Evaluating the Cost of Implementing Telehealth in a Hospital

Telehealth can bring healthcare into the 21st century Kyle Zebley, Director of Public Policy at the American Telehealth Association

The COVID-19 pandemic has caused financial damage to hospitals across the US. According to a Kaufman Hall report, hospitals’ median Operating EBITDA Margins fell more than 100% in March 2020.

Financial disruption

These turbulent times are teaching us how to conserve resources while adopting new solutions to retain patients. Telehealth may enable hospitals to thrive amid the current crisis. As Fitch Ratings has found, telehealth use partially offsets service revenue lost due to social distancing. If you want your organization to stay profitable, you should thoroughly assess the costs of implementing telehealth and prepare a financial plan that will help you successfully adopt telehealth services.

What is the cost of implementing telehealth?

When you clearly understand the key cost items, you can easily plan your budget. Let’s see what you should pay attention to when analyzing the approximate expenses for your telehealth upgrade.

Cost items

Rolling out telehealth services will involve creating or expanding your hospital’s IT system. The budget for this will largely depend on the equipment to be installed. For example, computers at your hospital must have adequate cameras, speakers, and microphones to run virtual visits. You can also use portable devices for flexibility in your physicians’ workflows. Besides client-side upgrades, you may also need to buy additional servers for collecting data. 

The second-largest expenditure might go for providing reliable and seamless software and a strong network connection. Ensuring user-friendly software is a must, as it will boost both patients’ and doctors’ satisfaction. To provide the best quality of services, make sure your internet provider offers at least a 100 Mbps connection to support EHR, HD video consultations, etc. The Federal Communications Commission recommends using dedicated internet access (DIA) solutions as they offer higher network bandwidth.

The number of employees and patients who will likely use your telehealth solution is also a variable that significantly influences the budget. Will your social work department and elderly services deliver consultations via video conferencing software instead of having in-person appointments?

Don’t forget to consider additional costs for items such as staff training, tech support (including software and hardware installation), marketing promotions to encourage people to use your new technology, and other ongoing spending for things like updates and maintenance.

Cost items

Existing solutions

To effectively implement a telehealth program, a hospital must assess its resources to evaluate equipment readiness. Start with inventorying the equipment in your hospital. You may notice that some tools can be reused for telehealth needs without significant investments. Maybe your devices will easily connect to custom software and you can just reorganize your current system as Central Maine Healthcare did: 

So we approached it first from the perspective of deploying dozens of iPads that we had in stock and had leveraged for other projects that we have planned. So we repurposed those as a way to allow for some flexibility within a practice with regard to telehealth visits. Steven Martel, M.D., CMIO at Central Maine Healthcare

Reimbursement conditions

Even though telehealth can increase profitability, one of the significant barriers to adopting telehealth services is inconsistent reimbursement policies. When assessing the financial implications of telehealth implementation, it’s good to know what services will be reimbursed. Contrary to the common misconception that virtual services are not reimbursed by insurance providers, Medicare and Medicaid have provided a list of telehealth services that are payable under the Medicare Physician Fee Schedule. In addition, a majority of US states have passed parity laws that require medical insurance providers to reimburse healthcare providers for virtual services at the same rates paid for in-person care. To check regulations and restrictions in your state, use this tool by the Center for Connected Health Policy.

Medicaid reimbursements

Implementation options

When we bring together all the variables that affect the budget, we can start choosing appropriate solutions.

Most telehealth vendors offer their service according to the software as a service (SaaS) model or as a white label solution.

SaaS services are subscription-based and typically vary from $19 to $500 per month per user. A SaaS solution is cheap and can be quickly implemented. Still, it always involves a third party, which can affect your goals and results. You’ll have to share private data with a third-party organization, thereby risking the security of your data, especially if the SaaS software is not HIPAA compliant. Besides, SaaS platforms don’t always inspire trust among patients because they need to go to a third-party website to use and pay for your service.

If you’re a big hospital network, you’ll probably be more comfortable with a white label solution. A white label product can integrate with your current system. The good thing is that you can ask your white label software provider to develop a specific feature to boost your performance. For example, you can integrate payment functionality so patients don’t have to go to another website to pay. The price for white label software will depend on your technical requirements and will be paid once as a fixed fee. When you buy a white label solution, its source code belongs to you. This means you won’t have upgrades forced on you or need to work around useless features SaaS providers may offer. Depending on the white label provider, the price of the software may include a support period and staff education. 

Key takeaways 

Once you outline all the variables influencing your situation, you’re ready to continue creating your roadmap for quick and flawless telehealth adoption. Just keep in mind that to understand how much it costs to implement telehealth, a hospital needs to:

  1. evaluate the opportunities of its current system
  2. decide on the type of equipment and software needed
  3. consider reimbursement conditions 
  4. choose a suitable telehealth software provider 

If you’re searching for an optimal solution in terms of price and functionality, consider ExpertBox. This white label solution will help you implement telehealth services and achieve a return on your investment.

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