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There’s a Problem With the Telehealth Revolution
September 15, 2023

There’s a Problem With the Telehealth Revolution

Reading Time: 4 minutes

There’s a Revolution Happening in Health Care. It Could Wind Up Backfiring., The technology can improve health care access for rural patients in many ways. But our research shows it might have long-term consequences., Research: The telehealth revolution ta

There are 60 million Americans who reside in rural locations, and they tend to be older and in poorer health than their urban counterparts. They also face greater difficulty accessing health care. Telehealth has been viewed as a game-changer for this population. The convenience of seeing a doctor via video, proponents say, has the potential to enable rural residents to get more and better care, thereby reducing health disparities. A specialist whom it might take hours to drive to can now be present—to an extent—in a patient’s living room. This can be particularly useful for patients who are managing chronic conditions.

Many policymakers and medical organizations push for telehealth expansions on the idea that telehealth is a clear boon for health care access. But what if this digital revolution is actually undermining the very rural patients it appears to support? Our recent research suggests that this is a real risk.

The issue is that patients may see any doctor who has a license to practice in their state. Urban providers can leverage their scale, reputation, and expertise to attract patients from rural areas. A patient in rural Idaho might choose to ‘visit’ a doctor in Boise, rather than one at a nearer hospital. This competitive shift poses a serious threat to the financial viability and sustainability of rural hospitals and clinics, which are already facing multiple challenges. Across the United States, more than 200 rural hospitals have closed since 2005, and 11 have closed this year alone. According to the Center for Healthcare Quality and Payment Reform, nearly 30 percent of all rural U.S. hospitals are now at risk of closing due to financial pressures.

To understand the impacts of telehealth expansion on the financial performance of rural health care providers, we conducted a study around the expansion of the Interstate Medical Licensure Compact, a regulatory framework that makes it easier for health care providers to get licensed in multiple states. As of August 2023, 35 states and one territory—Guam—have joined the Compact.

When a host state joins the compact, it opens up patients’ options for health care providers considerably. That patient in rural Idaho might have the option to see doctors in New Haven, Connecticut, or Cleveland, Ohio. We wanted to understand how this expansion in telehealth affected business for both rural and urban hospitals. We did this by analyzing data spanning 2010 to 2018 from the Centers for Medicare and Medicaid Services on health care provider revenues and patient flows, as well as private insurance claims data associated with more than 10 percent of the U.S. insured population.

We found clear evidence that when a state joins the Compact, patients start using telehealth more. While a rural patient may choose to see a rural doctor over video, this isn’t, on balance, what tends to happen. Our data indicates that more than 80 percent of rural patients’ telehealth claims involve urban providers. Rural patients substitute local, in-person visits with remote, virtual consultations supplied by urban providers. Then, those virtual consultations frequently lead to in-person follow-up visits at urban facilities. (In terms of the Compact, this might mean that a doctor in Nevada obtains an additional license to practice in Utah, and then draws patients in that state to their office in Las Vegas for in-person follow-ups.)

As a result, urban providers see a significant increase in revenue at the expense of rural providers. Specifically, we estimate that urban hospitals and physicians gain an average of 2.6 percent and 1.9 percent in revenue and payments, respectively, after their state joins the Compact. Rural hospitals and providers lose an average of 4.6 percent and 5.6 percent in revenue and payments, respectively.

Those percentages may seem small, but remember, many rural hospitals are already struggling. The added strain posed by telehealth could have dire consequences for many forms of rural health care access, including those for which telehealth is no substitute, like emergency medical care. A December 2020 report by the U.S. Government Accountability Office found that rural hospital closures lead to marked decreases in rural patients’ access to care, driving large increases in patient travel times and travel costs. Moreover, rural hospitals play a vital role in supporting the local economy and social fabric of their communities. According to a report by the American Hospital Association, rural hospitals contributed $220 billion in economic activity in 2020 and supported 1 in every 12 rural jobs.

Our findings thus raise important questions for policymakers. How can rural hospitals be integrated into a telehealth system without compromising their financial stability? How can urban providers ensure quality care while expanding their telehealth services? How can patients be informed about the impact of their choices regarding telehealth?

One potential solution is to allow rural and urban hospitals to provide complementary services. For example, rural hospitals could handle in-person follow-up treatments after initial telehealth consultations are conducted by urban providers. This could reduce travel burdens for patients while maintaining some revenue for rural hospitals. Another possibility might be to create more incentives for urban providers to collaborate with rural providers within telehealth networks or affiliations, with a sustainable revenue-sharing model. This could enhance the quality and coordination of care for rural patients while sharing the benefits of telehealth among both types of providers.

If you are a rural patient working with an urban provider, there are some steps that you might consider taking (with the caveat that your health care provider’s recommendations for the best management of your health should come first). Speak openly to your specialist about your preference to involve your local provider in your care plan. Many specialists are open to working with general practitioners in rural areas to help ensure continuity of care.

Assuming your specialist agrees (and you’ve checked with your insurance on how costs may be affected), you might coordinate to have tests or imaging done at your local health care facility and shared digitally with your specialist. Consultations can be performed via telehealth services, while in-person physical exams and other routine aspects of care can be completed at your local clinic or hospital.

But ultimately, a constructive dialogue is needed among policymakers, health care providers, insurers, and patient advocates on how best to leverage telehealth technologies in a way that supports both rural and urban health care in a sustainable manner.


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