The relative cost of outpatient telemedicine services

Objective. This study compares the costs of offering outpatient care to pri marily orthopedic and dermatology patients via live, interactive telemedici ne to the estimated costs of direct face-to-face care for the same patients . Materials and Methods. A simple, yet detailed methodology was used to evalu ate the cost of adding telemedicine to a health care delivery system, using a "hub-and-spoke" model located in Minnesota, The costs and cost savings o f telemedicine were evaluated from the perspectives of patients, providers, insurers, employers, and society as a whole. Sensitivity analysis was used to investigate the impact of various factors on the model. Results. The variable cost of a telemedicine referral was $144, versus an e stimated face-to-face referral cost of $183. Reductions in patient travel c osts and in lost employee productivity were the principal benefits of the s ystem. The break-even point, where total costs equal total cost savings, eq ualled 1,449 consultations annually. Sensitivity analyses indicated that th e breakeven point varies from a low of 152 telemedicine consultations for a "best case" scenario to no possible breakeven point for a "worst case" sce nario. Conclusions. At the system's current level of 300 consultations per year, t he telemedicine system is estimated to add $45,000 to society's costs of pr oviding medical care for these patients. The additional cost is primarily d ue to personnel expenses and an increase in the volume of specialty care. P atients see specialists more often due to improved access to care and lower transportation costs. Providers bear the cost while patients and employers enjoy substantial savings.