SIMULATION METHODOLOGY FOR ESTIMATING FINANCIAL EFFECTS OF TELEMEDICINE IN WEST-VIRGINIA

Understanding the full financial effects of telemedicine systems on pa yers, providers, and patients has been hampered by the lack of data fr om full-fidelity systems operating at a steady state. The vast majorit y of telemedicine systems in the United States have yet to achieve the ir full potential in serving their target populations and are operatin g well below capacity. The purposes of this research are two-fold: (1) to develop a methodology that compensates for the limited availabilit y of empirical data on the financial effects of telemedicine; and (2) to test this methodology in a comprehensive telemedicine system in Wes t Virginia. The proposed methodology utilizes simulation modeling tech niques for evaluating the financial performance of a mature telemedici ne system. It is particularly suitable for analyzing large, complex sy stems that have not yet achieved steady-state operation. Although comp lex, the methodology can be described simply as consisting of two majo r steps. The first is the identification of all of the relevant variab les and parameters for modeling. The second consists of simulating ''r eal world'' decision situations involving all relevant variables and p arameters. The relation among the variables and parameters are describ ed in terms of mathematical equations. The ability of the researcher t o estimate the financial effects of a given telemedicine system is a f unction of the extent to which the resulting model approximates condit ions of the real world; i.e., the fit between model and reality.