Editorial The Business Side of Telemedicine
Charles R. Doarn, MBA, FATA, and Ronald C. Merrell, MD, FACS, FATA Editors-in-Chief
O
ver the past year, we have brought to you select editorials, focused on specific topics that highlight the plethora of articles that have appeared in the Journal since its beginning over 20 years ago. It has been our intent to enable you to use these editorials and the nearly 15,000 pages of material in 20 volumes as a tool in moving your interest in telemedicine and medical practice forward. Over the past two decades, much has changed. As more innovation has found its way into clinical practice and into consumers’ hands, health commerce has changed, and the business practices in healthcare have evolved. This has been concomitant with other industries, although the healthcare industry always lags behind the earlier adopters, sometimes significantly. Consider that in 1993, consumers were just getting introduced to mobile telephony, and there were no free standing point-of-sale outlets like Verizon or Apple stores. Today, there are a number of vendors who sell a similar, if not the same, product. After a recent visit to one of these outlets, one would walk away with the knowledge and price comparison to return home and make the purchase in the comfort of home using the Internet. Even large shopping centers are now experiencing a new dynamic in consumerism, and we are seeing some contraction in physical retail space. If you can buy goods and services in a virtual world, why not some level of healthcare? Conceptually, this has moved forward in the last decade as inexpensive sensors, cheaper bandwidth, and mobile devices have established new possibilities for monitoring and managing one’s health where the consumer is, not in a hospital or clinic setting. With each of these innovative steps, our thought processes on how to effectively manage and therefore run a commercial venture have had to evolve. The business processes and management philosophy of the past may be insufficient in a work environment that is fundamentally different than it was only 10 years ago. If a hospital introduces an electronic health record, the operational flow and tempo in that hospital setting change, often disruptively. If the patient can now remain in his or her home, the traditional model of healthcare has changed. Telemedicine in some ways has been a disruptive technology, or more aptly a paradigm shift in patient care. Telemedicine has its challenges, there is no doubt; however, its applications and integration in healthcare have been shown to be very effective and make great business sense, especially in an environment characterized by a shortage of skilled practitioners at all levels and using costs of lost productivity and transportation as well as efficiency.
DOI: 10.1089/tmj.2014.9975
As innovation in all manner of technology has rapidly changed over the past 20 years, we have published in the Journal a wide variety of manuscripts that are still highly relevant today even though technology may have become obsolete—there were no cell phone ‘‘applications’’ in 1995. After all, how many new versions of the iPhone have been made available since its debut only in 2007? That is on average a new phone every 14 months or so. There are many elements to running a business. There are personnel issues, training issues, finance issues, capital investment issues, legal and policy issues, organizational issues, and the list goes on. In integrating telemedicine into a healthcare setting or system, there has to be an unmet need. This could be a shortage of skilled workers, a need to improve the quality of care, a need to keep patients out of the hospital to minimize potentially unnecessary readmittance, or a pure economic measure. It may even be driven by market share and perceived added value. Over the past 20 years, telemedicine has grown from niche populations (e.g., astronauts, military personnel, and grantees) to a much larger segment of the population, where sustainability is a concern but not a significant barrier. In the Journal’s inaugural year, Whitten and Allen1 reviewed the organizational perspectives of a telemedicine program in Kansas. Georgia’s state telemedicine program was discussed by Adams and Grigsby.2 In both of these articles, the authors discussed the needs and organizational issues they faced. Many of these issues remain today. In 1995, the entire third issue of Volume 1 of the Journal was focused on the outcome of the Second Invitational Conference on Telemedicine and the National Information Infrastructure, held in Augusta, GA in 1995. This conference addressed many of the issues we still face today, all of which have an impact on the business process.3 This conference was a follow-on to the Arlie House Conference, which had been held in August 1994. Again, many of the issues we face today have been discussed ad nauseum for decades. Telemedicine has been applied successfully in a variety of venues, including human space flight, the battlefield, prisons, homes, disasters, remote monitoring in unique settings, and even the operating room. Several articles published over the past 20 years have been about the application of telemedicine in each of these areas. Telemedicine has long been considered valuable in the prison setting for economic and security reasons. Zincome et al.4 conducted a financial analysis of telemedicine in prison systems. Brunicardi5 conducted a similar study of the prison system in Ohio. Evaluation of telemedicine modalities, both synchronous and asynchronous, has been done by Bangert and Doktor,6 who studied organizational issues with regard to asynchronous telemedicine. Dhurjaty7 reviewed economic issues for telerehabilitation. Economic
ª M A R Y A NN L I E B E R T , I N C . VOL. 20
NO. 11 NOVEMBER 2014
TELEMEDICINE and e-HEALTH 981
EDITORIAL
impact studies or analyses have been performed, resulting in several publications on telepharmacy, teledermatology, depression, child psychiatry, and telecardiology.8–12 The articles by Khan et al.,8 Whited,9 Naversˇnik and Mrhar,1, Spaulding et al.,11 and Lin et al.,12 all published in the past 10 years, are still very valid today. Almost every manuscript that has been published in the Journal has some element or business aspect in it. In 2006 McCue et al.13 developed an interactive spreadsheet as part of a business case. Schumann Rumberger and Dansky14 furthered the concept by developing a business case study for home health. In 2010, LeRouge et al.15 developed and presented a strategy primer for the business of telemedicine. In 2013, Chen et al.16 conducted a review of business models for telemedicine. The procedure of developing, operating, and maintaining a telemedicine program includes a wide variety of processes and systems. It requires technology and innovative approaches, and this requires investment. At the beginning of the Journal, which occurred about the same time as the establishment of the American Telemedicine Association (ATA), there were several that had made the investment in developing, integrating, and selling products as well as participating in the exhibition component of a variety of meetings, conferences, and seminars. From 1995 to the present day, there have been new companies and product lines that have been developed around the telemedicine and e-health space. Some of these have been through internal corporate investment and some from venture capital. In 2008, the Journal held a roundtable discussion on venture capital and telemedicine; this discussion brought several venture capitalists together to discuss a wide variety of issues around investment strategies.17 Terry18 provided an excellent review of merger and acquisition trends in telemedicine in 2008. Integrating technology and innovation changes the ‘‘cost’’ structure of any business. Automation provided the assembly line and more production of a wide variety of products. This helped create wealth and a better standard of living. It also introduced new challenges and opportunities. The introduction and integration of telemedicine have added value to healthcare delivery. Doolittle et al.19 discussed decreasing costs of telemedicine and telehealth in their 2011 article. Although others have discussed the financial impact of telemedicine in a pediatric setting20 and the economic benefit and impact on population-based mobile screening,21 Ruggeri et al.22 went a step further and discussed global opportunities. Of course, no telemedicine program will be able to survive without reimbursement and positive cash flow. Some organizations may use telemedicine as a cost savings measure to their systems but may run a deficit in the division in which it is housed or managed. Some organizations have billed payers, including Medicare, Medicaid, and the insurance providers. This remains a significant challenge in the United States. Private payer reimbursement has been discussed recently (in 2014) by Antoniotti et al.23
and supporting telemedicine. Although many of these guidelines have been published in the Journal, the entire library of guidelines can be found at the ATA Web site (www.americantelemed.org/ resources/standards/ata-standards-guidelines#.VD1Zl2ddVHU). These guidelines serve as excellent references for the telemedicine practitioner. If you are new to telemedicine, business processes can be challenging. Keep in mind the resources that the Journal has provided and the aforementioned guidelines. Although using telemedicine can provide tremendous benefit to your health practices, keep in mind a need to understand common business elements of (1) organization, (2) marketing, (3) accounting, (4) finance, (5) federal/state policy, regulations, and law, (6) personnel, and (7) your customers and patients. As we have said and will continue to promote, telemedicine is an excellent tool for enabling better, more efficient, and timely care. Although telemedicine may have some limitations due to licensing and reimbursement, these will be overcome. The business side of telemedicine is well positioned and growing.
What’s in This Issue? This issue brings you a wide variety of excellent articles that cover telemedicine experiences from around the world. In addition, the most recent ATA Clinical Guidelines for Telepathology24 are presented in their entirety.
REFERENCES 1. Whitten PS, Allen A. Analysis of telemedicine from an organizational perspective. Telemed J 1995;1:203–213. 2. Adams LN, Grigsby RK. The Georgia State Telemedicine Program: Initiation, design, and plans. Telemed J 1995;1:227–235. 3. Second Invitational Consensus Conference on Telemedicine and the National Information Infrastructure, Augusta, GA. Telemed J 1995;1:325–375. 4. Zincome LH Jr, Doty E. Balch DC. Financial analysis of telemedicine in a prison system. Telemed J 1997;3:247–255. 5. Brunicardi BO. Financial analysis of savings from telemedicine in Ohio’s prison system. Telemed J 1998;4:49–54. 6. Bangert D, Doktor R. Implementing store-and-forward telemedicine: Organizational issues. Telemed J E Health 2000;6:355–360. 7. Dhurjaty S. The economics of telerehabilitation. Telemed J E Health 2004;10:196–199. 8. Khan S, Snyder HW, Rathke AM, Scott DM, Peterson CD. Is there a successful business case for telepharmacy? Telemed J E Health 2008;14:235–244. 9. Whited JD. Economic analysis of telemedicine and the teledermatology paradigm. Telemed J E Health 2010;16:223–228. 10. Naversˇnik K, Mrhar A. Cost-effectiveness of a novel e-health depression service. Telemed J E Health 2013;19:110–116. 11. Spaulding R, Belz N, DeLurgio S, Williams AR. Cost savings of telemedicine utilization for child psychiatry in a rural Kansas community. Telemed J E Health 2010;16:867–871.
Guidelines and Business Processes
12. Lin S-H, Liu J-H, Wei J, Yin W-H, Chen H-H, Chiu W-T. A business model analysis of telecardiology. Telemed J E Health 2010;16:1067–1073.
The ATA, through participation of thought leaders, has developed a wide variety of guidelines and processes for implementing
13. McCue MJ, Palsbo SE. Making the business case for telemedicine: An interactive spreadsheet. Telemed J E Health 2006;12:99–106.
982 TELEMEDICINE and e-HEALTH N O V E M B E R 2 0 1 4
EDITORIAL
14. Schumann Rumberger J, Dansky K. Is there a business case for telehealth in home health agencies? Telemed J E Health 2006;12:122–127. 15. LeRouge C, Tulu B, Forducey P. The business of telemedicine: Strategy primer. Telemed J E Health 2010;16:898–909. 16. Chen S, Cheng A, Mehta K. A review of telemedicine business models. Telemed J E Health 2013;19:287–297. 17. Harris H, Doarn CR, Ulrich R, VanderWerf M, Thomas T. Roundtable discussion venture capital and telemedicine. Telemed J E Health 2008;14:418–425. 18. Terry M. Merger and acquisition trends in telemedicine. Telemed J E Health 2008;14:642–646. 19. Doolittle GC, O’Neal Spaulding A, Williams AR. The decreasing cost of telemedicine and telehealth. Telemed J E Health 2011;17:671–675.
20. Dharmar M, Sadorra CK, Leigh P, Yang NH, Nesbitt TS, Marcin JP. The financial impact of a pediatric telemedicine program: A children’s hospital’s perspective. Telemed J E Health 2013;19:502–508. 21. Brown-Connolly NE, Concha JB, English J. Mobile health is worth it! Economic benefit and impact on health of a population-based mobile screening program in New Mexico. Telemed J E Health 2014;20:18–23. 22. Ruggeri K, Wollner P. Transatlantic health IT policies: Opportunities for small businesses and health systems. Telemed J E Health 2014;20:601–603. 23. Antoniotti NM, Drude KP, Rowe N. Private payer telehealth reimbursement in the United States. Telemed J E Health 2014;20:539–543. 24. Pantanowitz L, Dickinson K, Evans AJ, Hassell L, Henricks WH, Lennerz JK, Lowe A, Parwani AV, Riben M, Smith D, Tuthill JM, Weinstein R, Wilbur D, Krupinski EA, Bernard J. ATA clinical guidelines for telepathology. Telemed J E Health 2014;20:1049–1056.
ª M A R Y A N N L I E B E R T , I N C . VOL. 20
NO. 11 NOVEMBER 2014
TELEMEDICINE and e-HEALTH 983
Charles R. Doarn, MBA, FATA, and Ronald C. Merrell, MD, FACS, FATA Editors-in-Chief
O
ver the past year, we have brought to you select editorials, focused on specific topics that highlight the plethora of articles that have appeared in the Journal since its beginning over 20 years ago. It has been our intent to enable you to use these editorials and the nearly 15,000 pages of material in 20 volumes as a tool in moving your interest in telemedicine and medical practice forward. Over the past two decades, much has changed. As more innovation has found its way into clinical practice and into consumers’ hands, health commerce has changed, and the business practices in healthcare have evolved. This has been concomitant with other industries, although the healthcare industry always lags behind the earlier adopters, sometimes significantly. Consider that in 1993, consumers were just getting introduced to mobile telephony, and there were no free standing point-of-sale outlets like Verizon or Apple stores. Today, there are a number of vendors who sell a similar, if not the same, product. After a recent visit to one of these outlets, one would walk away with the knowledge and price comparison to return home and make the purchase in the comfort of home using the Internet. Even large shopping centers are now experiencing a new dynamic in consumerism, and we are seeing some contraction in physical retail space. If you can buy goods and services in a virtual world, why not some level of healthcare? Conceptually, this has moved forward in the last decade as inexpensive sensors, cheaper bandwidth, and mobile devices have established new possibilities for monitoring and managing one’s health where the consumer is, not in a hospital or clinic setting. With each of these innovative steps, our thought processes on how to effectively manage and therefore run a commercial venture have had to evolve. The business processes and management philosophy of the past may be insufficient in a work environment that is fundamentally different than it was only 10 years ago. If a hospital introduces an electronic health record, the operational flow and tempo in that hospital setting change, often disruptively. If the patient can now remain in his or her home, the traditional model of healthcare has changed. Telemedicine in some ways has been a disruptive technology, or more aptly a paradigm shift in patient care. Telemedicine has its challenges, there is no doubt; however, its applications and integration in healthcare have been shown to be very effective and make great business sense, especially in an environment characterized by a shortage of skilled practitioners at all levels and using costs of lost productivity and transportation as well as efficiency.
DOI: 10.1089/tmj.2014.9975
As innovation in all manner of technology has rapidly changed over the past 20 years, we have published in the Journal a wide variety of manuscripts that are still highly relevant today even though technology may have become obsolete—there were no cell phone ‘‘applications’’ in 1995. After all, how many new versions of the iPhone have been made available since its debut only in 2007? That is on average a new phone every 14 months or so. There are many elements to running a business. There are personnel issues, training issues, finance issues, capital investment issues, legal and policy issues, organizational issues, and the list goes on. In integrating telemedicine into a healthcare setting or system, there has to be an unmet need. This could be a shortage of skilled workers, a need to improve the quality of care, a need to keep patients out of the hospital to minimize potentially unnecessary readmittance, or a pure economic measure. It may even be driven by market share and perceived added value. Over the past 20 years, telemedicine has grown from niche populations (e.g., astronauts, military personnel, and grantees) to a much larger segment of the population, where sustainability is a concern but not a significant barrier. In the Journal’s inaugural year, Whitten and Allen1 reviewed the organizational perspectives of a telemedicine program in Kansas. Georgia’s state telemedicine program was discussed by Adams and Grigsby.2 In both of these articles, the authors discussed the needs and organizational issues they faced. Many of these issues remain today. In 1995, the entire third issue of Volume 1 of the Journal was focused on the outcome of the Second Invitational Conference on Telemedicine and the National Information Infrastructure, held in Augusta, GA in 1995. This conference addressed many of the issues we still face today, all of which have an impact on the business process.3 This conference was a follow-on to the Arlie House Conference, which had been held in August 1994. Again, many of the issues we face today have been discussed ad nauseum for decades. Telemedicine has been applied successfully in a variety of venues, including human space flight, the battlefield, prisons, homes, disasters, remote monitoring in unique settings, and even the operating room. Several articles published over the past 20 years have been about the application of telemedicine in each of these areas. Telemedicine has long been considered valuable in the prison setting for economic and security reasons. Zincome et al.4 conducted a financial analysis of telemedicine in prison systems. Brunicardi5 conducted a similar study of the prison system in Ohio. Evaluation of telemedicine modalities, both synchronous and asynchronous, has been done by Bangert and Doktor,6 who studied organizational issues with regard to asynchronous telemedicine. Dhurjaty7 reviewed economic issues for telerehabilitation. Economic
ª M A R Y A NN L I E B E R T , I N C . VOL. 20
NO. 11 NOVEMBER 2014
TELEMEDICINE and e-HEALTH 981
EDITORIAL
impact studies or analyses have been performed, resulting in several publications on telepharmacy, teledermatology, depression, child psychiatry, and telecardiology.8–12 The articles by Khan et al.,8 Whited,9 Naversˇnik and Mrhar,1, Spaulding et al.,11 and Lin et al.,12 all published in the past 10 years, are still very valid today. Almost every manuscript that has been published in the Journal has some element or business aspect in it. In 2006 McCue et al.13 developed an interactive spreadsheet as part of a business case. Schumann Rumberger and Dansky14 furthered the concept by developing a business case study for home health. In 2010, LeRouge et al.15 developed and presented a strategy primer for the business of telemedicine. In 2013, Chen et al.16 conducted a review of business models for telemedicine. The procedure of developing, operating, and maintaining a telemedicine program includes a wide variety of processes and systems. It requires technology and innovative approaches, and this requires investment. At the beginning of the Journal, which occurred about the same time as the establishment of the American Telemedicine Association (ATA), there were several that had made the investment in developing, integrating, and selling products as well as participating in the exhibition component of a variety of meetings, conferences, and seminars. From 1995 to the present day, there have been new companies and product lines that have been developed around the telemedicine and e-health space. Some of these have been through internal corporate investment and some from venture capital. In 2008, the Journal held a roundtable discussion on venture capital and telemedicine; this discussion brought several venture capitalists together to discuss a wide variety of issues around investment strategies.17 Terry18 provided an excellent review of merger and acquisition trends in telemedicine in 2008. Integrating technology and innovation changes the ‘‘cost’’ structure of any business. Automation provided the assembly line and more production of a wide variety of products. This helped create wealth and a better standard of living. It also introduced new challenges and opportunities. The introduction and integration of telemedicine have added value to healthcare delivery. Doolittle et al.19 discussed decreasing costs of telemedicine and telehealth in their 2011 article. Although others have discussed the financial impact of telemedicine in a pediatric setting20 and the economic benefit and impact on population-based mobile screening,21 Ruggeri et al.22 went a step further and discussed global opportunities. Of course, no telemedicine program will be able to survive without reimbursement and positive cash flow. Some organizations may use telemedicine as a cost savings measure to their systems but may run a deficit in the division in which it is housed or managed. Some organizations have billed payers, including Medicare, Medicaid, and the insurance providers. This remains a significant challenge in the United States. Private payer reimbursement has been discussed recently (in 2014) by Antoniotti et al.23
and supporting telemedicine. Although many of these guidelines have been published in the Journal, the entire library of guidelines can be found at the ATA Web site (www.americantelemed.org/ resources/standards/ata-standards-guidelines#.VD1Zl2ddVHU). These guidelines serve as excellent references for the telemedicine practitioner. If you are new to telemedicine, business processes can be challenging. Keep in mind the resources that the Journal has provided and the aforementioned guidelines. Although using telemedicine can provide tremendous benefit to your health practices, keep in mind a need to understand common business elements of (1) organization, (2) marketing, (3) accounting, (4) finance, (5) federal/state policy, regulations, and law, (6) personnel, and (7) your customers and patients. As we have said and will continue to promote, telemedicine is an excellent tool for enabling better, more efficient, and timely care. Although telemedicine may have some limitations due to licensing and reimbursement, these will be overcome. The business side of telemedicine is well positioned and growing.
What’s in This Issue? This issue brings you a wide variety of excellent articles that cover telemedicine experiences from around the world. In addition, the most recent ATA Clinical Guidelines for Telepathology24 are presented in their entirety.
REFERENCES 1. Whitten PS, Allen A. Analysis of telemedicine from an organizational perspective. Telemed J 1995;1:203–213. 2. Adams LN, Grigsby RK. The Georgia State Telemedicine Program: Initiation, design, and plans. Telemed J 1995;1:227–235. 3. Second Invitational Consensus Conference on Telemedicine and the National Information Infrastructure, Augusta, GA. Telemed J 1995;1:325–375. 4. Zincome LH Jr, Doty E. Balch DC. Financial analysis of telemedicine in a prison system. Telemed J 1997;3:247–255. 5. Brunicardi BO. Financial analysis of savings from telemedicine in Ohio’s prison system. Telemed J 1998;4:49–54. 6. Bangert D, Doktor R. Implementing store-and-forward telemedicine: Organizational issues. Telemed J E Health 2000;6:355–360. 7. Dhurjaty S. The economics of telerehabilitation. Telemed J E Health 2004;10:196–199. 8. Khan S, Snyder HW, Rathke AM, Scott DM, Peterson CD. Is there a successful business case for telepharmacy? Telemed J E Health 2008;14:235–244. 9. Whited JD. Economic analysis of telemedicine and the teledermatology paradigm. Telemed J E Health 2010;16:223–228. 10. Naversˇnik K, Mrhar A. Cost-effectiveness of a novel e-health depression service. Telemed J E Health 2013;19:110–116. 11. Spaulding R, Belz N, DeLurgio S, Williams AR. Cost savings of telemedicine utilization for child psychiatry in a rural Kansas community. Telemed J E Health 2010;16:867–871.
Guidelines and Business Processes
12. Lin S-H, Liu J-H, Wei J, Yin W-H, Chen H-H, Chiu W-T. A business model analysis of telecardiology. Telemed J E Health 2010;16:1067–1073.
The ATA, through participation of thought leaders, has developed a wide variety of guidelines and processes for implementing
13. McCue MJ, Palsbo SE. Making the business case for telemedicine: An interactive spreadsheet. Telemed J E Health 2006;12:99–106.
982 TELEMEDICINE and e-HEALTH N O V E M B E R 2 0 1 4
EDITORIAL
14. Schumann Rumberger J, Dansky K. Is there a business case for telehealth in home health agencies? Telemed J E Health 2006;12:122–127. 15. LeRouge C, Tulu B, Forducey P. The business of telemedicine: Strategy primer. Telemed J E Health 2010;16:898–909. 16. Chen S, Cheng A, Mehta K. A review of telemedicine business models. Telemed J E Health 2013;19:287–297. 17. Harris H, Doarn CR, Ulrich R, VanderWerf M, Thomas T. Roundtable discussion venture capital and telemedicine. Telemed J E Health 2008;14:418–425. 18. Terry M. Merger and acquisition trends in telemedicine. Telemed J E Health 2008;14:642–646. 19. Doolittle GC, O’Neal Spaulding A, Williams AR. The decreasing cost of telemedicine and telehealth. Telemed J E Health 2011;17:671–675.
20. Dharmar M, Sadorra CK, Leigh P, Yang NH, Nesbitt TS, Marcin JP. The financial impact of a pediatric telemedicine program: A children’s hospital’s perspective. Telemed J E Health 2013;19:502–508. 21. Brown-Connolly NE, Concha JB, English J. Mobile health is worth it! Economic benefit and impact on health of a population-based mobile screening program in New Mexico. Telemed J E Health 2014;20:18–23. 22. Ruggeri K, Wollner P. Transatlantic health IT policies: Opportunities for small businesses and health systems. Telemed J E Health 2014;20:601–603. 23. Antoniotti NM, Drude KP, Rowe N. Private payer telehealth reimbursement in the United States. Telemed J E Health 2014;20:539–543. 24. Pantanowitz L, Dickinson K, Evans AJ, Hassell L, Henricks WH, Lennerz JK, Lowe A, Parwani AV, Riben M, Smith D, Tuthill JM, Weinstein R, Wilbur D, Krupinski EA, Bernard J. ATA clinical guidelines for telepathology. Telemed J E Health 2014;20:1049–1056.
ª M A R Y A N N L I E B E R T , I N C . VOL. 20
NO. 11 NOVEMBER 2014
TELEMEDICINE and e-HEALTH 983
