “Health Professional Shortage Area” or in a county outside of a “Metropolitan Statistical Area,” both areas typically underserved by healthcare professionals. 

Next: Change coming in DC



Change coming in DC

However, change is on the way. A bipartisan working group of the Senate Finance Committee has outlined several potential telemedicine policy options with regards to chronic care management for Medicare recipients, including: 


(i) expanding access to home dialysis and using telemedicine to satisfy the monthly clinical visit requirement; 

(ii) amending Medicare Advantage plans to allow further reimbursement by Medicare; 

(iii) allowing accountable care organizations to use telemedicine, thus waiving the geographic restrictions; and 

(iv) permitting telestroke technology, which enables stroke specialists to perform stroke-specific neurological exams via telemedicine. 


In addition, a number of special interest groups, including the American Telemedicine Association, are pushing the Centers for Medicare and Medicaid Services and Congress to remove what they see as arbitrary restrictions limiting telemedicine coverage. 

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Most state Medicaid plans cover some telemedicine services, although the coverage varies greatly from state to state, and states continue to enact legislation requiring some form of reimbursement by private payers, many times at levels equivalent to those provided for in-person services. 

Next: Benefits to patients


Benefits to patients

The expansion of telemedicine services should continue to benefit consumers. 

Some office visits can be replaced with virtual visits, saving patients time and money by limiting trips to more expensive urgent care centers and emergency departments. In addition, the expansion of telemedicine services should help reduce the physician shortage that is predicted to occur in the near future, particularly in primary care. 

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A 2015 study commissioned by the Association of American Medical Colleges predicts that by 2025, the demand for physicians will exceed supply by up to 90,000 physicians, including a shortfall of up to 31,100 primary care physicians. 

Telemedicine has the potential to be detrimental to many local independent practices, both small and large. A few specialties have already been impacted by its growth.

In dermatology, for example, companies are now providing services where patients can take pictures of their skin on their mobile devices and  email the pictures to physicians for diagnoses. Psychologists are using video conferencing tools such as Skype to communicate with their patients.

More specialties are sure to be affected as the use of telemedicine expands. Healthcare providers with regional, national and international reputations have the potential to expand their brands by offering services in areas where they previously could not because of licensing restrictions and lack of reimbursement for telemedicine.

Local providers may have to compete with these providers who, because of marketing power and lower costs, could enjoy a significant advantage in attracting future patients. This may force local providers to sell their practices to regional, national and international healthcare systems or risk being forced out of business entirely.

Local providers have several options for combating the challenges posed by the expansion of telemedicine. One possibility is to join a larger practice or hospital system. This would allow a local provider to expand the geographical scope of his or her practice, but at the expense of the practitioner’s independence. Another option is for local providers to grow their practices organically. Telemedicine is still in its infancy in many specialties and first movers can still gain a significant advantage. 

A third option is for local providers to partner with existing telemedicine providers and thereby take advantage of an existing infrastructure, thus reducing costs. 

Next: Doing nothing is not an option


Doing nothing not an option

What physicians cannot afford to do is do nothing. Telemedicine is going to change the way medicine is practiced and provided, whether physicians are ready for it or not.

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The expansion and evolution of telemedicine has the potential to benefit patients by expanding access to medical services and lowering healthcare costs. However, these benefits will come at the expense of further healthcare consolidation and regional, national and international providers continuing to acquire market share. Local providers will have to adapt their practices to this new reality by growing in scale, joining already established health care consolidators or partnering with existing telemedicine providers.  

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