Telehealth: A More Affordable Option for Care

Heart disease is the No. 1 chronic illness in the U.S. in terms of spending. In a report from the Organization for Economic Cooperation and Development (OECD), chronic conditions account for 75% of spending in healthcare, and 9.5% of it is from heart disease among other ailments like mental health, diabetes, kidney disease and pulmonary disease.

The OECD also projected a total of $2.2 trillion medical expenditures from 2013–2023 in America. With about 55% of the country’s total population suffering from heart disease, 55.7% of these are inpatient and 10.8% are at home.

It’s no wonder why patients with heart disease spend the most money. First, patients need to undergo several surgeries, depending on the heart’s state. An average open heart surgery will cost a patient an average of $15,000–$20,000 depending on the hospital, while a heart transplant normally costs from $787,800 up to $900,000. Second, these procedures are very complicated, and the preparation needed before the operation is lengthy. Because of this, patients are required to stay in the hospital longer. And with several additional apparatuses needed to support the patient, as well as medicines, there is no doubt why patients spend so much.

The 2011 OECD report found that compared with other developed countries, the U.S. has the highest percentage of unmet medical care due to incrementally high cost over average income (see photo). More than 35% of the total population has lesser income over healthcare expenses.

All these factors lead to one problem, and that is expense. Due to high costs, patients may not consult a doctor, fill a prescription or get a required test or treatment (see photo).

What healthcare providers suggest will be capitation. By capitation providers can tailor services based on the patient’s ability to pay. One example is through capitation of days in the hospital. If the patient stays in the hospital with an average of 743 days, 595 days of it will by capitated, which in turn makes the patient spend 20% less, or a total of 148 days saved from cost. Another one will be an emergency room visit. If the patients frequent ERs an average of 423 times, and 254 of it will be capitated, patients will pay 40% off the usual amount.

The Oliver Wyman Group forecasts that for this year it will be a 50-50 split between the costs shouldered by patients and full or partial capitation. By 2020, it foresees 80-20 split, with 80% coming from capitation services.

Another option patients can look at is telehealth. Telehealth is a cheaper alternative for patients with heart disease or any chronic ailment. This is a convenient type of healthcare, since it is conducted at home. It also reduces costs spent in hospital versus at home by almost 50%. If patients spend an average of $6,400 for each stay, with telehealth it will be reduced to only $3,300.

In a report from Substitute Hospital at Home for Older Persons, they found that patients are more satisfied with telehealth because it improves their cognitive functions due to use of technology. It also improves lifespan and lessens risk of readmission.

Telehealth can be the future of healthcare. With nonstop increase of healthcare fees, a cheaper and more convenient alternative with proven results will surely pave way to more Americans having access to medical care and recovery.

Richard A. Kimball, Jr. is a financial executive with deep proficiency in the healthcare industry and experience in capacities such as investment banking, venture capital and public policy. He is currently a Fellow in Stanford’s Distinguished Careers Institute and building a healthcare technology start up HEXL.com. Richard graduated from Yale University with a BA in Economics.