Do telemedicine programmes have to be profitable?

New York 15 April 1998 The concept of telemedicine is fairly young. Yet, in the United States, health care providers start to worry about the profitability aspect of the telemedical implementation. They first wanted to prove whether is was possible to deliver remote health care through networking facilities, in which they have succeeded. Now, they are busy trying to collect hard figures to show that telemedicine optimises the quality of care, while reducing costs at the same time. Unfortunately, this is no evidence of intrinsic profitability, because the programme itself might turn a loss. Some experts plead for the introduction of a special standard by which telemedical programmes are judged profitable as long as they serve the specific objectives of the entire health care organization. Others stick to a strict business approach, claiming the programme should make money in its own right.

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The concept of telemedicine is fairly young. Yet, in the United States, health care providers start to worry about the profitability aspect of the telemedical implementation. They first wanted to prove whether is was possible to deliver remote health care through networking facilities, in which they have succeeded. Now, they are busy trying to collect hard figures to show that telemedicine optimises the quality of care, while reducing costs at the same time. Unfortunately, this is no evidence of intrinsic profitability, because the programme itself might turn a loss. Some experts plead for the introduction of a special standard by which telemedical programmes are judged profitable as long as they serve the specific objectives of the entire health care organization. Others stick to a strict business approach, claiming the programme should make money in its own right.

In recent years, federal and state governments in the United States are not so eager anymore to offer grants for telemedicine initiatives. The need for reimbursement increases, whereas providers become more reluctant to fully depend on official funding. This has led health care organizations to develop telemedicine programmes that perfectly fit in the global structure of their institutions. In this way, telemedicine is considered to function as an added value to the other health care programmes. For instance, it can generate more patient referrals to the hospital and thus increase business on the condition that the hospital staff is handling the appropriate profit margins. In this strategic approach, telemedicine is indirectly selfsustaining.

In addition, a major hospital is able to extend its influence throughout the region via interconnection with smaller facilities. The latter equally benefit from this mutual telemedical collaboration since they can offer a greater variety of medical services. However, this alternative vision of making profit doesn't convince certain health care professionals. They only believe in telemedical survival if the programmes yield a direct profit. They are not sure that patient referral will increase, simply by providing telemedicine to areas that previously were underserved. The programme equally has to monitor the patient flow within the institution to earn money. Otherwise, you will have to cover your own costs sooner or later, according to Gordon Rudd, telemedicine manager at Saint Francis Hospital in Tulsa, Oklahoma.

The University of Kansas Medical Centre's telemedicine programme was launched in late 1991 and revised in 1995. Being the only major health care institution in the state, the organization links 27 rural hospitals, four elementary schools, and several mental health facilities and nursing homes to provide remote care with interactive video technology by means of large room units or desktop personal computers. The medical centre is dealing with a wide range of health problems but psychiatry takes the first place in teleconsultation. Luckily, telemedical services are reimbursed by sick-funding organizations. Pamela Whitten, who is responsible for telemedicine, states that the Kansas Medical Centre has a responsibility towards the region with regard to medical and patient education courses, which is more important than plain gathering of revenues. It would be out of the question to maintain the same quality of care and education without the telemedicine programme.

The Saint Francis telemedicine programme on the other hand is being run like a small business centre, integrated in the major institution, which serves as the lead facility of a complete health care system, including a psychiatric clinic and a set of medical group practices. It started in 1995 with the delivery of emergency care, ranging from cardiology and radiology to family practice, equally by means of teleconsultation with interactive video technology. This telemedical care is being reimbursed under normal health care billing procedures. The business centre is selfsupporting, according to Gordon Rudd, because it unites the different factors from all the hospital's business lines, in order to generate and assess a specific programme. From his point of view, making profit is the only way to survive for telemedicine. You can read the full story on telemedicine as a contested source of profit, written by Bill Siwicki, on the Health Data Management Web site.


Leslie Versweyveld

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