Chief Financial Officer’s Perspective of Telemedicine

SUMMARY:

Telemedicine implementation and operation involves significant financial considerations.
Most CFO’s view telemedicine as a loss leader or at best a neutral impact program.
CFO’s do identify several direct and indirect financial benefits of telemedicine programs.

Health system decisions to invest in telemedicine programs is a complex one.
Research on telemedicine programs has historically focused on clinician and/or patient input.
As part of the decision making group, the CFO’s perspective is necessary.

Telemedicine implementation and operations involve significant financial considerations.
Expenses of such a program are primarily due to:
- Technology and infrastructure
- Staffing
- Workflow integration
- Education/training
- Outreach
Most CFO’s believe telemedicine is a loss leader or at best a neutral impact on health system finances.
Although reimbursement of telemedicine is increasing, it remains variable and inconsistent.

Substantial technology investment
- Subsequent long term financial benefits are difficult to quantify on a spreadsheet.
- Use of telemedicine services and return on investment downstream is hard to determine.
Low volumes and low reimbursement prevent telemedicine from being profitable.
- Must factor in:
  - Non-technology costs
  - Unknown future reimbursement rates
There are few examples of telemedicine services with direct financial advantages
Telemedicine is not a predominantly featured item during strategic planning.
Belief that in-person care is superior to virtual-care.

The primary goal is to improve quality of care, not financial.
Improved patient retention and prevent transfers.
Financial benefit tied to increases in patient volumes
- Many CFO’s are only convinced once the program is actually completed
The program may drive additional ancillary services
- Laboratory services
- Referrals to other services and providers
Keeping up with local competitors rather than improve financial position
Telemedicine is less expensive than adding brick & mortar beds or hiring full time providers.
- Decrease direct labor costs
- Decrease cost of recruiting

Switch from Defense to Offense.
- Change from defending operating margins and volumes to looking for areas of growth via revenue diversification.
Get Up and Running
- Maximizing the full value from the telemedicine program is a long term effort
- It will not happen in the first 1 or 2 quarters, may take 1 – 2 years.
- Get up and running at least in a rudimentary way.
Meet Patients Where They Are.
- CFO’s and healthcare leaders need to get more comfortable with ambulatory and virtual models of care.
- Being more responsive to patients via e-consults and e-clinics.
Expand Capacity
- Keep adding key components, in a way to take the burden off employees
- Ensure the technology meets all the clinical needs
Maximize Clinical Use
- Become a high-end user of whatever digital health area or technology the health system focuses on.
Maximize Data and Analytics
- Become more analytical.
- Benchmark over time the major clinical and financial outcomes
  - By Practice area
  - By Provider

CFO’s typically perceive telemedicine as not being able to improve their health systems financial profile.
CFO’s may be motivated to implement telemedicine programs to improve quality of care.
Telemedicine financial advantages do exist by increasing local revenue from ancillary services and fewer transfers.
Financial performance is positively impacted by increased volumes (i.e. bed turnover).