HomeMy WebLinkAboutInnovation Demand and Investment in TelehealthFOREWORD
America’s healthcare system is regarded as among the world’s best. The application of
new technologies to medical care has enabled significant progress. However, the wider
adoption of telehealth technologies promises even greater access and hi gher quality care,
with reduced costs. Telehealth applications have been proven effective in extending
medicine’s reach to remote Alaskan villages, disaster assistance teams, and ships at sea.
As global demand for healthcare increases, adoption of telehe alth systems and
technologies can be a powerful tool to assure high quality medical care for all peoples,
regardless of their location.
The Technology Administration was asked, in its role as a portal to private industry, to
conduct the first comprehens ive analysis of telehealth since 1997. This report focuses on
the state of innovation, demand and investment in telehealth in the United States at the
end of 2003. Its findings represent information collected in over 40 interviews with
medical specialists , information technology innovators, healthcare consumers, etc. This
report should be viewed as a baseline, presenting what is current, while offering a
roadmap for achieving what is possible.
Although this report is a call to action, the Technology Adm inistration joined with other
federal, state and private stakeholders even before its release to make progress in
addressing several of the impediments described herein. The information presented here
can serve as a framework for advancing the adoption an d application of telehealth
technologies, but a strong commitment among all healthcare stakeholders is essential.
If we seize this opportunity and act, the national benefits can be great. Increased
adoption of telehealth technologies offers increased a ccess to quality health care at lower
costs, while simultaneously increasing our nation’s security. Please join with the
Technology Administration as we continue to work to improve America’s healthcare
access, quality and cost through more effective “Inno vation, Demand and Investment in
Telehealth.”
Sincerely,
Phillip J. Bond
Under Secretary for Technology
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Innovation, Demand and Investment in Telehealth
TABLE OF CONTENTS
ACKNOWLEDGEMENTS ................................ ................................ ............................. 5
EXECUTIVE SUMMARY
................................ ................................ ................................ 9
CHAPTER 1 – BACKGROU ND AND METHODOLOGY
................................ ....... 17
CHAPTER 2 – INNOVATION IN TEL EHEALTH
................................ ...................... 22
TECHNOLOGIES
................................ ................................ ................................ ...... 22
INNOVATORS
................................ ................................ ................................ ........... 26
Federal a nd State Governments
................................ ................................ ...... 27
Universities
................................ ................................ ................................ ............ 30
Private Sector
................................ ................................ ................................ ........ 32
IDENTIFYING NEEDED TECHNOLOGIES
................................ ........................ 34
Needs Assessment
................................ ................................ .............................. 34
Approaches to Needs Assessment
................................ ................................ ...... 37
AREAS FOR TELEHEALTH RESEARCH
................................ ............................ 37
Homeland Security,
Chemical/Biological/Radiological/Nuclear/Explosive (CBRN/E), and
Public Health
................................ ................................ ................................ ......... 38
Convergence of Technologies
................................ ................................ ......... 43
Interoperability and Integration/Standards
................................ ................... 44
Technology
................................ ................................ ................................ ........... 44
Policy
................................ ................................ ................................ .................... 49
Medical Simulation and Training/Health Education
................................ ... 49
Efficacy and Cost - Benefit Analysis
................................ ................................ . 50
Data on Efficacy and Cost/Benefits
................................ ................................ ... 53
DISSEMINATION OF INFORMATION AND TECHNOLOGY TRANSFER
.. 54
Technology Transfer
................................ ................................ ........................... 55
INTELLECTUAL PROPERTY
................................ ................................ ................ 56
CHAPTER 3 - DEMAND F OR TELEHEALTH TECHNO LOGIES & SERVICES
58
THE MARKET
................................ ................................ ................................ ........... 58
Estimates of Market Demand
................................ ................................ ............ 58
Markets for Telehealth
................................ ................................ ........................ 60
Homeland Security
................................ ................................ .............................. 60
Access: New Populations and Settings
................................ ............................. 63
Continuum of Care
................................ ................................ ............................. 64
Home Healthcare
................................ ................................ ................................ . 66
Demand in International Markets
................................ ................................ ..... 67
Comp etitiveness
................................ ................................ ................................ ... 68
BARRIERS TO MARKET DEMAND
................................ ................................ ..... 70
Reimbursement
................................ ................................ ................................ .... 71
Reimburse ment by Medicare
................................ ................................ ............. 74
Reimbursement by Medicaid
................................ ................................ ............. 80
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Reimbursement by Private payers
................................ ................................ .... 82
Consumer Satisfaction
................................ ................................ ........................ 83
State Licensure
................................ ................................ ................................ ..... 84
Liability
................................ ................................ ................................ .................... 88
Provider Acceptance
................................ ................................ ........................... 89
Cost Considerations
................................ ................................ ............................ 91
DEMAND AGGREGATION
................................ ................................ ..................... 93
C HAPTER 4 – INVESTMEN T IN TELEHEALTH
................................ ..................... 96
CURRENT INVESTMENT
................................ ................................ ....................... 96
National Health Technology and Information Infrastructure
........................ 99
LEVERAGING CAPITAL RESOURCES
................................ ............................. 102
Blended Funding
................................ ................................ ............................... 102
Universal Services Access C orporation (USAC)
................................ ............ 103
Public - Private Partnerships
................................ ................................ ............. 103
Homeland Security Funding
................................ ................................ ............ 104
PRIVATE INVESTMENT
................................ ................................ ....................... 105
Increase Demand by Increasing Access
................................ .......................... 105
Improve Quality and Flexibility
................................ ................................ ...... 107
Improving Productivity and Reducing Cost
................................ ................... 109
Responding to National Emergencies and Increasing Homeland Security
. 111
BUSINESS MODELS
................................ ................................ ............................... 112
Business Models - Lessons Learned
................................ ................................ 113
Sustainability
................................ ................................ ................................ ..... 114
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Principal Authors/Project Managers
David Brantley
Technology Policy Analyst, Office of Technology Competitiveness
Karen Laney - Cummings
Chief, Office of Technology Competitiveness
Dr. Richard Spivack
Economist, Advanced Technology Program, Natio nal Institute of Standards and
Technology
Acknowledgements
The Technology Administration expresses appreciation to the following individual and
organizations for their contributions to this report:
Jon Linkous,
Executive Director, American Telemedicine Association
Colonel Ronald Porapatich, M.D
., Telemedicine Advisor to the U.S. Army Surgeon
General and former President, American Telemedicine Association
Dr. Dena Puskin
, Director, Office for the Advancement of Telehealth, Department of
Health and Human Services, and Chair, Joint Working Group on Telehealth
Craig Walker
, Senior Vice President, HealthCare Vision, Inc. and Chairman for Public
Policy, American Telemedicine Association
Robert Waters, Esq
., Director, Center for Telemedicine Law
The Technolog y Administration also expresses appreciation to the following individuals
and organizations that provided assistance during the course of this research:
Major General George Alexander, M.D.
, Office of Homeland Security and U.S. Army
National Guard
CAPT Ri chard S. Bakalar, M.D.
, Special Assistant to the Navy Medical CIO for
Telehealth
Jane W. Ball, RN, DPH
, National Resource Center, Emergency Medical Services
David Blanchard - Reid
, Mountain Area Health Education Center, NC
Carolyn Bloch
, Federal Telemedicine News
George F. Bond, Jr.,
Health Director, Buncombe County, NC
Stephen J. Brown,
President and CEO, Health Hero Network, Inc.
Dr. Sam Burgiss,
Director, Telemedicine Center, University of Tennessee
Bill Clark
, Federal Emergency Management Agency
Conrad C lyburn
, Georgetown University and U.S. Army Telemedicine and Technology
Research Center
Steve Cooper
, CIO, Department of Homeland Security
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Adam W. Darkins, M.D.,
Chief Consultant, Telemedicine, Department of Veterans
Affairs
Craig Dobyski,
Center for Medic are and Medicaid Services, HHS
Dr. Michael Fitzmaurice,
Agency for Healthcare Research and Quality
COL Mark Janczewski, M.D.,
Director for Telemedicine, Department of Defense
Thelma McClosky - Armstrong
, Director, Eastern Montana Telemedicine Network
Dr. Vic tor McCrary
, Director, Convergent Information Systems Division, NIST
Greg Mears, M.D.,
Dept. of Emergency Medicine, University of North Carolina -
Chapel Hill
Dr. Richard Morris
, National Institutes of Health
Sumit Kumar Nagpal ,
President and CEO, Wellogic Inc .
Neal Neuberger,
CISSP, President, Health Tech Strategies, LLC
Mark Newburger
, President and CEO, Apollo Telemedicine, Inc.
Steven R. Normandin
, Vice President, AMD Telemedicine, Inc. and Chair, Industry
Advisory Board, American Telemedicine Associati on
Paul Olenick
, Director, Division of Integrated Delivery Systems, Center for Medicare
and Medicaid Services
Dr Mike Ricci
, University of Vermont College of Medicine
Jay Sanders, M.D.,
President and CEO, The Global Telemedicine Group
Yvonne Santa Anna,
Na tional Association for Home Care
Scott Simmons,
The Telemedicine Center, East Carolina University
Phillip R. Smith, M.D.,
Indian Health Service, Office of Public Health
Alice Watland ,
Deputy Executive Director, American Telemedicine Association
In additio n, Technology Administration would like to note and express appreciation to
the following individuals who contributed significantly to this research and report:
Roundtable Leadership and Management
Phillip J. Bond,
Under Secretary for Technology Departm ent of Commerce
Ben Wu
, Deputy Under Secretary for Technology, Department of Commerce
Dr. Arden Bement
, Director, National Institute for Standards and Technology
Bruce P. Mehlman
, Assistant Secretary for Technology Policy, Department of
Commerce
Chris Isra el
, Deputy Assistant Secretary for Technology Policy, Department of
Commerce
Mae Ellis - Covell
, Technology Administration, Department of Commerce
Cheryl Mendonsa
, Technology Administration, Department of Commerce
Marjorie Weisskohl
, Technology Administratio n, Department of Commerce
Report Review
Phillip J. Bond
, Under Secretary for Technology, Department of Commerce
Chris Israel
, Deputy Assistant Secretary for Technology Policy, Department of
Commerce
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COL Mark Janczewski, M.D.,
Director for Telemedicine, Department of Defense
Morey Barnes
, Office of Technology Policy, Department of Commerce
Barry Bird
, Office of General Counsel, Department of Commerce
Connie Chang
, Economist, Advanced Technology Program, National Institute of
Standards and Technology
Step hen Heard
, Telemedicine Consultant, U.S. Army Telemedicine and Technology
Research Center
Karen Laney - Cummings
, Chief, Office of Technology Competitiveness
Jon Linkous
, Executive Director, American Telemedicine Association
Dr. Richard Spivack
, Economist, A dvanced Technology Program, National Institute of
Standards and Technology
Congressional Communications
Angela Ewell - Madison
, Technology Administration, Department of Commerce
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Innovation, Demand and Investment in Telehealth
Executive Summary
Wi th medical knowledge expanding every day, no physician
can keep up without help. By using high - tech medical
communication, high - performance computers, high -
resolution video, and fiber - optic information
"superhighways," we have been able to put the entire w orld
of medical science at the fingertips of even the most isolated
rural family doctor.
1
- C. Everett Koop, M.D.
This quote by a former Surgeon General encapsulates the promise and potential for
healthcare technology. Tens of thousands of Americans ar e accessing healthcare
remotely from medically underserved areas such as Arctic villages, Native American
reservations, prisons, and rural communities. Many more are being diagnosed, treated
and monitored from ships at sea, battlefields, urban centers, an d homes. However, only a
fraction of the potential for technology to increase access to, improve quality of, and
reduce the cost of the nation’s healthcare has been realized to date. In 2001, a major
report by the Institute of Medicine stated: “The autom ation of clinical, financial and
administrative information and the electronic sharing of such information among
clinicians, patients and appropriate others within a secure environment are critical if the
st 2
21 - century health care system (envisioned by the committee) is to be realized.”
This report discusses factors that have affected the adoption and application of one of
these technologies - telehealth - and presents findings that, if addressed, could lead to
increased innovation, demand, and investment . Many of the study’s findings relate to
other healthcare technologies as well -- a result of their ongoing convergence with
telehealth.
Some have suggested that telehealth is not a technology per se but rather a technique for
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delivering care remotely. It is “the use of telecommunications and information
technologies to provide health care services at a distance, to include diagnosis, treatment,
public health, consumer health information, and health professions education.” This
4
definition incorporates the concept of a comprehensive system for integrating various
1
From the Koop Institute web site at http://www.dartmouth.edu/dms/koop/projects/past/nnehii.shtml
2 st
Crossing the Quality Chasm, A new Health System for the 21 Century,” Committee on Quality of Health
Care in America, Institute of Medicine, National Academy Press, Washington (2001) page 17
3
Journal of
Loane, M., and Wootton, R.. “A Review of Guidelines and Standards for Telemedicine.”
Telemedicine and Telecare
8(2):63 - 71. 2002.
4
from the “2001 Report to Congress on Telemedicine,” Office for the Advancement of Telehealth, May,
2002 at:
http://telehealth.hrsa.gov/pubs/report2001/intro.htm#overview
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applications — clinical health care delivery, management of medical information,
education, and administrative services — within a common infrastructure. Any
examination of the nation’s healthcare system should also acknowledge the convergence
of such healthcare technologies as medical devices, healthcare informatics, IT for
healthcare, telehealth and healthcare over the internet (“eHealth”).
Telehealth providers characteristically apply a unique c ombination of innovative,
technical, and entrepreneurial skills. The absence of a “national market” and the
fragmentation of research and development, demand and investment have prompted the
development of telehealth’s pioneers and “champion” providers ind ependently of a
national or sectoral strategy or effort. To fully respond to the nation’s healthcare and
homeland security needs, however, telehealth suppliers (manufacturers and services
firms), providers (clinics and clinicians), payers (third party ins urers), and other
stakeholders must be prepared to work together to address a wide array of needs, issues
and opportunities.
The market for telehealth technology (products and services) is relatively small and has
historically been considered a technical specialty separate from traditional medicine. One
of the most important challenges to (and opportunities for) telehealth providers is the
integration of technology with clinical medicine. Growing acceptance and use of
advanced medical devices, information technology (IT), and the Internet by healthcare
providers have contributed to greater interest in telehealth within the medical mainstream.
Attention to telehealth has also grown with the surge of interest in homeland security,
especially with its curren t emphasis on first responders, equipment interoperability, and
public health information networks.
In order to evaluate the current state of telehealth, it is important to consider public policy
issues that seem to act as barriers to innovation, demand a nd investment. As the
technology evolves into its “third generation,” it is also important to move the discussion
of these issues to the next level, that is, to focus greater attention on designing and
implementing solutions. If progress in meeting the c ombined challenges of access,
quality, cost and homeland security is going to be made, industry leaders and policy
makers must agree on and demonstrate the will to undertake appropriate solutions.
The report devotes a good deal of discussion to organizati onal or process issues to
include several findings that focus on coordination . A principal finding suggests that
progress in addressing public policy issues is often limited by insufficient coordination
among stakeholder groups and organizations. Solutio ns to issues have also been
hampered by lack of information, authority and organization. Examination of
organizational and process issues was, therefore, included within the comprehensive
“systems approach” applied to the research and analysis leading to t his report.
The report contains numerous findings although only those considered most significant
have been summarized below. Findings and conclusions are presented in a manner that
should lead easily to follow - on actions and/or solutions. The inten t of this report was to
analyze the current state of telehealth and to describe the impact that policy and process
issues seem to be having on its innovation, demand and investment. As such, the report
should be viewed as a “baseline” for renewed effort a mong stakeholders to resolve
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longstanding legal, financial, regulatory, organizational, and process barriers. Because
the Department of Commerce has a secondary or indirect role with telehealth, the
research, analysis and findings presented below are inte nded to be consultative and not
prescriptive. Analysts within the Office of Technology Policy will, however, be pleased
to discuss findings and possible recommendations with appropriate stakeholders within
another venue.n
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PRINCIPAL FINDINGS
Policy
Telehealth innovation, adoption and deployment have been impeded by legal, financial
and regulatory barriers.
Numerous federal, state and private sector policy issues have contributed to the inability
of telehealth technology to achieve enough of a criti cal mass needed to be fully included
in national discussions of healthcare and homeland security. Although an array of
potential solutions is well known within the telehealth community, a coordinated and
focused effort to act on frequently compelling evide nce supporting change has not been
undertaken.
A framework for determining reimbursement coverage of telehealth applications that is
more reflective of technology’s impact on access, quality, and cost considerations is
needed.
Although Medicare only a ccounts for a portion of healthcare reimbursement, its policies
influence other payers as well as providers. The telehealth community has been generally
unsuccessful in persuading Medicare to reimburse many of its applications to include
such technologies as store and forward (with certain exceptions). There is also evidence
that Medicare and Medicaid policies lag behind those of private payers. There is evidence
to suggest that greater discussion and coordination among payers of reimbursement
policies may lead to more informed consideration of technology’s impact on access,
quality and cost.
A recently announced process for requesting Medicare coverage and a “Medical
Technology Council” may have little effect until or unless the stakeholder community
can provide the Centers for Medicare and Medicaid Services (CMS) and Congress with
compelling evidence of telehealth’s value. Although it is a widely held belief that
telehealth and other healthcare technologies can reduce the cost and increase the
productivi ty of healthcare, additional high quality studies are needed to make the
business case for expanding reimbursement.
Additional innovation may be stimulated through greater use of “fast track” protection
of intellectual property.
Additional innovation ma y be stimulated through "fast track" protection of intellectual
property. A good portion of innovation in telehealth occurs locally as a result of
improvements in currently operating programs and lessons learned. Innovators in this
field, however, tend to be small companies or individuals that often choose not to pursue
intellectual property protection for financial reasons, among them the time and possible
expense of seeking exclusive rights. As a result, the disclosure of significant
advancements in tele health may be delayed. Reducing the time for granting patents by
encouraging inventors to use existing "fast track" processes would allow innovative
technologies to reach the marketplace and healthcare consumer sooner. Those "fast track"
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processes are ava ilable by way of “petitions to make special” which are provided for
under the current United States Patent and Trademark Office rules of practice.
Acceptance of telehealth within the medical mainstream can be increased with a
coordinated effort within th e stakeholder community.
Greater acceptance within the medical mainstream is a long and evolutionary process,
especially in a field where risk is measured in human health. There are steps that the
telehealth community can take, however, to accelerate acc eptance of telehealth and its
integration with clinical procedures such as ensuring that a telehealth curriculum is
available to medical and nursing schools and telehealth “champions” are working
actively throughout the nation’s healthcare delivery system.
Homeland security requirements for local, regional and national healthcare networks justify
greater cooperation and coordination among licensing authorities.
Regulation of healthcare providers has traditionally been a function of the states. Even
thoug h telehealth and, more recently, healthcare over the Internet cross state lines,
vendors and providers have been unable to plan for a “national market” due to a
patchwork of state policies for licensure and reimbursement (i.e. Medicare, Medicaid and
the St ate Children’s Health Insurance Program). The same factors make investment and
adoption of telehealth technology by clinicians less attractive due to the uncertainties and
changing nature of licensing rules from state to state, and credentialing and privil eging
rules for healthcare networks and facilities. A “compact” among licensing authorities
could help form a foundation for greater coordination and cooperation among states
under certain circumstances, such as those related to homeland security.
Recent initiatives give reason to expect greater progress in resolving licensure issues in
2004. For example, an Office for the Advancement of Telehealth (OAT) contract with
the Center for Telemedicine Law providing for a December 2003 workshop to examine
vario us options, and another OAT contract with the Federation of State Medical Boards
for developing workable licensure solutions should help incentivize stakeholders to move
forward.
Progress in the development and adoption of industry - wide standards will contribute to
resolving interoperability issues in the long term.
Following the policy roundtable organized by the Technology Administration in June
2002, representatives of the American Telemedicine Association (ATA) and the National
Institute for Standa rds and Technology (NIST) began to work together to develop, market
and gain industry acceptance of standards. Progress to date has included the development
of a standards process for diabetic retinopathy as a test case. Over time, this process will
rout inize the development and marketing of other telehealth standards, a key requirement
for addressing issues of interoperability. OAT’s process for developing “guidelines”
offers an interim step for focusing attention on interoperability requirements while
s tandards are being developed.
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A national discussion of the merits of, and policy and technical issues associated with national
health information infrastructure is needed.
A great deal of discussion favoring a “national health information infrastructure ” (NHII)
has taken place to include extensive proposals by such groups as the Department of
Health and Human Services, ATA, and the Rand Corporation. The complexity of and the
many different interests affected by policy issues surrounding a NHII justify a national
discussion of its merits, costs and benefits before investment decisions are made. The
Department of Health and Human Services recently appointed an Assistant Secretary for
Planning and convened the first conference to develop a national action a genda for the
NHII, important first steps in shifting the focus from promoting the concept to design and
cost - benefit analysis.
Organization and coordination
Progress in addressing public policy issues and improving the return on the nation’s
investme nt in telehealth can be affected by greater coordination among federal stakeholders.
Existing mechanisms for coordinating federal agency telehealth policies, investments and
activities have been less than completely effective in such areas as data collect ion,
planning for research, information exchange and policy development. More effective
coordination among federal stakeholders is necessary to raise awareness, share
information and increase return on investment, and parallels the need to coordinate and,
where appropriate, integrate federal research, programs and resources for converging
healthcare technologies. A more systematic approach to coordination might include an
interagency working group for healthcare technologies with specific responsibilities and
the authority to carry out those responsibilities.
More effective coordination of planning, policy - making, and allocation of resources among
government, academic and private stakeholders is needed to achieve more efficient solutions
and to realiz e telehealth technologies’ potential.
Processes currently available for coordinating federal, state and private sector activities
are less than completely effective. The absence of a coordinative process resulting from
the fragmented nature of the telehe alth community limits opportunities for technology
and information diffusion, the efficiencies of a larger and more integrated market, and the
kinds and levels of synergies that should lead to greater innovation, demand and
investment. It has been noted t hat a critical mass of telehealth programs that could
collaborate on research has not existed until recently. As programs gain experience and
the merits and benefits of collaboration are recognized, there will be both greater need for
coordination and gre ater opportunities for collaboration.
Convergence of such healthcare technologies as telehealth, healthcare informatics and
eHealth warrants a more comprehensive, systematic and coordinated approach to research,
development, testing and evaluation.
A more general description of healthcare technologies would include telehealth, medical
devices, healthcare informatics, eHealth, and, perhaps, assistive technologies. Each of
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these technologies shares the same policy issues as well as the same potential for
transforming the nation’s healthcare enterprise. Until recently, each of these technologies
has innovated, grown, developed standards, and addressed policy issues independently.
Coordination among planners, policy - makers, researchers and program manager s is
essential to insure the most efficient, integrated strategies for increasing access,
improving quality and reducing costs, and for assuring that public policy reflects current
technologies, issues and opportunities.
The homeland security community has not yet given significant consideration to telehealth
technologies when assessing healthcare needs or available resources.
Because telehealth has not been a major player at the national level, its value to homeland
security and healthcare in general has been largely overlooked. The assessment of
telehealth and other healthcare research and technology needs should comprise an
important and early undertaking within the Department of Homeland Security’s science
and technology framework.
Telehealth te chnologies could also contribute significantly to protecting public health.
For example, development of epidemiological detection and surveillance information
systems by the Centers for Disease Control and Prevention and various states should not
overlook the hundreds of telehealth networks as a currently available infrastructure.
Planning for surge capacity should also include consideration of remote telehealth
providers as extensions of local healthcare providers and facilities.
The nation’s civilian, private and other public sector healthcare communities are not fully
benefiting from the Departments of Defense and Veterans Affairs’ achievements in telehealth
technologies.
Telehealth has been widely adopted and applied by the nation’s defense and vete rans
health enterprises for several years, having realized and demonstrated the benefits to
access, quality and cost of integrating technology with healthcare. Although enthusiastic
about sharing lessons learned, the civilian sector has yet to fully benefi t from DOD and
VA research, innovation, know - how and experience through technology transfer.
Reasons for this lag may include the high cost of research, and more effective technology
transfer through channels that are not exclusively telehealth or even he althcare.
Data
Innovation, demand and investment in telehealth will be impeded as long as evidence of its
clinical efficacy and cost - benefit is unavailable or not widely accepted.
The telehealth community’s inability to prove efficacy and produce co st effectiveness
data through high - quality, peer - reviewed clinical studies is often perceived as a barrier to
resolving such diverse issues as provider acceptance, third party payer reimbursement,
and liability. Further, lack of rigorous cost - benefit or b usiness case analyses has made it
difficult for innovators to justify public funding for developing mainstream applications
for telehealth. Direct and indirect benefits of undertaking such studies include the
15
identification of healthcare’s technology needs and the value of technology innovations
that will, in turn, justify public funding.
The varied and, in some cases, competing interests of providers, payers and technology
suppliers dictate that these studies be undertaken by competent but disinterested t hird
parties. The Department of Health and Human Service’s Agency for Healthcare Research
and Quality (ARHQ) seems a likely choice, but the challenge of its many research
priorities competing for limited funding suggest that an ARHQ program or appropriatio n
specifically dedicated to analyses of the efficacy, cost - effectiveness, cost - benefit and
business case of telehealth and other healthcare technology applications would be most
effective.
Where high quality clinical and cost - effectiveness studies are b eing conducted (e.g.
Veterans Affairs), it is important that those results are shared with the Centers for
Medicare and Medicaid Services, private third party payers, the Agency for Healthcare
Research and Quality, healthcare providers, and numerous other stakeholders. A
coordinated effort to catalog and distribute clinical studies for the nation’s healthcare
providers would also be useful.
Innovation, demand and investment data important to telehealth program managers, policy
makers, exporters and invest ors is not readily available.
Despite the substantial amount of available research and data relating to healthcare,
telehealth program managers, policy makers, exporters and investors sometimes lack
fundamental data upon which to base analysis and make de cisions. A primary reason for
this information gap is limited public and private coordination, prioritization, and funding
of data collection, research and evaluation.
Industry and trade data and market research and analysis is limited for the lack of U.S
and international classifications and codes specific to telehealth and other important
healthcare technologies. Although the process for adding classifications and codes is
long and arduous, the additional data that could be generated as a result would a ssist
stakeholders in conducting more accurate cost - benefit, business case and market
analyses.
Competitiveness
Despite being regarded as one of the world’s leading innovators and suppliers of telehealth
technologies, U.S. firms’ participation in inter national markets is limited.
The U.S. healthcare sector is internationally recognized as one of the world’s most
innovative and competitive, and this reputation carries over into the area of telehealth
technologies. Telehealth consulting and engineering s ervices could be as marketable as
the products themselves because American know - how in designing, developing and
deploying successful installations is very highly regarded. Many telehealth firms,
however, have neither the resources nor the size to support significant product and
services export campaigns. Other nations such as Canada, the U.K. and Japan appear to
have recognized the international market potential for telehealth and other healthcare
technologies, and appear to be succeeding in markets unatt ended by U.S. firms.
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Chapter 1 – Background and Methodology
The original purpose of this study was to analyze the current state of telehealth
technology and identify barriers to the development and adoption of telehealth
innovations, including such l ongstanding policy issues as access to health care within
5
medically - underserved areas, interoperability, reimbursement, privacy, and security.
Many of these same issues were highlighted in a GAO report entitled “ Telemedicine:
6
Federal Strategy is Needed t o Guide Investments .” On the surface, it would appear that
little has changed since that report was issued in 1997. What limited progress there has
been in resolving such issues can be attributed to a very recent and concentrated effort by
such stakehold ers as the American Telemedicine Association (ATA), the Center for
Telemedicine Law, and the Office for the Advancement of Telehealth (OAT) within the
Department of Health and Human Services (HHS).
The report’s title “Innovation, Demand and Investment in Telehealth” was chosen
because of the importance of all three functions. Innovation is important to telehealth
because it creates the potential to increase access to, improve quality of, and reduce the
cost of the nation’s healthcare. Demand is importan t to telehealth because it encourages
innovation and investment. Investment is critical because it supports both innovation and
the capacity to meet demand.
The convergence of healthcare technologies and policies with those of homeland security
added an other important dimension to the study. The nation’s inventory of telehealth
networks and other technology resources offers an extensive existing infrastructure upon
which to build sound and strategic healthcare defense and response capacities.
Additional ly, telehealth’s relationships with information technology (IT) and
telecommunications make it a logical and significant building block that should be
included in ongoing discussions of a national health information infrastructure.
These added dimension s convergence both expanded the scope of this study and
7
underscored the need for a “systems approach” for research and analysis. A “systems
8
approach,” for example, begins with a comprehensive inventory of current and proposed
national, regional, state, local and private health programs and initiatives (“systems”) that
might have some impact on telehealth. Integration presents one of the biggest challenges
to telehealth. There are hundreds of “stovepipe” telehealth systems already in use.
Within many enterprises, such as the Department of Defense, integration of these systems
is a logical next step.
5
Also referred to as “Health Professional Shortage Area” or HPSA.
6
“Telemedicine: Federal Strategy is Needed to Guide Investments,” U.S. General Accounting Office
Report GAO/NSIAD/HEHS - 97 - 67, February 1997
7
A “systems approach” entails close examination of healthcare and homeland security “systems” (end - to - end
rather than point - of - care) and was considered necess ary to address a very broad array of technical and policy
issues and subjects.
8
The study team adapted the methodology recommended by the Project management Institute in their
Project Management Book of Knowledge
to the comprehensive scope of this subje ct.
17
Table 1(a) shows a few of the more visible national initiatives, while the chart at
Appendix A includes major current and proposed national and regional health
information systems. There are numerous other healthcare systems managed by states,
institutions, and private payers. System sponsors should continually update their
awareness of what other systems are proposed or operational in order to leverage t he
efficiencies and cost savings that could result from integration.
Table 1a: National Healthcare Systems Initiatives, 2002
Initiative Primary Sponsor Status
National Information Architecture Rand Corporation Proposed
National Health Information HHS Proposed
Infrastructure Initiative (NHII)
NEMCON American Proposed
Telemedicine
Association
eHealth Initiative HRSA with Demonstration
eHealth Initiative
Bio - Defense Initiative Southern Governors Planning
Association
National Epidemic and Dis ease Centers for Disease Development
Surveillance System (NEDSS) Control and
Prevention (CDC)
Health Alert Network (HAN) CDC Partially
operational
Veterans Information Systems Veterans Affairs Operational
Network (VISN)
Tri - Care On - Line Department o f Operational
Defense (DoD)
OASIS Medicare (CMS) Operational
Because each of these systems involves healthcare informatics, telecommunications
networks and national policy in some fashion, each should be analyzed for how current
telehealth applicat ions and networks could be integrated.
Methodology
Over 40 interviews were conducted with individuals who are leaders and/or users of
telehealth, each of whom represented the unique perspective of a specific stakeholder
18
group. A common factor among tele health stakeholders interviewed, however, was their
enthusiasm and belief in its efficacy and potential. “Champions” of telehealth technology
have committed themselves to its diffusion. Interviews included stakeholders from each
9
of the following categorie s:
1. Government agencies funding telehealth
2. Non - profit industry and trade associations
3. Military
4. First respondebrs
5. Public health departments
6. Healthcare institutions
7. Clinicians
8. Manufacturers and services firms (suppliers)
9. Payers
10. Consumers
Primary sources of information were the American Telemedicine Association (ATA), a
trade, industry and professional association representing different stakeholders, and the
Office for the Advancement of Telehealth (OAT) of the Department of Health and
Human Services. Man y of the nation’s “telehealth centers of excellence” receive at least
some of their initial funding through OAT grants. The support and participation of these
two entities will be essential to implementing solutions that might be generated by this
study.
In addition to interviews, on June 19, 2002, the Department of Commerce’s Office of
Technology Policy, Technology Administration held a “roundtable” discussion with 28
public and private leaders in the fields of telehealth, healthcare, and homeland securit y.
Discussion focused on issues and solutions related to innovation, demand, and investment
in telehealth, and points raised are referenced in this report. Transcripts of the Roundtable
discussions can be found at the Technology Administration web site at
www.technology.gov .
Analysis also included an extensive literature search to include Web sites for and
publications of ATA, OAT, the Association of Telehealth Service Providers (ASTP), the
Telehealth Information Exchange, the journals Telemedicine Today , Telehealth Journal
and eHealth , and Telemedicine News , and such on - line databases as MedLine and
PubMed . These sources, in conjunction with primary data collection, yielded a wealth of
information on stakeholders’ interests, issues, and proposed solutions (see Table 1.b).
Issues of Primary and Secondary Importance to Stakeholders
Table 1(b).
Stakeholders Homeland Access Quality Cost Innovation Competitiveness
Security
P P P P P S
Homeland Security
9
There were other organizations that do not consider themselves telehealth stakeholders but perhaps
should (e.g. the National Guard, the fire system, and international development agencies).
19
P P P P S S
First Responders
P P P P S S
Public Health
P P P P P S
Military
S S P P S P
Clinicians
S S P P S P
Payers
P P P P S S
Consumer
Telehealth
Manfuacturers and
Vendors
Products
S S P P P P
Services
S S P P P P
P = Primary, S = Secondary
In the private sector, stakeholders include ma nufacturers and services firms (suppliers),
health care providers, third party payers, and patients. The American Telemedicine
Association (ATA) and several other industry groups represent manufacturing
stakeholders as well as healthcare providers. Becau se telehealth is not considered a
medical specialty but provides fairly specialized products or clinical tools for many
specialties, it falls outside the fields of such influential groups as the American Medical
Association and the Advanced Medical Technol ogy Association (ADVAMED) . ATA is
attempting to forge strategic alliances with such groups.
ATA also represents other, non - vendor members such as clinicians, nurses, supporting
industries, and business services. These stakeholders often participate in o ther trade and
professional associations or advocacy groups that may attempt to influence policy. The
Center for Telemedicine Law, for example, provides research and positions on such
federal and state issues as licensure and reimbursement. Federal membe rs of ATA may
also participate in the federal interagency “Joint Working Group on Telemedicine.”
Chapter 2 summarizes research, development, and innovation taking place in the field of
telehealth, and attempts to identify both research and technology “g aps.” Many of these
gaps represent the “needs” or “requirements” of homeland security, the military, public
health, clinical healthcare and other sectors of the healthcare community.
Chapter 3 describes and summarizes the “market” for telehealth technol ogies, and
identifies what actions and policies may be necessary to unleash demand. Some of the
more complex and difficult “barriers” are discussed in this chapter because of the
considerable impact those issues have on demand . . . the engine that drives innovation
and investment. Any issue that affects demand, therefore, will likely impact every other
dimension of telehealth policy.
Chapter 4 addresses current investment and what would be required to increase access,
especially for medically underserved areas. As with any investment in the development
and adoption of new technologies, public and private investment decisions must consider
returns or the relationship of cost to benefits, a primary focus of this chapter. The chapter
also discusses alternati ve approaches and possible incentives for increasing investment,
20
and what “business models” experts in the field have suggested might be applied to grow
and sustain telehealth diffusion in the private sector.
Lastly, findings have been prepared and presen ted to correspond with the report’s
narrative discussion. These findings are intended to “baseline” a dynamic inventory of
ideas directly and indirectly related to innovation, demand, and investment in telehealth.
Rather than using this report to catalog a ll the secondary findings and recommendations,
however, it was determined that the most productive way to move forward with
identifying and strategizing solutions was through informal discussions with appropriate
stakeholders.
It is hoped that this repo rt and its findings will be used, built on, and improved by the
many stakeholders that have an interest in telehealth to baseline the state of innovation,
demand and investment in, to track progress in removing barriers to, and to serve as a
reference and starting point for future studies of telehealth in the United States.
21
Chapter 2 – Innovation in Telehealth
The convergence of information technology and telecommunications, including
Internet technologies, is emerging as a key tool to drive increased e fficiency and
effectiveness in health systems worldwide. With part of its roots in medical
research for military and space applications, telemedicine is expected to make it
possible to link medical expertise with patients in the most distant locations --
pr oviding clinicians with valuable new tools for remote monitoring, diagnosis,
10
and intervention.
A 1997 Kaiser Permanente study of telehealth concluded that “technology in healthcare
can be an asset for patients and providers and has the potential to save costs; therefore,
11
this technology must be a part of continuous planning for quality improvement.”
It is widely claimed and often assumed that innovation in healthcare technologies can
contribute to increased access to and improved quality of care, reduc ed costs, and better
national security. With healthcare expenditures of over $1.5 trillion projected to account
12
for 13 percent of U.S. GDP in 2002, even incremental improvements in delivery can
have a significant economic impact. Although telehealth te chnologies currently account
for a small segment of all healthcare technologies (an estimated $380 million out of $71
billion nationwide and $169 billion globally), innovation in this area could spur
13
significant improvements in sector productivity and qual ity of life. Today, after more
than 30 years of telehealth, that potential has still not been fully realized. This Chapter
assesses telehealth technology and research and identifies barriers to innovation that have
impeded its potential.
TECHNOLOGIES
T elehealth focuses on the transfer of basic patient information over networks and the
diagnosis, treatment, monitoring, and education of patients using systems that allow
access to expert advice and patient information. A technical definition of telehealth
technology would include those devices and software that enable healthcare providers
and educators to diagnose, consult with, monitor, treat and educate patients and
consumers remotely. In order for the devices and software to be effective, however, it is
necessary to integrate technology with healthcare applications and clinical procedures.
The integration of devices and applications with clinical processes must then be
10
Medical Device Link
“Technology Forecast” from , at
ht tp://www.devicelink.com/mddi/archive/00/01/012.html
11
, RN, MSNM&L; , RN, MSNM&L; , RN, MBA;
Barbara Johnston Linda Wheeler Jill Deuser Karen H.
, RN, PhD
Sousa “Outcomes of the Kaiser Permanente Tele - Home Health Research Project” from the
Archives of Family M edicine,
January 2000. View the 1997 study at: http://archfami.ama -
assn.org/issues/v9n1/ffull/foc8072.html#a4 .
12
Health Care Fi nancing Review,
U.S. Centers for Medicare and Medicaid Services, Summer 2001.
13
Source: Commerce Department (See Table 3.a).
22
integrated with provider workflow or protocols that would add value to a network of
pr oviders and patients. This innovation continuum may be characterized as:
Need Applications Devices Integration Programs
? ? ? ?
identified developed developed with clinical developed
protocols
Effective functioning requires proper infrastructure, to include the physical facilities,
setup, and equipment used to capture, transmit, store, proc ess, and display voice, data,
14
and images. For example:
1 “Capture” devices such as digital and video cameras, radiographs (e.g. x - ray images), and
physiologic monitors (e.g. EKGs, oxygen saturation monitors);
2 Basic telecommunications and networking of co mputer systems;
3 Communications software, including electronic mail and browsers for the World Wide
Web; and
4 Forms of telecommunications, including videoconferencing, remote data monitoring and
file transfer, applicable to medical care in remote or rural a reas.
5 Electronic data storage facilities (e.g. disk arrays to store patient records and/or digital
images).
14
Journal of Medical Systems
Guler, Nihal Fatma and Elif Derya Ubeyli. “Theory and Applications of Telemedicine.” ,
vol. 26, No. 3, June 2002. p. 202.
23
Table 2.a Telehealth Technologies
TECHNOLOGY EXAMPLES OF DEVICES EXAMPLES OF WHO INNOVATES
15
and SOFTWARE APPLICATIONS
Remote Monitoring Senso rs Bio - defense Laboratories
Instruments Telehomecare Sensor manufacturers
Ultrasound Telemedicine centers
Military/VA
Diagnostics Otoscope Consultations Medical device manufacturers
Stethoscope Telehomecare
EKG
Videoconferencing Cameras (Videocams, Consultations Videoconferencing manufacturers
Webc ams) Teledermatology
Computer - based desktops Telementalhealth
Portable communications and
data systems
Digital imaging Instruments Telepathology Laboratories
Media (e.g. film, magnetic Teleradiology Instrument manufacturers
tape) Teledentistry Media manufacturers
Scanners/Viewers Teledermatology
Digital cameras TeleENT, TeleGI
Videocams wi th scopes
IT Data storage systems Electronic medical IT manufacturers
Servers record Systems integrators
Software/Informatics/ Data mining Software developers
Middleware Syndro mic Database developers
surveillance Webmasters
Web portals
Decision - support
systems
Administration
Networking/ Hubs, routers, servers Interoperability IT/telecom manufacturers
Interfaces “Black boxes” Inter net/intranet System integrators
System software Hub and spoke
networks
Mobile data
transmission
Robotics/Remote Instruments Telesurgery Instrument manufacturers
Controls Controls Telepathology Control manufacturers
Viewers Homeland security Defen se Advanced Research
Projects Agency (DARPA)
Store - and - Forward Data/image/video/audio card Electronic medical Card capture manufacturers
capture/scanners record Scanner manufacturers
Computer/camera/microphon Report generator Software developers
e & image management
software
Simulation and Multi - media graphics eLearning Multimedia firms
Training Software Curriculum Software developers
Audio - visual Conferencing
Current telehealth technologies can be grouped into at least nine broad categories (Table
2.a) , each of which includes both devices/equipment and applications. Each of these
categories overlap and intersect. For example, information technology (IT) systems
(hardware, software, and microprocessors) are a central component of all technologies.
Tel ehealth technologies may also be classified according to the point in time when the
encounter is transacted: store - and - forward (asynchronous) and interactive (synchronous).
16
Store - and - forward technology is a lower - cost method of transmitting images by
comp uter. This technology is currently most frequently used for transmitting radiological
15
Applications developed to i ncorporate a device into the healthcare process can be defined by function, end - use, or
nature of the user. For example, a stethoscope can be categorized as a listening device for a broad variety of functions,
as part of a heart monitoring application as an end - use, and emergency response as the nature of the user.
16
Store - and - forward technology allows the provider to perform a procedure, store the procedure for a later
use, or forward the procedure to another location for further activity.
24
and dermatological pictures, and is employed by hospitals and clinics across the country.
Interactive telehealth implies face - to - face interaction with a patient, health p rofessional,
or both, and requires audio, full - motion video, and still images. Although both categories
are sometimes used in conjunction with one another, store - and - forward technologies are
more widely used due to lower start - up and sustainability costs, and increased flexibility
and productivity in scheduling encounters and managing workload.
This method of categorizing telehealth technology is important when discussing third
party reimbursement. Because store - and - forward does not feature a “real - tim e”
encounter between a patient and a healthcare provider, the application is not currently
being reimbursed by Medicare. It is very likely that this issue will become more
important as store - and - forward technology becomes more commonly - used and more
cost - e ffective. In the meantime, this lack of reimbursement represents a barrier to further
17
investment and a disincentive to use by clinicians.
Leaders in the field of telemedicine/telehealth suggest that the current state of technology
18
is moving from its second generation into its third. The “ first generation ” can be traced
as far back as far as the 1950s. “One of the earliest uses was at the University of
Nebraska where psychiatric consultations were conducted on two - way closed - circuit TV
19
using microwa ve technologies.” The second generation might be dated from 1989,
when then Secretary Bowen of the Department of Health and Human Services directed its
Health Resources Services Administration (HRSA) and the Centers for Medicare and
Medicaid Services (CM S - formerly the Health Care Financing Administration) to fund a
telemedicine project call “the MedNet Project (now HealthNet) at Texas Tech University.
Until then, telehealth was limited to a few medical specialties such as radiology and
focused on eithe r store - and - forward or video conferencing applications. That generation
was characterized by specialized devices that did not interface easily with other devices
and were not well integrated with clinical protocols. This lack of “interoperability” and
tec hnical know - how frequently led to user dissatisfaction and may have created a
negative image of telehealth products and services within the traditional medical
20
community.
Teleradiology was one of few technologies that developed quickly during the first
g eneration of telehealth, to become the first specialty to establish a record of
21
interoperability and sustainability. A telehealth technology CEO suggested that
“teleradiology is most successful because the specialty (radiology) is made up of
professiona ls who are already technical.” Other reasons for its success included the
17
For an in - d epth treatment of this and other issues, see: “Telemedicine: Follow the Money,” by Dr. Dena
Online Journal of Issues in Nursing at
Puskin, September 2001,
http://www.nursingworld.org/ojin /topic16/tpc16_1.htm
18
A generation is defined as a period of time in which stakeholder interests and technological development
are at a similar stage. A generation changes when breakthroughs occur in technologies and innovation
moves quickly to a differ ent level.
19 nd
For more history of telehealth, see “Telecommunications for Nurses, 2 Edition,” Armstrong and Frueh
(editors), “An Overview of Telemedicine: Through the Looking Glass,” (D.S. Puskin), Springer Publishing,
2003
20
Mark Newburger, CEO of Apollo Telemedicine and a panelist at the Technology Administration’s
Roundtable “Innovation, Demand and Investment in Telehealth,” June 19, 2002 in Washington D.C.
21
Ibid.
25
development of private teleradiology services that have already proven sustainability, and
because x - rays, sonograms and other images have been consistently reimbursed by
Medicare a nd other payers.
With the second generation, users demanded greater ability to integrate with legacy
systems and peripheral devices, and manufacturers responded with multi - application
systems. Successful first generation telehealth applications -- such a s monitoring,
radiology and video - consults - were joined by other specialty applications such as
dermatology and pathology. Most first and second generation technologies were based
in some way on remote monitoring, video conferencing, or digital imaging technologies.
Technological advances in videoconferencing and digital imaging are now well into a
third generation of telehealth. Several factors account for the faster pace of innovation in
these technologies and their attendant applications: the und erlying technologies are multi -
use, the broadcast infrastructure is stable, there is little FDA regulation, cost effectiveness
is more evident, and their market is much broader than simply healthcare.
Other drivers that are moving technological innovation toward a third generation of
telehealth technologies and applications include:
Technology related drivers:
1. decreasing costs of telecommunications technologies
2.
decreasing costs of telehealth devices and applications
3. progress toward resolving the longstan ding issue of interoperability
4.
convergence of telehealth technology with telecommunications, IT and the Internet
Market related drivers:
1. increasing emphasis on reducing cost and increasing quality of healthcare
2. increasing demand for homeland security and public health technologies
3. more clinical and econometric studies concluding that telehealth meets
expectations
4. rapidly increasing demand for home healthcare
5. incremental changes in payer reimbursement policies and increased levels of
Medicare and other thir d party reimbursement
6. increasing awareness by providers and consumers as a result of government
investment in “demonstration projects”
7. increasing acceptance by medical professionals and institutions
INNOVATORS
Telehealth research since 1975 includes a m ix of public and private sector R&D, clinical
studies, and demonstration projects. Federal departments and agencies, state and local
governments, universities, private foundations, manufacturers, insurers, and other sources
provide varying amounts and for ms of research funding. Technology and research efforts
span a wide range of organizations and medical specialties – from military medical
commands to rural clinics, from major medical centers to the needs of sparsely populated
regions and territories. Th is diversity (and fragmentation) complicates quantitative
26
analysis of R&D expenditures, as well as the collection of information about current and
required R&D and technology transfer.
Following is an overview of research and innovation activities in th ree broad stakeholder
groups: federal and state governments and the private sector.
Federal and State Governments
Table 2b – Federal Research and Program Funding (FY2000 - 01)
Departmen Agency or Nature of Nature of FY2000 FY2001
t Bureau Research or Technologies Funding Funding
Program $million $million
Rural Utilities Program grants Distance learning 25 25
Agriculture
Service and telemedicine
NTIA Demonstration Network 15.5 15.5
Commerce
Projects Infrastructure
NIST (ATP) Tech commercial Various 3 3
High - ris k,
enabling tech
development
DARPA Applied <1 <1
Defense
Army
TATRC Applied Remote access, 100 100
warfighter
AMEDD Applied Web - based triage 3.1 3.6
Navy Applied Shipboard * 20
applications
Air Force Applied Various * 11.5
Applied Rehab/Assistive tech * *
Educ ation
Sandia Applied Robotics * *
Energy
Applied Diagnostic devices * *
Oak Ridge Applied Sensors * *
Pure Sensors * *
AHRQ Evaluation * *
HHS
22
HRSA (OAT) Demo Projects 34.5 34.7
HRSA (ORHP a nd Demonstration AHEC, Community * 13
other HRSA) projects Health Centers,
Rural development
23
CMS Demo Project 6 6
FDA Demo Projects * *
NIH Applied Next generation 45 45
NLM Demo projects Internet
NIBIB**
Bureau of Prisons Clinical Consultations * *
Justice
Cost - benefit
Pure Remote monitoring 10 10
NASA
Applied
Applications Ongoing programs 45 45
VA
Clinical Efficacy Studies
USAC Subsidies ERate * 18
FCC
* Data not available 287 332
TOTAL
** Began telehealth initiatives in FY2003
Public sector research and innovatio n are centered on applications (including software)
and programs, but not devices. Federal civilian and state R&D is most often associated
with “demonstration grants.” Attempts have been made to quantify public investment in
22
Amounts include Congressional earmarks.
23
Amount for CMS represents one year of a five - year, $30 million demonstration grant managed by
Columbia Presbyterian.
27
telehealth in the past but hav e been largely unsuccessful because agencies are not
required to either collect or report on their telehealth investments. Although data are not
easily identifiable, it is estimated that in FY2001, federal agencies spent at least $332
million for military and civilian telehealth research and programs. That amount grew in
FY2003 as recent legislation included funding for telehealth infrastructure, programs, and
projects, and as homeland security research, program development, and procurement
were funded. Ta ble 2.b was constructed from limited information available from federal
agencies and other sources.
Within the federal telehealth community, the Department of Defense (DoD), Department
of Veterans Affairs (VA), and the Department of Heath and Human Servi ces’ Office for
the Advancement of Telehealth (OAT) account for most federal telehealth spending.
DoD (and, more specifically, the Army) is far and away the federal research leader with
such programs as:
-
the Army’s Telemedicine and Advanced Technology Research Center (TATRC)
at Fort Detrick, Maryland, which commands a budget of over $100 million for
research into a broad array of healthcare technologies.
- the Army Medical Department (AMEDD), which sponsors a “Competitive
Telemedicine Program” where i ndividual Army medical units compete with each
other for funding for innovative programs. This program nearly doubled in the
number of proposals submitted from FY2000 to FY2002 and currently funds 25
projects at slightly over $4 million.
- the Navy’s “Glo bal Digital Teleradiology Network” including ships at sea.
- the Defense Department’s “Akamai” program in the Pacific theater.
- the Armed Forces Institute of Pathology which is currently developing a web -
based telemedicine program using a browser for vie wing images, and store and
forward application software.
On the civilian side, the Department of Veterans Affairs (VA) operates the nation’s
largest telehealth program with more than three hundred thousand teleconsults annually.
Like the Department of De fense, VA is considered a “closed system” that includes
patients, providers and payers, and is not significantly affected by the need to annually
compete for grant funding. It therefore offers the size and stability necessary to provide
one of the best av ailable “testbeds” for research, development, standards, clinical efficacy
and cost - benefit studies, and needs assessment. VA is also considered unique among
telehealth programs because its leadership has taken on the role of “early adopter” of
healthcare technologies, and has been adequately funded to procure and integrate
telehealth with clinical medicine on a very broad scale.
HHS’ Office for the Advancement of Telehealth (OAT) and Agriculture’s Rural Utilities
Service (RUS) are the largest federal pro grams outside the DoD and VA with telehealth
programs/networks in 43 states and 2 territories. OAT’s guidance to grantees is a
24
40%/60% ratio of equipment to operations. OAT’s demonstration grants would be
24
OAT emphasizes the development of operational infrastructure within its programs, not equipment.
There is also a “symbiotic” relationship between OAT and the National Library of Me dicine wherein the
latter examines information requirements needed for technology to assist in a clinical diagnosis or
treatment, and OAT examines the practical issues of cost - effective deployment and utilization of those
technologies.
28
considered installations within an “open system” in which business principles such as
25
financial planning and reporting, sustainability, and marketing apply. In addition to
demonstrating technological benefits, grantees are expected to demonstrate the merits,
and increase provider and patient awareness, of telehealth as an effective healthcare
26
technique.
There would appear to be a symbiotic relationship among DoD, VA, and OAT. For
example, DoD leads in developing technology, VA leads in both volume of encounters
and in the integration of telehealth wi th medicine, and OAT leads in the diffusion of
telehealth within the civilian sector. Additionally, the VA and DoD currently cooperate
on several pilot projects and in a policy - making forum that has made significant headway
27
in credentialing and workload c redit for teleconsultation and patient - provider eMail.
Greater coordination among these three agencies’ telehealth programs could be expected
to increase: 1) prioritization of high quality research, efficacy, and cost - effectiveness
studies; 2) diffusio n of telehealth information and technology between the
military/veteran and civilian sectors; 3) the use of VA as a more expansive “test bed” for
new devices, applications and standards; 4) the complementary roles of DoD as
innovator, VA as early adopter, and OAT as diffuser. In addition to demonstration
projects, federal research also touches on the very clinical (i.e. the development of robots
for surgery), the programmatic (e.g. evaluating the cost effectiveness of telehomecare),
homeland security (i.e. research, development, testing and integration of sensors and
syndromic surveillance), and the very technical (i.e. applying Internet2 to network
architectures).
Most states and some local governments fund telehealth research, programs and
procurement, g enerally with the goal of supporting program infrastructure, project
development, or feasibility studies. A number of states have developed statewide public
and private strategies for increasing access to quality healthcare through telehealth
technologies . In several cases, states have organized “taskforces” responsible for
assessing needs and assessing factors affecting telehealth adoption and deployment. For
example:
Arizona provides money from a variety of sources to support the University of
Arizona Telemedicine Network, funds pilot studies documenting whether
telemedicine contains health care costs, and studies the feasibility of providing
28
healthcare within the state corrections system via telemedicine.
Texas has, through its Statewide Health Coo rdinating Council (SHCC),
conducted research on and prepared an extensive report titled “The State of
25
Unlike a “closed s ystem” such as VA or DoD where, for example, common business principles such as
supply and demand are less relevant.
26
Federal demonstration projects and pure and applied research are frequently managed through
public/private partnerships, and vary from op erational clinics to cooperative research to personnel
exchanges to licensing technologies.
27
“Workload credit” refers to a process for recognizing value added to the clinical process when performed
electronically, such as when a provider (clinician) resp ond to a patient’s eMail inquiry. The workload
credit may be linked to billing as well, although capturing the value of electronic activity such as eMail is
still largely a manual process.
28
State Law Update, Center for Telemedicine Law.
29
Telemedicine and Telehealth in Texas.” In preparing this report, the Council
brought together stakeholders from throughout the state to develop a strate gic
plan and to explore solutions to policy and technical issues, an approach that may
serve as a model for other states, localities, and the federal government. The
SHCC has been conducting research through such pilot programs as telehealth
and distance learning programs within rural and remote schools.
The primary mission of Florida’s Center for Research on Telehealth and
Healthcare Communication is to facilitate collaborative multidisciplinary
research on telehealth, both within the state’s university system and in health
science centers across the nation. The Center is funded by a combination of
grants from NIH’s National Institute on Disability and Rehabilitation and
Research, the Department of Veterans Affairs, the Florida Department of Elder
Affairs , and the Robert Wood Johnson Foundation.
The Texas legislature also established the “Telecommunications Infrastructure
Fund” (TIF) in 1995 and allocated $1.5 billion over 10 years to promote and
develop a statewide telecommunications infrastructure to in clude grants to health
care facilities and schools. The future of this program is uncertain as its initial
life cycle draws to a close. In contrast, California created the “California
Telehealth and Telemedicine Center” with support from private foundatio ns.
Universities
Some of the most innovative and important research is taking place at the nation’s public
and private universities, frequently through “Telemedicine Centers” attached to their
medical and nursing schools. University research may incl ude both technological
innovation and sociological studies focused on delivery of health care to underserved
populations. It appears that universities located in states with substantial remote and rural
medically underserved populations such as Texas, Ten nessee, Alaska, Montana and
North Carolina produce some of the nation’s most active and innovative research and
telehealth programs.
University telehealth programs may leverage grants from OAT as well as funding from
state government and private foundatio ns. While the focus of their funded research and
innovation may be on devices and applications, the connection with academic medical
centers provides a stable and significant patient population, as well as the research and
teaching environment and capabil ities of the university and medical schools.
x
The Arizona Telemedicine Program run in conjunction with the University of Arizona's
Health Science Center receives $85 million a year in research grants that enable state - of -
the - art treatment for patients and up - to - date healthcare information for studen ts. The
Colleges of Medicine, Nursing, Pharmacy, and Public Health and the University of
Arizona School of Health Professions participate in the program. The program has
partnerships with a variety of not - for - profit and for - profit healthcare organizations and
has created new interagency relationships within the state government. Additionally, the
state has received grants OAT, USDA’s Rural Utilities Service, Commerce’s National
30
Telecommunications and Information Administration, HHS’ National Library of
29
Medi cine and the DoD.
A number of university telehealth programs also benefit from technology collaborations
with private corporations. For example:
The University of Texas (UT) joined VTEL, Sprint, and NASA to demonstrate
direct visual examination of p atients in remote locations, in a project designed to
serve Hispanic children living in medically underserved areas of south Texas.
The project used video teleconferencing, a document camera for transmitting x -
rays, and a microscope camera that permits the transmission of bone marrow
biopsy slides.
UT’s Medical Branch in Galveston (UTMB) also partners with the SBC
Foundation in supporting a telehealth research center. A $1 million grant
provided by the philanthropic arm of SBC Communications allows center
researchers to evaluate the effectiveness of healthcare technologies using
rigorous scientific methods. The center collects data not only to demonstrate
effectiveness of technologies and applications, but also to help guide public and
30
private insurers in d eveloping reimbursement policies.
One feature of many successful university programs is the very technical background and
technological interests of the telehealth center staff and researchers.
The Telemedicine Center at East Carolina University (ECU ) in Greenville, North
Carolina has emerged as a national innovation leader, largely due to the
enthusiasm of its director and its willingness to recruit top - level technologists
and to develop experimental technologies. For example, ECU technologists have
addressed the issue of interoperability by developing a “black box” which acts as
an interface to as many as twelve different devices at once.
The Telehealth Center at the University of Tennessee (Knoxville) is another
technology innovator led by an engin eer who had previously designed medical
devices. Research and development relating to human factors in
videoconferencing has resulted in advancements in teleconsultation systems.
The telehealth program at the University of Vermont is led by a vascular su rgeon
with extensive technical skills who has conducted research in using telehealth for
trauma care in rural areas.
University innovations are not focused only on rural applications. For example, the
interests of an ophthalmologist at Charles R. Drew Un iversity of Science and Medicine
led to a research grant from the Los Angeles County Community Development
Commission in 1996 for the “Urban Telemedicine Demonstration Project”. This project
was designed to evaluate the use of telehealth in providing incr eased eye care to [atients
in inner city Los Angeles. The doctor established “partnerships” with private sector
29
Federa l Telemedicine News, 1/6/03
Source: . For more information on the Arizona program, see
http://www.federaltelemedicine.com/n010603.htm
30
“Telemedicine Today,”
From October 2002. at http://www.telemedtoday.com/newslinks/
31
telehealth technology companies and leveraged donations of equipment, software and
31
connectivity to become a pioneer in the field of teleopthamo logy.
Private Sector
In contrast to federal, state, and local research – much of which focuses on specific
applications within specific, individual projects – most private sector firms concentrate
their research on technological innovations in specific medical areas such as pathology
and homecare.
This is a function of how telehealth firms were founded - generally by an individual who
developed a product or service around a particular technical skill or interest. Business
growth and consolidation requ ire a broader approach to both research and product
development, such as designing multi - use products for a broader range of customers. In
successful firms, greater attention is paid to both product and market research in order to
gain and maintain market share, and, if necessary, to compete with multinational
corporations entering the market with considerable resources.
The following are a few examples of applied research taking place within the nation’s
small, medium, and large companies:
Table 2.c E xamples of Private Sector Research and Development
Technology Examples of research Firm Size
32
Digital imaging Replacing film with digital Large
radiographs
33
Epidemiological detection Developing sensors and linking Medium
and surveillance sensors to algorithmic databases
Remote monitoring Linking devices (e.g. pacemakers) to Medium
remote monitoring instruments
34
Distributed measurement Homecare patients completing Small and
and control architectures diagnostic procedures and then medium
transmitting results to providers
Televideoconferencing Telepsychiatry Medium
Distributed diagnostics Linking devices to information Small and
systems medium
Pathology Linking instruments and laboratories Small
to providers
31
For more information on this interesting project and person, visit the University’s telemedicine web site
at http:// www.cdrewu.edu/telemedicine/Default.htm .
32
Having 500 or more employees
33
Having more 50 or more employees but less than 500
34
Having less than 50 employees
32
Research in digital imaging is being led b y such large firms as General Electric, Siemens,
and Kodak and is focusing on replacing film with digital radiographs for teleradiology.
The practice of medicine is growing increasingly dependent on computers and
networking. To be cost - effective and effici ent, these networks must include x - ray images,
which account for about 70% of all the imaging studies done in the United States.
“Additionally, as doctors grow increasingly accustomed to the benefits of digital image
display in other modalities such as MR I, CT, and ultrasound, they will demand the same
35
from radiography and the various applications of x - ray fluoroscopy.” Some smaller
firms also conduct research in digital imaging, focusing on monitors, application servers,
and information systems.
Epide miological detection and surveillance (i.e. “bio - defense”) has gained importance
and attention with the growing concern for homeland security. Although the Centers for
Disease Control and Prevention (CDC) are currently engaged in a substantial undertaking
to develop a nationwide system, small and medium firms are developing sensors and the
kinds of algorithmic databases that would alert networks to a possible healthcare
emergency situation. These technologies are also under development at federal labs,
s uch as the Department of Energy’s Oak Ridge National Laboratories which is providing
leadership and public/private collaboration in the field of sensors.
Distributed measurement and control architectures allow the use of telehealth, client -
server networks , and the Internet to program and receive data, and to diagnose symptoms.
Small and medium - size private companies such as HealthCare Vision, Health Frontier,
Health Hero, HomMed, March Networks, ATI, CyberCare, CyberNet, Cardiocom, CDX,
and Creative Healt h Products, Inc. have emerged as early leaders in this area.
One of the nation’s leaders in televideoconferencing technology, Polycom, reported that
it had invested over $82 million in research and development in 2001, an amount unique
to R&D spending amo ng telehealth firms.
Research in the area of distributed diagnostics appears to be confined to a few small
companies such as Apollo Telemedicine and tends to focus on incremental product
improvement. Apollo’s pathology network uses a subscription - base d applications service
provider model and remotely controlled telescopes to feed images from laboratories over
a TCP/IP based network (internet or intranet) to professional pathologists.
According to DoD and VA telehealth executives, small telehealth comp anies are
beginning to investigate funding sources for R&D such as the federal Small Business
Innovation Research (SBIR) and Small Business Technology Transfer (STTR) programs.
For example, the Army’s Telemedicine and Advanced Technology Research Center
(T ATRC) maintains 15 SBIR “topics” for which SBIR funding is available.
Some private non - profit organizations are also conducting telehealth research often
associated with improvements in access and quality. Although new technology does not
generally res ult from such research, studies are important in identifying research needs.
One such organization undertaking prototype research is the Center of Excellence for
35
Medical Device and Diagnostic Imaging,
“Digital Imaging Heralds Waning of Film Era,” January 199 9.
33
36
Remote and Medically - Underserved Areas (CERMUSA). CERMUSA is building a
wireless rural te lemedicine communications “test bed” at its St. Francis University
facility in Pennsylvania to test and evaluate the integration of new communications
technologies with cutting - edge telehealth technologies to determine the optimal means to
increase access to healthcare in medically under - served areas.
The focus of CERMUSA’s prototype is, essentially, the
development of a wireless communications infrastructure capable
of transmitting and receiving medical information. As new
communications and telemedicin e technologies become available,
they will be added to the “test bed.” The first priority will be audio
transmissions. The follow - on to audio will be to examine the ability
to transmit medical data and video. This test bed will allow
technologies to be tes ted on several different wireless frequencies
and signals. This upgradeable system will examine the efficacy of
communications modalities including: VHF radio, UHF radio,
analog and digital cellular, 800MHz radio, and mobile satellite
communications.
IDEN TIFYING NEEDED TECHNOLOGIES
37
Needs Assessment
An effective and efficient needs assessment should recognize the nation’s technical,
economic, and political environments. For example, increased attention to homeland
security has underscored the technical and economic need for federal and private research
and development to focus on “multi - use” technologies. Epidemiological surveillance and
pathology are examples of much - needed public health and homeland security
applications.
During a 2002 industry and provider roundtable, DoC Undersecretary for Technology,
Mr. Phillip Bond asked the nation’s telehealth leadership to discuss the role of the
Federal government in innovation, demand and investment in telehealth. All agreed that
any effort must begin with a systematic needs assessment or requirements analysis.
It would appear that, with a few exceptions, a great deal of effort or coordination has not
yet been directed toward the “front end” identification of research, clinical healthcare or
homeland secur ity requirements for telehealth. This should be expected, however, since
the business of healthcare is healing and not technology, and the healthcare industry has
not traditionally thought in terms of “national” needs or priorities.
Events of September 11, 2001 underscored the convention that technology must meet the
primary requirements of being both multi - use and interoperable. To accomplish these
36
For more information on CERMUSA and their research, visit their Web site at http://www.cermusa.francis.edu/default2.htm
37
Also commonly referred to in the private sector as “business analys is,” “requirements identification,”
“requirements definition,” “requirements analysis,” and “requirements gathering.”
34
requirements most effectively and efficiently, homeland security and clinical healthcare
needs should be integrated at every level -- locally, regionally and nationally.
Coordination of this integration project should begin with the Department of Homeland
Security. The needs assessment process will not only identify current “gaps,” but will
also identify technology and information needs not currently being addressed and
requiring additional effort and/or investment in research, development, testing, and
evaluation.
Identification of areas for telehealth research requires assessment according to recognize d
evaluation criteria, and a prioritization which has not yet been developed nor applied.
Needs assessment can play a significant role in identifying telehealth technologies
(devices, applications, and program models) that can be instrumental in providing greater
access to, lowering the cost of, and improving the quality and security of the nation’s
health. Such an assessment is also important for the development of “business models”.
Needs assessment can play a significant role in identifying telehealth technologies
(devices and applications) that can be instrumental in providing greater access to,
lowering the cost of, and improving the quality of the nation’s healthcare, increasing
productivity or healthcare professionals and staff, and providing great er homeland
security. A cross - or multi - specialty needs assessment could spur innovation by applying
a “systems approach” to identify what new or additional technologies are needed, what
technologies are available, what technologies are needed and availab le but not being used
(and why), and strategies for researching, developing, producing, and deploying the
required technologies.
Although leaders of the telehealth community generally agree on the importance of such
an “assessment,” there is not current ly a process in place which identifies, compiles and
disseminates telehealth technology needs of the nation’s providers. A commonly
developed and accepted collection of technology requirements beyond those identified
for a few specialties and on behalf of manufacturers or customers could not be identified
in the data - gathering phase of this report. The fragmentation of technology needs
assessment was recognized early on, however, and stakeholders have considered this
study a call for greater coordination and effort in collecting, compiling, and disseminating
this information.
Some activities that might contribute to telehealth needs assessment are currently under
way. The National Library of Medicine, for example, evaluates commercial telehealth,
informa tics and eHealth products. OAT requires its grantees to meet periodically to
discuss lessons learned, and looks to the proposal process as a method of assessing
technology needs. It has also developed guidance for strategic planning, technical
guidelines for purchasing equipment for specific telehealth applications, and is currently
developing a series of technical assistance documents for its grantees to guide them in
assessing needs. Draft guidelines should be available to the public by March, 2004.
Priv ate telehealth product and services firms often routinely assess provider’s needs when
conducting market research prior to innovating technology solutions. How these and
other efforts feed information back into the research and development process is uncl ear.
35
The ATA has made an effort to coordinate the identification of technology needs to the
extent of publishing certain standards. Beginning in 2003, ATA also began to emphasize
the role of its Technology Special Interest Group (Technology SIG) in iden tifying
38
requirements and future technology trends.
Before needs assessment can occur effectively and efficiently, it is important to
understand the policy climate surrounding telehealth. Policy issues such as
reimbursement and the availability of clin ical studies would assist provider’s decisions
regarding technology needs. In addition, increased attention to homeland security has
underscored a need articulated by the President that the technology be multi - use.
One of the most critical policy questio ns with fundamental relevance for any telehealth
technology needs assessment is the need, worth and desirability of a “national health
technology and information infrastructure,” and attendant issues such as data privacy. For
example, if providers and/or f irst responders are linked nationwide to sophisticated
evidence - based databases, their technology needs may be quite different.
Previous efforts that might have led to a national health technology and information
infrastructure include NIST’s Advanced T echnology Program’s Information
39
Infrastructure for Healthcare (1994 - 1997) which focused on providing funding for
infrastructural technology development to enable enterprise - wide integration of
information among all sectors of the healthcare industry. By i mproving the quality and
flexibility of the delivery of care through broad and effective access to information, the
program aimed to drive down the rising costs of healthcare while raising the quality of
care. It was not until the National Research Counci l and Institute of Medicine issued
st 40
“Crossing the Quality Chasm: A New Health System for the 21 Century” that the
concept of a national health information infrastructure began to acquire traction. The
Council’s report was followed by “Information for H ealth: A Strategy for Building a
National Health Information Infrastructure (NHII)” by the National Committee on Vital
and Health Statistics. In June, 2003, HHS convened a conference to “bring together
representatives of all stakeholders and to develop a consensus for a national action
agenda, which will then be published and widely disseminated, and used to guide the
41
further development of NHII.”
Consideration of such an infrastructure should include the converging technologies of
telehealth, healthcar e informatics, and eHealth as well as other healthcare devices and
applications. The nation’s interstate highway system, banking (ATM and credit card)
network, and Internet are good examples of current national infrastructures, and may, in
fact, provide m odels for a national health infrastructure development.
38
For information on ATA’s Technology SIG, see http://www.americantelemed.org/ICOT/icot.htm.
39
For more information, see Bettijoyce Lide a nd Richard N. Spivack, “Advanced Technology Program
Information Infrastructure for Healthcare Focused Program: A Brief History,” (NISTIR 6477), February
2000.
40
“Crossing the Quality Chasm,” Committee on Quality Health Care in America, 2001, Washington D. C,
National Aademy Press
41
For more information on the conference, see: http://www.nhii - 03.s - 3.net/welcome.htm
36
Approaches to Needs Assessment
There are at least three approaches to needs assessment – “top down,” “bottom up,” and a
hybrid version of these. The “top down” approach requires high - level decisi ons and
priorities on the direction and utilization of technologies, followed by the identification of
telehealth, IT and data requirements that support those high - level goals. This approach
can be undertaken with fewer resources but risks overlooking imp ortant requirements and
diminishes “buy - in” by state and local stakeholders who are critical to effective
implementation.
This has been the approach, for example, of the Centers for Disease Control and
Prevention (CDC) in their development of the National Epidemiological Detection and
Surveillance System (NEDSS) and Health Alert Network (HAN) in which they
established a national framework and specifications, then funded states to develop local
systems to interface with and support the national system.
Th e “bottom up” approach would involve surveying stakeholders at the “front lines” for
their requirements, and compiling this information into a comprehensive set of national
requirements. This approach develops a sense of “buy in” and participation that is
important for implementation. The disadvantage is the amount of time and dollar
resources required to undertake the survey, analysis and translation of clinical needs into
technology requirements.
The third approach is a hybrid of the first two – a “nee ds assessment team” made up of
professional requirements analysts and representatives of primary stakeholder groups.
The team would interview leaders within each community at all levels to obtain
requirements, and then compile a database of identified nee ds. The team would analyze
needs and recommend public/private strategies for meeting those needs.
The convergence of healthcare technologies would suggest that the most efficient and
cost - effective approach to needs assessment would be a comprehensive “s ystems
approach.” As such, a team should be comprised of requirements analysts familiar with
devices, applications, IT, informatics and eHealth.
In April of 2003, The Army’s Telemedicine and Advanced Technology Research Center
(TATRC) hosted a full day “ needs assessment” workshop. This session, which included
40 or more technical experts in various areas of healthcare and technology, was the first
attempt at a nationwide needs assessment focusing on homeland security and bio - defense.
There was producti ve discussion of detailed requirements and should result in a
substantial step forward in understanding and identifying needs
AREAS FOR TELEHEALTH RESEARCH
Stakeholder groups with specific interests in telehealth innovation include both providers
(clinic ians and healthcare institutions) and suppliers (manufacturers, services firms, and
systems integrators). Both groups have identified a common set of research priorities,
such as the development of industry - wide technical standards integrated with medical
37
protocols, clinical efficacy of telehealth applications, and cost - benefit comparisons that
offer compelling evidence of increased productivity and decreased costs. New telehealth
technologies must also be multi - use, scalable, and interoperable with legac y systems (i.e.
“plug and play”) Three other common research and development requirements include
interoperability, multi - use and training.
The American Telemedicine Association suggests the following seven areas as priorities
for innovation and adoptio n. It is here that the application of current technologies and
further research can significantly impact healthcare access, quality, cost, and homeland
42
security:
43
1. Homeland Security, CBRN/E, and Public Health
2. Military
3. Convergence of Technologies
4. Interope rability and Integration/Standards
5. Medical Simulation, Training and Health Education
6. Efficacy and Cost - Benefit Analysis
7. Diffusion of Information and Technology Transfer
Homeland Security,
Chemical/Biological/Radiological/Nuclear/Explosive (CBRN/E), and
Pu blic Health
A member of the President’s Homeland Security Advisory Council has said:
“A necessary first step is to more clearly define the desired outcomes — to
establish national objectives for the homeland security mission. From those
objectives we can devise strategies — the means to accomplish the objectives.
From those strategies we can begin to identify opportunities to employ
technology - based solutions. And from those opportunities, we can determine
where today's products are adequate — given effective implementation — and
where today's technologies fall short.
Then, and only then, can we create a roadmap to guide technology
investment for the homeland security mission. But rather than tasks to be
completed in sequence, these steps must become elements o f an ongoing
process that continually adapts our homeland security posture — maintaining
an asymmetric advantage over the adversaries who would threaten our
44
homeland.”
42
For more information on CERMUSA and their research, visit their Web site at http:/ /www.cermusa.francis.edu/default2.htm
43
Chemical, biological, radiological, nuclear, and explosion.
44
“Homeland Security Technologies: Creating an Asymmetric Advantage,” Dr. Ruth David, President and
April 2002.
CEO — ANSER (Analytic Services Inc.)
38
Even though the healthcare technologies industry responded early with offers of various
45
technologies, the federal homeland security community has yet to fully identify its
healthcare needs, or to completely address the role of telehealth technologies in “desired
outcomes,” “objectives,” “strategies,” or “opportunities to employ technology - b ased
solutions.”
The nation’s public health infrastructure was not a significant user of telehealth prior to
the events of September 11, 2001 and the anthrax attacks that followed. The Centers for
Disease Control and Prevention (CDC) had been developing plans and designing
systems, however, to detect chemical, biological, radiological, nuclear and explosion
(CBRN/E) attacks and to alert public health authorities. Prior to September 2001, the
CDC had begun development of a “National Epidemiological Detecti on and Surveillance
System” (NEDSS) and a “Health Alert Network” (HAN) applying multi - platform
telecommunications networks to link the Nation’s 1,300 public health sites. It was widely
assumed that many local health departments did not have the basic infra structure to either
connect with a NEDSS or HAN system, or to approximate more sophisticated emergency
medical response capabilities of metropolitan areas. For example:
Weaknesses in the nation’s governmental public health infrastructure were clearly demo nstrated in the
fall of 2001, when the once - hypothetical threat of bioterrorism became all too real with the discovery that
many people had been exposed to anthrax from letters sent through the mail. Communication among
federal, state, and local health off icials and with political leaders, public safety personnel, and the public
was often cumbersome, uncoordinated, incomplete, and sometimes inaccurate. Laboratories were
overwhelmed with testing of samples, both real and false. Many of these systemic weaknes ses were well
46
known to public health professionals, but resources to address them had been insufficient.
The events of September 11, 2001 underscored the need for coordinating local response
to medical emergencies and highlighted the need for improved re lationships between
healthcare and homeland security agencies and personnel. Federal responsibilities for
assessing technologies and identifying requirements for responding to CBRN/E threats
and emergencies is currently diffused among the Department of H ealth and Human
Services (HHS), the Department of Defense (DOD), and the Department of Energy
(DOE). The consolidation of CBRN/E defense and preparedness responsibilities under
the Department of Homeland Security is underway, although responsibility for p ublic
health will remain with HHS.
In January 2002, Congress and the Administration released the first installment of more
than $1 billion in funding to the states to respond to the threat of bio - terrorism. States
were expected to respond with a statewi de plan to “ . . . lay out how it will respond to a
bio - terrorism event and other outbreaks of infectious disease, but also how it will
45
Acc ording to a report by the National Academy of Sciences, over 11,500 manufacturers responded to
calls from Governor Ridge following his appointment in October 2001 and by the Department of Defense
for technologies that would contribute to homeland defense, including dozens of telehealth suppliers. A
coordinated process to interface those responses with healthcare technology requirements was not in place.
It was reported that the initiative was “overwhelmed” as a result, and most private sector responses wer e
disregarded.
46
“The Future of the Public’s Health in the 21stCentury,” Institute of Medicine, The National Academies
Press, 2002, page 96
39
47
strengthen core public health capacities in all relevant areas.” Plans are being reviewed
48
and approved by HHS according to 17 critical criteria. It is likely that at some point in
the future, these plans will be used to further identify technology gaps and/or the need for
a national health technology and information infrastructure. This review and (possible)
integration provide unique opportunities to apply a “systems approach” to identify and
assess homeland security, public health and clinical healthcare gaps and needs as an
integrated whole.
Discussion of telehealth’s role in and potential contribution to homeland se curity has
been reflected in the distribution of initial homeland security - related funding. Initial
emphasis on first responders and public health communities appears to miss hospitals and
clinics, where most telehealth programs are deployed. Organizationa l responsibility for
and structure of each state’s homeland security planning depends on the individual or
49
organization designated by the Governor. For the most part, Governors have designated
state public health officers and emergency medical directors as points of contact and
responsibility. The “National Bioterrorism Hospital Preparedness Program” administered
by HRSA’s Office of Special Programs committed $498 million in FY2003 for grants to
states for disaster planning, needs and capacity assessment , technical assistance and
training although it is not yet known whether this deployment has included consideration
of telehealth technologies.
A major activity of the new Department of Homeland Security’s Office of Science and
Technology will be directin g federal research and development, coordinating research
and development/science and technology activities among the multiple agencies
involved, and identifying homeland security research, science, and technology
requirements. Interagency teams tasked wit h evaluating federal needs for homeland
security infrastructure have been convened in several critical functions, but not, as yet,
for healthcare. It is important that any consolidation of healthcare technologies
requirements for homeland security be int egrated with other private and public
stakeholders to include such research organizations as the Army’s Telemedicine and
Advanced Technology Research Center (TATRC). Cooperation among users in
requirements definition as well as research and development co uld well result in multi -
use breakthrough innovations for homeland security, public health and clinical healthcare
technologies.
Telehealth technologies offer the opportunity to not only augment the “first response
level” but also empower successive level s of authority in crafting an overall response
network. Such a network would require: 1) updated, open - platform systems; 2) high -
speed networks; 3) workstations; 4) industry - standard applications; 5) standardized
nomenclatures and taxonomies; 6) data secur ity tools and protocols; and 7) computer -
47
“Federal Funds for Public Health Infrastructure Begins to Flow to States,” DHHS Press release, January 25, 2002. see
http://www.hhs.gov/news/press/2002pres/20020125a.html .
48
“ 17 Critical Benchmarks for Bioterrorism Preparedness Planning,” DHHS Press release, June 6, 2002,
see http://www.hhs.gov/news/press/2002pres/20020606a.html .
49
For a list of State Homeland Security Directors, go to
http://www.whitehouse.gov/ homeland/contactmap.html .
40
50
based patient records. While each of these requirements is being addressed in some
fashion by researchers and federal organizations, there has been little coordination with
each other or within the telehealth com munity.
Homeland security technology needs include sensors and surveillance devices, related
information systems for syndromic surveillance, and alert capabilities. One of the
leading examples is the Real - time Outbreak and Disease Surveillance (RODS) sys tem
developed by the University of Pittsburgh’s Center for Biomedical Informatics and
funded by the National Library of Medicine, the Agency for Healthcare Research and
Quality (AHRQ), the Centers for Disease Control and Prevention (CDC), and the
Defense A dvanced Research Project Agency (DARPA). RODS is essentially a proven
telehealth technology that could be used as the basic platform for national CBRN/E
development programs.
Research and development of sensor technology was rapidly advancing even prior t o
9/11. At the 2002 Winter Olympics in Salt Lake City, for example, sensor and syndromic
surveillance technologies were combined by the U.S. Air Force in conjunction with Idaho
Technologies to form the Ruggedized Advanced Pathogen Identification Device, o r
RAPID. This innovative project provides for fast pathogen identification, using a
backpack - sized portable laboratory to analyze field samples and polymerase chain
reaction technology. It was designed for use in field settings like military hospitals and
first - responders to detect the presence of harmful biological agents.
Beyond detection and surveillance, other areas of focus for innovation and adoption
related to development of a technology infrastructure for homeland security include
telecommunicati ons, information, and training networks which link providers and
institutions. Deploying these technologies and programs, and providing training to the
nation’s public health providers to respond to their new homeland security
responsibilities presents bot h a financial challenge and an opportunity to increase access
to quality healthcare for medically underserved areas. Linking sensors to central
receivers or monitors and linking those facilities, in turn, to centralized databases requires
telecommunicatio ns infrastructure that does not exist in much of the nation’s rural and
remote areas. Although wireless communications may provide a partial answer (Oak
Ridge Laboratory’s “Sensor Net” uses wireless telephony, although over a relatively
limited area), mos t sensor research and development has yet to address interfaces or
integration with CDC’s public health systems.
Research and development is also underway in the area of bioinformatics for syndromic
surveillance systems using algorithms to analyze sympt oms for possible epidemiological
and CBRN incidents and/or attacks. For example, the Lincoln Laboratory at the
Massachusetts Institute of Technology (MIT) is developing a microchip combined with
mouse B cells to detect individual pathogens. Efforts are un der way to increase the speed,
sensitivity, and cost - effectiveness of such a detector.
50
Nursing Management
Simpson, Roy L.“Our First Line of Defense Against Bioterrorism.” 2002 May
33(5):10 - 13. p. 12.
41
In a worst - case scenario, there will be a need to monitor individuals in quarantine,
bringing the need for bio - detection and remote monitoring technology to the front
d oorstep of home healthcare. Advances have been made in this arena as well, such as the
Air Advice monitoring system developed by an Oregon company of the same name.
That device monitors allergens, pathogens and biogens in a room or house, then transmits
collected data via telephone lines (POTS) to DOE’s Pacific Northwest Research Lab
(PNRL). There the data is analyzed using algorithms, then transmitted to Air Advice’s
database, which then alerts the subscriber. It appears that in addition to significant
potential for improving the protection and healthcare provision for individuals, there is
significant economic potential in linking homecare monitoring with environmental (air
and water) and CBRN monitoring.
Military
Within the federal government, the DoD leads the federal research community in
research and innovation related to telehealth due primarily to the Army’s Telemedicine
and Advanced Technology Research Center (TATRC) located at Fort Detrick, Maryland.
Although TATRC research and other DoD mis sions are focused on military applications,
their telehealth applications are clearly “multi - use”. Systems can be deployed for
domestic preparedness, emergency response, and homeland security, as well as combat
theater uses. TATRC’s technological researc h priorities outlined in a recent presentation
51
include the following:
Imaging
Digital image acquisition devices
3D Medical data and image analysis and displays
Virtual workbench
Portable Apollo Digital Mobile Radiology System
Distance medicine
Predictive diagnostics
Radio frequency triage system
Image - guided therapies
Medical informatics
Computerized patient record
Medical data mining
Intelligent decision systems
Medical data processing
Wireless medical enterprise
Wireless medi cal systems (e.g. medical digital assistants)
Personal information carrier (i.e. “digital dog tag”)
Virtual retina laser display
Digital EMS
Medical modeling and simulation
Computer - aided instruction
3D surgical simulation
Virtual reality
51
“Telemedicine and Advanced Medical Technology Program,” a briefing presented by Conrad Clyburn of
the U.S. Arm y Telemedicine and Advanced Technology Research Center, November 2002
42
He althcare complex modeling
Medical situational analysis
Digitally enhanced mannequins
Operating room of the future
Minimally invasive therapy
Physiological sensors
Microelectromechanical (MEM) systems
Sensors and robotics
Real - time biochemica l assays
Communications infrastructure
Each of these areas represents significant technology needs and may provide
opportunities for project - specific “partnerships” for small private firms focusing on
research, development and commercialization. Althoug h much of the $106 million
budgeted for TATRC research is designated for specific projects, the Center routinely
identifies potential partners for projects that fit with their mission. In addition, TATRC
manages 12 - 15 Small Business Innovation and Researc h (SBIR) topics.
One of the early breakthroughs in telehealth research and development came through a
Defense Advanced Research Projects Agency (DARPA) contract to develop the “Life
Support for Trauma and Transport” system -- a fully self - contained elect ronic stretcher.
DARPA is also developing robotic models for such applications as telementoring,
telepresent surgery, and laparoscopic video teleconferencing, as well a robotic transporter
for moving injured personnel away from battle without endangering t he attending
medical specialist. DARPA reduced its telehealth research in FY2000 through FY2002,
but may resume its telehealth research now that its former lead researcher has rejoined
the agency.
.
Convergence of Technologies
Several technologies which have developed in their own right appear to be converging
and, in some cases, integrating. For example:
1 With its roots in information technology, healthcare or medical informatics is
increasingly dedicated to research, simulation, modeling, education, an d decision
support.
2 The rapid integration of informatics and devices with eCommerce and the Internet
has evolved into the field of “eHealth.”
There are several similarities between these IT - based technologies and other telehealth
52
technologies. For exam ple, each of these face barriers of reimbursement, licensure, and
user acceptance. Despite advances in each of these technologies, a recent Institute of
52
43
Medicine report maintains, “The health care sector has languished behind almost all other
53
industries i n adopting information technology.”
The convergence of healthcare technologies creates another dynamic for innovation. For
example, the National Science Foundation, in conjunction with the Commerce
Department, recommended in a 2002 report entitled “Conv erging Technologies for
Improving Human Performance” that “the Federal Government should establish a
national research and development priority area on converging technologies focused on
enhancing human performance as a long - term, conferment strategy for r esearch and
54
education.”
The convergence of technologies has also been widely recognized throughout the
healthcare sector. Industry associations have begun expanding their membership to
include vendors and users of related technologies, and some associati ons have created
crosscutting committees or special interest groups. The American Medical Informatics
Association has, for example, created a Telehealth Special Interest Group, while the
American Telemedicine Association has created new Special Interest G roups to consider
the industry impact of convergence. In December 2002, Department of Commerce
Undersecretary of Technology Phil Bond called for a “coalition” of like - minded
healthcare and information technology associations to develop a “single voice” on
important issues.
Interoperability and Integration/Standards
The integration of technology with medicine may be the single greatest
55
current research need for the telehealth community.
Technology
Increasing the interoperability of devices and the int egration of telehealth with clinical
medicine and other healthcare technologies is another focus of telehealth innovation.
Interoperability is the ability of two or more systems to interact with one another and
exchange information in order to achieve pre dictable results. Innovations in this area
include the integration of networks with programs, of devices with applications, of
applications with clinical protocols, and of technologies with business processes. If
telehealth is going to realize its potent ial for improving productivity, increasing quality
56
and reducing cost, the following three levels of interoperability must be provided:
53
“Fostering Rapid Advances in Health Care: Learning from System Demonstrations,” Institute of
Medicine’s Committee on Rapid Advance Demonstration Projects: Health Care Finance and De livery
Systems, November 2002.
54
“Converging Technologies for Improving Human Performance,” a NSF/DOC sponsored report, June
2002.
55
Jon Linkous, Executive Director, American Telemedicine Association, September 2002.
56
Col. Ron Porapatich in speaking to th e American Telemedicine Association conference, December 2002.
44
1. Stations or applications developed by independent vendors must be able to
interact.
2. Medical devices and other “peripher als” connected to one vendor’s station
must be able to interact with stations developed by other vendors.
3. Individual stations should be developed as “plug and play” from
components developed by multiple vendors.
4. Ideally, information systems should be devel oped or adapted using open
standards and, just as importantly, publishing those standards widely.
5. Eventually, most applications need to link back in some fashion to
electronic clinical patient record databases.
Until interoperability is fully achieved, i nnovators must focus on “middleware” to include
hardware and software. As a result, users will likely face higher integration costs.
Standards are a means by which interoperability is achieved .
In addition to facilitating development of interoperable de vices and applications, the
57
following represent benefits to providers of adopting universally accepted standards:
- The ability to plug and play devices and applications as required
- Increased safety with compliant devices and applications comply with industry
requirements
- Greater satisfaction of users in knowing devices and applications are tested and
compliant
- Reduction of uncertainty means better management of clinical risk
- Assuring compliance will contribute to greater credibility and, therefo re to
consultation volumes
- Compliant performance can assist with costing of services because of the
sameness of workflow among providers
- Standard performance can support evidence - based practices
Standardization cab improve business profitability by:
- Lowering purchasing costs
- Increasing quality
- Lowering trade barriers (where standards have been internationalized)
- Decreasing design time
- Ensuring Interoperability
Standardization can improve competitive advantage by:
- Promoting innovation
- Increasing speed to market of new technology
- Creating the perception of being an industry leader
- Enabling compliance with international codes, specifications and standards
To achieve operational interoperability, a number of practical steps are r ecommended.
These include: interoperability testing of devices and applications, clarification on
57
Col. Ron Porapatich in speaking to the American Telemedicine Association conference, December 2002.
45
clinical approaches, process and workflow analysis and improvement, provider
agreements, and education of providers regarding the uses (and limitations) of th e
technologies. In addition, operational interoperability requires buy - in from the
participating organizations, technical support, training of both users and staff, and
58
detailed staff and equipment scheduling procedures.
In addition to technical issue s of interoperability, other policy issues must be addressed.
Looking at three areas of interoperability, one can identify both technical and policy
requirements: 1) operational (e.g. ease of use, cost - benefit, privacy, and human
resource/education); 2) c linical (e.g. licensure, automation of patient records, and risk
management); and 3) technical (e.g. connectivity speeds and modes, technical standards,
peripherals, and security).
As noted, the problems associated with interoperability are due in large p art to the
fragmented nature of telehealth – many participants each having different requirements or
solutions and each applying different technical standards. The healthcare industry is not
unique in having an excess of standards that are developed by mu ltiple organizations.
Other organizations face similar situations and challenges with respect to electronic
business specifications. Healthcare is unique, however, in the diversity of standards –
infrastructure standards, clinical information standards, and business information
standards, as well as standards within each medical discipline – only some of which are
comparable. Healthcare is also unique in that, due to the number and diversity of
providers and technology suppliers, interoperability is signi ficantly more challenging. It
is also critically important, especially when considering that individuals’ health and life
are affected as well as the national dimension of homeland security.
Some vendors’ telehealth systems are similar enough that physic ians need not be fully
retrained when they move to a new delivery system or combine services with another
provider. But the lack of compatibility among many homegrown systems has limited just
how far many telehealth services can extend. On a national leve l, compatibility is
essential to constructing any truly useful, larger infrastructure of healthcare service.
Faster connection and transmission speeds have increased the capabilities of telehealth
applications overall, but without standards (or the abilit y to integrate patient information
among various internal or external systems) many telehealth services cannot be
performed within or across delivery systems. Standards form the building blocks of
effective health information systems and are essential for efficient and effective public
health and healthcare delivery systems.
Adoption of standards that make it easier for telehealth systems to interoperate with other
hospital information systems and easier to integrate technology with routine care should
en courage physicians to adopt telehealth applications. Without standards that make
telehealth technologies easier to use or that enable interoperability among disparate
59
systems, physicians are unlikely to embrace advancements in telehealth applications.
Canadian Society of Telehealth. “National Telehealth Interoperability Workshop Report,” F eb. 2001, p. 2.
58
Health Data Management
Kelly, Becky. “Telemedicine Begins to Make Progress.” , Jan. 2002, p. 76.
59
46
Requirements should be developed to define the level of interoperability to which
different vendors or suppliers of telehealth equipment must communicate and exchange
60
health related information. Efforts to enumerate current standards and develop profil es
(i.e., a stack of standards) and conformance testing methodologies, need to ensure that
broad (standards) coverage exists to serve the needs of the whole community, not just one
61
sector.
There are a few initiatives underway which may contribute to im provements in
interoperability and standards for telehealth devices and applications:
1. HHS, DoD and VA recently announced an effort to standardize the information
exchange, part of the Consolidated Health Informatics (CHI) initiative, one of the
Bush ad ministration's 24 eGovernment initiatives. The standards, including privacy
and security protections, will make it easier for health care providers to share patient
information and identify emerging public health threats. It also will facilitate the
creati on of portable electronic medical records
2. To ensure that all agencies are working together to address common homeland
security equipment issues, the Interagency Board for Equipment Standardization and
Interoperability (IAB) is facilitating the developm ent of Interagency Agreements
(IAs) and Memoranda of Understanding (MOUs) among federal, non - profit, and
private standards agencies. These agencies include, among others, the National
Institute for Occupational Safety and Health (NIOSH), the National Insti tute for
Standards and Technology (NIST), and the American National Standards Institute
(ANSI). The IAB suggests that these IAs and MOUs are critical to the development
and use of interoperability standards and regulations for military and first responders .
The Interagency Board is organized into four equipment Subgroups and two technical
Committees. The equipment Subgroups include the Medical Subgroup, the Personal
Protective and Operational Equipment Subgroup, the Interoperable Communications
and Informa tion Systems Subgroup, and the Detection and Decontamination
Subgroup. The two technical Committees include the Science and Technology
62
Committee, and the Standards Coordination Committee.
Discussion with the Federal co - chair of the Medical sub - group re vealed that inclusion
of telehealth devices had not been considered to date.
3. The Technical Support Working Group (TSWG) is the U.S. national forum led by
DoD that identifies, prioritizes, and coordinates interagency and international
research and devel opment (R&D) requirements for homeland security. The TSWG
“rapidly develops technologies and equipment to meet the high - priority needs of the
homeland defense community, and addresses joint international operational
63
requirements through cooperative R&D wit h major allies.”
Discussion with TSWG staff revealed that inclusion of telehealth devices had not
been considered to date.
60
Ibid . p. 5.
61
Ibid . p. 76.
62
For more information, visit their web site at http://www.tswg .gov/tswg/home.htm .
63
For more information, visit their web site at http://www.iab.gov/IAB.asp .
47
4. The Technology Special Interest Group (SIG) of the American Telemedicine
Association (ATA) has also been organized with inter operability and standards as its
primary objective.
5. ATA is discussing a joint effort at standards development with the Canadian Society
64
for Telehealth.
6. Following the June 2002 Roundtable organized by Technology Administration, ATA
and the Nationa l Institute for Standards and Technology (NIST) developed a process
leading to standards in the area of diabetic retinopathy. That “roadmap” has been
completed in draft and was presented to the ATA membership for review at their
December 2003 business opp ortunities conference.
7. The Universal Plug and Play Forum is a private, non - profit initiative designed to
enable simple and robust connectivity among stand - alone devices and PCs from
many different vendors. The Forum consists of more than 500 vendors, i ncluding
industry leaders in consumer electronics, computing, home automation, home
security, appliances, printing, photography, computer networking, and mobile
65
products.
Development of technologies such as “middleware” and “black boxes” that connect and
integrate devices and/or applications from a variety of sources and between different
versions of systems would speed adoption and deployment of telehealth. Many problems
with interoperability are attributable to unsuccessful attempts at integration, esp ecially
during the first generation of telehealth technology. Research and development of
integration models, methodologies, and innovative technologies could be instrumental in
facilitating integration.
Additionally, the “gap” between the technical kn ow - how of the user and the human
factors engineering of the technologist might be narrowed with more “user friendly”
technologies or features that are intuitive to providers. The DoD has been a leader within
the federal government in closing this gap, as demonstrated by their “Tri - Care On - Line”
which integrates numerous medical information systems into a common, user - friendly
web portal.
The information technology industry has essentially solved this issue through systems
analysis, systems integration, and business process reengineering. The limited number of
systems analysts, systems integrators, and business process reengineers expert in
64
A look at how Canada is addressing the issue of interoperability may also be useful. Canada has taken the issue o f
interoperability seriously, beginning with a “National Telehealth Interoperability Workshop” in 2001. The Canadians
concluded with the need for “an inventory of interoperability activities across Canada” and “the collection and
synthesis of the teleheal th interoperability elements be compiled into a framework to address telehealth interoperability
implementation and sustainability. This framework will provide interoperability guidelines and recommend standards
to assist health care providers in their im plementation and use of telehealth systems. These common sets of telehealth
standards and protocols will support collaborative telehealth activity, and encourage development of the evolving
telehealth industry.” Another interesting comment by the Canadians is “ . . . the lack of information on the tangible
benefits of telehealth interoperability makes the issue difficult to prioritize, as does the lack of funding specifically
targeted for this activity. They continue “The process for developing interoperabi lity is very immature and fragmented.
As such, there is a lack of clarity on accountability, governance and mandates.”
65
For more information, visit the Forum’s web site at http://www.upnp.org/
48
telehealth often shifts the burden for integration to in - house IT staff, clinicians or
vendors. Education and trai ning in healthcare applications for “techies,” and the
development of in - house integrators (health care professionals with training in systems
analysis and process reengineering) will contribute to resolving interoperability issues. It
is equally importan t for manufacturers to build interoperability into systems from the
outset.
Policy
While most of the attention has been focused on the interoperability of technology , not
enough attention has been paid to the interoperability of technology with policy . An
example is the security and privacy regulations mandated by the Health Insurance
Portability and Accountability Act of 1996 (HIPAA). Devices and applications should
have become “HIPAA - compliant” in 2003, which may add another layer or dimension of
inte roperability, especially for legacy systems. How homeland security - related
technology procurements by state and local first responder and public health
organizations are integrated with other networks may also be significantly affected by
interoperability concerns.
Medical Simulation and Training/Health Education
Using telehealth to increase access to education and training opportunities could also
advance user adoption. The audio/video/digital nature of telehealth networks allows
them to be used for simulation and training, as well as health care. Simulation
technologies such as “virtual operating rooms” can be distributed to educators and
healthcare providers through telehealth networks. Streaming video and other web
technologies make education and training as economical and accessible as the closest
computer. Technology to deliver the educational component of public health and
homeland security is currently available and awaiting additional infrastructure and
curriculum content.
Because of the need to link to increasing amounts of information and IT capabilities,
telehealth networks may provide the infrastructure needed for continuing education. The
convergence of telehealth, healthcare informatics, and eHealth will increase the levels of
tech nical know - how required of healthcare providers at all levels and in all specialties.
Medical and healthcare education curricula will be revised with greater integration of
information technology and knowledge management.
The Internet and related informa tion technologies also can enable a more efficient,
quality healthcare system. The evidence - based approach to medical treatment uses
knowledge about the treatments and technologies that provide the best patient outcomes
under different circumstances at the point of care. Evidence - based medicine and health
informatics may improve the quality of patient care. With recent concern over widely
publicized medical errors, as well as rising variable costs in treatments and outcomes, the
healthcare community is se arching for ways to acquire knowledge that will guide them in
the appropriate delivery of care. The generation and provision of such evidence could
support the development of practice guidelines and the standardization of care.
49
Overwhelming amounts of cli nical and public health information are available to
healthcare and public health providers and patients. Some of that information is
potentially confusing or inaccurate, in particular that found on the World Wide Web.
Knowledge management technologies suc h as data mining and decision support systems
assist in sorting good from bad information. As individuals take greater responsibility for
their own healthcare, search, sort, and filter technologies which could connect the
consumer to appropriate sources o f diagnosis, treatment or information may become
commonplace.
Process reengineering and automation of current manual transactions and processes are
tasks necessary to enable a seamless continuum of care, evidence - based healthcare, and
wellness and prevent ion. One of the key problems to be solved is providing a means for
practitioners to enter data they develop during patient encounters without imposing on the
clinical procedure or the practitioner’s natural, individual workflow. Such unobtrusive
data captu re will allow for the development of resources such as longitudinal patient
records, knowledge services, and clinical repositories. The DoD, with the development
and early deployment of its Composite Health Care System (CHCS) II, is perhaps the
leader in f ielding a large system that includes a patient data repository and brings to the
clinician’s desktop patients’ electronic health records.
There is a need to make systems and data more accessible to those outside the
organization where systems and data re side. This need in the healthcare industry arises
out of new business relationships among various healthcare players established to
respond to paradigm shifts in healthcare delivery, and from the need to deliver
information directly to the patient to meet the demand for patient involvement in his/her
own healthcare decisions. Open exchange of healthcare data and information requires
sophisticated technological safeguards to mitigate the risk of unauthorized access or
disclosure, or a loss of information int egrity.
Challenges for Healthcare Standards and Testing
The provision of simple, standardized methods to evaluate and certify online healthcare
information is crucial to making healthcare safe and available to all. At the same time,
the public, as well as healthcare providers, must have confidence that their online
communications are secure, their privacy protected, and the digital representation and
exchange of information is accurate and correct. Security and continuity of operations
must also be assu red. Appropriate standards for healthcare information and systems
provide the cornerstone to achieving a ‘healthy’ healthcare infrastructure.
Efficacy and Cost - Benefit Analysis
Much of what is considered “research” in telehealth is actually devoted to ef ficacy and
cost - effectiveness studies funded primarily by private sources. It appears, however, that
such studies have not yet significantly contributed to advancing the adoption of
telehealth. A primary challenge to these types of studies has been the ne ed for a “critical
50
mass” of programs. OAT suggests that “We appear to be on the cusp of having enough
programs in place that can be studied.”
Although the conduct of peer - reviewed clinical studies in telehealth has been relatively
limited, there have be en some that have demonstrated promising results. For example,
where telehealth was applied to managing high - risk pregnancies, there were significant
66
reductions in premature births. Other studies in Tennessee showed that hospital
readmission rates for congestive heart failure patients were dramatically lower after a
67
sustained program of telehomecare monitoring and patient education.
Even though the quantity of high - quality clinical studies is relatively limited, there may
have been enough to conclude that telehealth should be considered a promising
application of technology in the national context and discussion of healthcare quality. It
would also seem likely, then, that additional high quality efficacy studies would be
sufficient to convince both p roviders and patients of the efficacy of a certain device or
application, its contribution to improving quality of care, and its ability to increase the
productivity of the provider and staff which will, in turn, lower costs.
Some studies undertaken to establish efficacy have, however, yielded contradictory
conclusions. In one case study referred to frequently by telehealth leaders, Kaiser
Permanente studied the effects of telehomecare on congestive heart failure patients and
determined that televideo mo nitoring can economically replace in - home visits. The
positive results of this study resulted in Kaiser’s decision to reimburse and to promote
68
telehomecare use among its providers. On the other hand, an Aetna “evidence review”
funded by HHS’ Agency for H ealth Research and Quality (AHRQ) in 2001 to determine
the availability of evidence of improved access and clinical efficacy in certain telehealth
specialties suggested that the quality of efficacy studies was insufficient to reimburse any
telehomecare app lication. As a result, Aetna appears to be the only major third party
payer with a specific policy prohibiting reimbursement of telehealth encounters.
Despite dramatic growth in federal and private funding for medical and healthcare
research (e.g. a 30% increase in funding during FY2000 - 02 to $23 billion for the National
Institutes of Health), there appears to be little activity throughout the federal government
in conducting efficacy or cost - benefit research for telehealth, even though the need has
been recognized for several years.
In 1998, the predecessor to the AHRQ described the nation’s needs for telehealth
69
research and information as follows:
66
Morrison, John, M.D . et al , “Telemedicine: Cost - Effective Management of High Risk Pregnancy,”
Managed Care
, November 2001.
67
Burgess, S., Dimmick, S., & Robbins, S. (2001). “Cost of care reductions using telehealth: A
comparative analysis,” paper presented at the American Telemedicine Association Annual meeting. Fort
Lauderdale, FL, June 2001.
68
See a discussion of the AETNA study at http://archfami.ama - assn.org/issues/v9n1/fful/foc8072.html
69
Fit zmaurice, J. Michael, “Telehealth Research and Evaluation: Implications for Decision Makers,”
AHRQ, August 1998
51
1 Scientific studies - controlled trials
2 Condition - specific studies
3 Site - specific studies
4 Multiple - site s tudies
5 Large sample sizes
6 Studies in developed and underdeveloped areas
7 Continually updated Web site of telehealth projects
8 Continually updated Web site of telehealth evaluation studies
9 Funding for scientifically valid telehealth research and evaluation pr ojects
In 2001, the University of Oregon published an evaluation of telemedicine research under
70
an AHRQ grant that contained several recommendations:
The Evidence - based Practice Center team recommends that, in the
future, diseases with a high burden of illness and barriers to access to
care should receive the highest priority for telemedicine research.
Systematic observation of the effect of a telemedicine service should
begin as soon as possible with the use of patient registries, and
research on teleme dicine in practice networks should be encouraged.
Randomized controlled trials that assess patient outcomes and costs
related to entire episodes of care should be encouraged, and
demonstration projects avoided. The fact that telemedicine is an
emerging te chnology is not a reason for failing to perform
randomized controlled trials. Rather, new methodologies such as
"tracker trials" should be used to assess telemedicine systematically.
There is also a need for basic research in telemedicine to refine
target populations for services, refine interventions prompted by
them, develop standardized tools to measure effectiveness and
harm, and assess the effect of different methods of delivery and
payment.
Finally, journals publishing telemedicine evaluation studie s must set
high standards for methodological quality so that those who make
decisions on coverage of telemedicine services need not rely on
studies with marginal methodologies.
There has been limited progress in meeting those research needs. What federal funding
may be available for clinical efficacy studies for telehealth has been largely limited to
grants or contracts awarded by AHRQ for evaluative studies and by NIH Institutes such
as the National Library of Medicine for technology assessment and demon stration
projects. It would appear that, to date, AHRQ’s efforts have been largely focused on the
evaluation of existing studies rather than in creating studies of a quality acceptable to
71
clinicians, regulators, and third - party payers. What emerges is a “Catch 22” situation
where telehealth cannot advance without evidence created by quality studies, but quality
studies are not being undertaken because of lack of coordination, funding, or focus.
70
Telemedicine for the Medicare Population
Evidence Report/Technology Assessment No. 24, (AHRQ
Publication No. 01 - E012).
71
Studies conducted by vendors are often discounted as not being objective.
52
The DoD and VA have produced and published some efficacy stu dies of their own
programs. The Quality Interagency Coordination Task Force (QuIC) was established in
1998 in accordance with a Presidential directive to ensure that all Federal agencies
involved in purchasing, providing, studying, or regulating health car e services are
working in a coordinated manner toward the common goal of improving quality care. It
would appear, however, that efforts to coordinate federal research topics, priorities, and
funding for telehealth have thus far fallen short or have fallen outside of the mission
outlined for QuIC.
Without greater efforts to provide evidence of clinical efficacy and positive cost - benefit,
other barriers to innovation, demand and investment in telehealth will be difficult to
overcome. The Food and Drug Admin istration (FDA), for example, needs high quality
clinical efficacy studies to evaluate and approve new devices, and the Centers for
Medicare and Medicaid Management Services (CMS) require evidence of efficacy for
reimbursement decisions. As importantly, c linicians expect sound, peer - reviewed
research before adopting new technologies, and administrators require evidence of cost
effectiveness before considering investments.
Whereas FDA requirements are generally satisfied by the firm submitting a device o r
application for approval, CMS and private payer efficacy requirements apply to a broader
application or specialty, such as mental health or home healthcare. While it is in the
interest of telehealth providers and vendors to provide CMS and private payer s with
clinical evidence of efficacy, the cost of such research may be prohibitive to small and
medium size firms that tend to make up most of the telehealth technology sector.
Data on Efficacy and Cost/Benefits
Although there are numerous studies that claim to prove telehealth applications are cost -
effective, these studies are often summarily dismissed because they are not scientifically
or statistically significant. Moreover, critics of telehealth point to a lack of evidence that
the technology has p roven itself as an effective substitute for the traditional encounter.
Primary reasons for the lack of data are the cost of surveying and collecting data as well
as what would appear to be the lower priority for such studies.
72
Another factor is the deba te over what constitutes valid measures. OAT has developed
some common measures of value - added for improved access that are being implemented
in 2003, and some preliminary measures of outcomes for a subset of specific conditions
are under development.
As mentioned earlier, teleradiology (TR) is an area that was invested in and developed
early in the history of telehealth for various reasons, some of which included the specialty
is made up of professionals who are already technical, private teleradiology s ervices have
already proven sustainability, and because radiological images have been consistently
72
For example, in theory, every American already has access to quality healthcare - the only barrier being
distance to and cost of travel to the provider’s location. In this case, the return on investm ent is more an
economic measure of convenience or transportation cost savings than a reflection of public policy such as
increased access or improved quality. This line of reasoning argues for the home as the most cost effective
location for healthcare fo r many Americans.
5 3
reimbursed by Medicare and other payers. Thus, many large HMOs as well as the
Federal government (DoD, VA) have instituted TR to varying degrees within thei r
enterprises. Yet, to date, there appear to be no comprehensive business - case analyses that
have definitively estimated the overall economic return on investment. This may, in part,
be due, to business competition concerns. In 2000, the US Air Force Te lemedicine office
performed a literature search and found only five (5) such studies in the medical literature
that addressed cost factors and/or savings, yet each of these studies addressed only a
subset of possible factors, such as costs savings from eli mination of films and storage
®
rooms. The Air Force telemedicine consultant then developed an Excel - based model
that looked into 25 separate factors, including other items such as reduced medical
malpractice claims arising from lost films and the reductio n in costs associated with the
use of voice - recognition software for reports (thus reducing or eliminating the need for
transcriptionists). While it was concluded that the “break - even point for investment
would occur at 7 - 8 years, that duration may curren tly be shorter as costs for radiographic
image “capture” devices have dropped dramatically in just three years.
Attempts to evaluate the impact of telehealth investment by such states as Virginia have
also been hampered by the need for more and better dat a. There are not, for example,
before and after data relating to the percent of patients in rural and medically underserved
areas that have benefited from increased or improved access to additional medical
services through telehealth programs.
A reason o ften given for the limited data on telehealth's effectiveness is the governmental
focus on issues other than telehealth research. "The government's been more focused on
developing the telecommunication infrastructure to provide the services rather than
73
fin ding out if the services work," suggests one critic. States struggle with the same
issues of lack of evaluative data and the lack of funding to carry out relevant data
collection.
DISSEMINATION OF INFORMATION AND TECHNOLOGY TRANSFER
“How do you find o ut what is happening in the field of telehealth innovation and
research?” was a question asked of individuals interviewed for this study. The most
common responses were the ATA annual meeting and grantee meetings hosted by OAT.
Telemedicine Today and the Telehealth Journal were also mentioned. Several of those
individuals interviewed suggested the need for a “national information clearinghouse.”
This raises the question of why information on telehealth research and innovation is not
more available to he althcare providers (for example, why clinical research is more often
found in telehealth journals but not in well - established medical journals.) The answer
probably relates to a widely shared perception that telehealth exists outside the medical
mainstrea m. Greater awareness of and familiarity with telehealth applications, healthcare
informatics, and other healthcare technologies are generally followed by greater
acceptance by providers and patients. This suggests that telehealth advocates need to put
fo rth greater effort to ensure information is made more widely available using
mainstream channels as well as their own.
73
Monitor on Psychology
Lisa Rabasca, “Taking Telehealth to the Next Step,” , April 2000.
54
“Diffusion of information on medical and clinical research and innovation is well
established within the traditional medical community. Two examples are the production
of electronic, up - to - date versions of clinical references (i.e. medical journals and
textbooks), and development of efficient search tools for large bibliographic databases
74
such as Medline.” Electronic access to information on telehealth innovation and
research is, however, limited to a few sources such as PubMed and the Telemedicine
Information Exchange (TIE) operated by the Telemedicine Research Center (TRC) and
75
funded by the National Library of Medicine. While the TIE offers on - line access, its
coverage of telehealth research is selective, with access to most publications limited to
paying subscribers.
In a promising development, the American Telemedicine Association has said it will be
surveying its members in 2003 re garding the level and extent of private sector research
and development. ATA’s Research and Evaluation Special Interest Group (SIG) has
proposed to help benchmark and shape telemedicine research by tracking ongoing and
completed research among ATA members; preparing guidelines for telemedicine
research; providing a list of current resources for doing telemedicine research; generating
a research agenda or priority list of current research questions; and developing a checklist
or model documents. While this e ffort represents a significant step forward, the part - time
and voluntary nature of the SIG and its need to limit its activities to ATA membership
limits the scope and value of this initiative.
It would appear that the Joint Working Group on Telemedicine ( JWGT), the American
Telemedicine Association, the National Library of Medicine, and the TIE are best
positioned to diffuse telehealth research and program best practices information. All four
organizations collect and maintain useful but different informat ion on programs, research,
and policies.
Technology Transfer
The federal government is required to work with the nation’s private sector to transfer
technologies developed in its laboratories and other research institutions. Only anecdotal
information is available to estimate how much innovation in telehealth - related
technologies takes place in federal laboratories and may be available for public
commercialization.
“Tech transfer” occurs using a variety of mechanisms, to include patent licensing
agr eements, Cooperative Research and Development Agreements (CRADAs), personnel
76
exchange programs, etc. Other mechanisms include Small Business Innovation
74
Rick G. Kulkarni, M.D. and Justin Graham, M.D., “Information Technology in Patient Care: The
Current Medical Diagnosis and Treatment
Internet, Telemedicine and Clinical Decision Support, ” in
(2002).
75
The Telemedicine Research Center (TRC) is a Portland, Oregon based non - profit public service research
organization founded in 1994 to promote telemedicine re search and to create, manage and disseminate
information about telemedicine related issues.
For a good description of tech transfer, see the Air Force’s Technology Transfer Handbook at the Air
76
Force Research Laboratory’s web site: http://www.afrl.af.mil/techtran/handbk/ .
55
Research (SBIR) grants and Small Business Technology Transfer Research (STTR)
grants. In FY2003, for example, TATRC has solicited SBIR and STTR grants in 15
topics, and NIH’s FY2003 program includes hundreds of topics (some pertaining to
77
telehealth). One group, the Federal Laboratory Consortium, maintains a web site of
available laboratory technologies a lthough there is no category for “telehealth” and there
are no telehealth technologies listed.
The Commerce Department’s National Telecommunications and Information
Administration (NTIA) offers the following examples of creative approaches to federal
te ch transfer. In 2001, NTIA’s Technology Opportunity Program (TOP) awarded a grant
to the District of Columbia's Department of Health to deploy the Veterans
78
Administration's electronic medical record system at three nonprofit community clinics,
and, in 19 97, TOP awarded a grant to Saint Vincent Hospital in Montana to integrate the
Telemedicine Instrumentation Pack (TIP) unit, originally developed for space flight
medical applications by the National Aeronautics and Space Administration (NASA),
79
with a terre strial telemedicine network linking the Crow Reservation.
The prospect of technology transfer (i.e. from federal research organizations to private
sector firms for commercialization) has not been widely pursued by either side. The most
active tech tra nsfer programs in telehealth would include TATRC, VA, and NASA.
TATRC engages in “partnerships” with private firms to develop technology applications,
with companies taking ownership of intellectual property. VA facilities are used by
private firms to de velop and evaluate innovations. NASA undertakes both partnerships
and the more traditional channels such as licensing agreements.
INTELLECTUAL PROPERTY
Regarding special provisions for processing health - related patent applications, new
applications are ordinarily taken up for examination in the order of their effective United
States filing dates. Certain exceptions, however, can be made by way of petitions to
“make special,” which may be granted under specific conditions. Applications which
have been mad e special will be advanced out of turn for examination and will continue to
be treated as special throughout their entire prosecution in the U.S. Patent and Trademark
Office (PTO). There are several petitionable conditions under which applications may be
m ade special. The following conditions may be of particular relevance to health - related
patent applications:
I. In view of the exceptional importance of recombinant DNA and
the desirability of prompt disclosure of developments in the field, the
U.S. Patent and Trademark Office will accord "special" status to
patent applications relating to safety of research in the field of
recombinant DNA.
77
For more information of the Consortium, visit its web site at: http://www.federallabs.org/
78
For more information on this example, s ee
http://ntiaotiant2.ntia.doc.gov/top/details.cfm?tiiap_no=10564.
79
For more information on this example, see
http://ntiaotiant2.ntia.doc.gov/top/details.cfm?tiiap_no=970118 .
56
II. In view of the importance of developing treatments and cures for
HIV/AIDS and cancer and the desirability of prompt disclosure of
advances made in these fields, the U.S. Patent and Trademark Office
will accord "special" status to patent applications relating to
HIV/AIDS and cancer.
III Applicants who are small entities may request that their
biotechnology applications be granted "special" status.
IV. If an applicant is 65 years of age or more, and/or can make a
showing that the state of their health is such that he or she might not
be available to assist in the prosecution of the application if it were to
run its normal course, a petition for special status can also be made.
No fee is required for either petition.
V. A new application (one which has not received any examination
by the examiner) may be granted special accelerated status provided
that app licant (and this term includes applicant's attorney or agent)
complies with each item set forth in our Manuel of Patent
Examination Practice (MPEP) section 708.
Except as provided above, these petitionable conditions require payment of the fee under
37 CF R 1.17(h) and the filing of a petition accompanied by a statement by the applicant,
assignee, or an attorney/agent registered to practice before the PTO. See MPEP Chapter
708 for a concise explanation of all of the individual petitionable conditions and th eir
associated requirements.
Additionally, the PTO’s proposed 21st Century Strategic Plan provides applicants with a
"rocket docket" option of choosing an accelerated examination procedure with priority
processing and a pendency of no longer than twelve months. This, however, will require
statutory rule changes to implement and is not yet available.
57
Chapter 3 - Demand for Telehealth Technologies &
Services
THE MARKET
Demand is probably the most critical factor affecting the deployment of telehealth
t echnology and programs because it drives private innovation and investment decisions.
Public and private perspectives and motives differ, however.
On the public side, demand is driven by such national priorities as providing access to
quality health car e for all citizens and the containment or reduction of healthcare costs.
Much of the demand for telehealth programs has been artificially created and maintained
by millions of dollars in public grants for “demonstration projects.”
On the private side, market demand for healthcare technologies and delivery systems is
driven largely by the business needs of transforming traditional clinical services through
technology, increasing the level and quality of services provided, increasing productivity,
and red ucing costs. As consumers become increasingly more technology savvy and are
empowered by continually greater healthcare information, it is likely that they will also
involve themselves more directly in purchasing decisions, and especially those
applicatio ns which do not require a physician’s prescription or are priced within reach of
the individual.
This chapter analyzes market demand for telehealth programs, products, and services, and
identifies the major factors that drive demand.
Estimates of Marke t Demand
Any discussion of market and market demand must be prefaced by identifying problems
with currently available data. Because the North America Industry Code System
(NAICS) and Harmonized System (HS) classifications for medical equipment do not
sep arate telehealth from other applications, no “official” and specific market data is
available. Private research firms have estimated the annual market for telehealth
technologies (products and services) to be around $380 million in 2004 based on an
80 81
estima ted growth rate of 15 - 20% per year. There have been widely publicized
80
This estimate is based on projections from research by the firm Frost and Sullivan which showed that
videoconferencing, the largest component of telehealth equipment, had a market of $119 million in 2000
which is expected to grow to $275 million in 2007 .
81
This estimate also includes a 1999 forecast by Feedback Research Services that the combined worldwide
sales of video - based home care, telemedicine, and teleradiology systems would possibly reach $172.0
million by 2004. Both the Frost and Sullivan and the Feedback research estimates have been added to
arrive at a projection of around $380 million in 2004.
58
claims of a telehealth market in the billions of dollars, although the few private firms that
82 83
have conducted actual research in this area discount such claims completely.
A le ading market research organization studying telehealth is Feedback Research
Services of Jacksonville, Oregon. In a 2000 interview, Feedback’s research director
summarized the difficulty with estimating the size of the telehealth market:
“Unfortunately, i n telemedicine, there are a limited number of segments for
which sales data can be obtained. This is partly due to the fact that many of
the larger competitors (such as Kodak in radiology and VTEL in
videoconferencing) generate a relatively small portion o f total corporate
revenues from telemedicine - based activities. Another problem is the number
of privately held competitors involved in this market (some of which can be
significant players).”
S everal entities have provided very general descriptions of the telehealth market by
estimating the number of programs. Conclusions that can be drawn from these
descriptions, however, vary noticeably. The following list represents some of the more
significant efforts to quantify the nation’s telehealth market.
1 In 1 996/1997, HHS’s Office of Rural Health Policy’s former Rural Telemedicine Grant
Program (now HRSA OAT’s Telehealth Network Grant Program) contracted with Abt
Associates to survey the extent of telehealth in rural hospitals. Although survey data is
dated, it represents the best available snapshot of rural telehealth investment to date. The
survey of 2,472 non - federal U.S. hospitals outside metropolitan areas had a 95% response
rate, and showed that 700 or 30% of rural healthcare operations were engaged in some
kind of telehealth activity.
2 In 1998, the Joint Working Group of Telemedicine completed a “Federal Telemedicine
84
Directory” which described 188 projects in 44 states having some federal funding.
3 A 1999 study conducted for HHS’ Agency for Health Rese arch and Quality identified
455 telehealth/telemedicine programs, to include 362 in the United States. Among U.S.
programs, 111 were located at academic medical centers and 68 were in hospital - based
health care networks; 80 were in Federal, military, or V A medical centers. Over 30
medical specialties were represented. Many programs include more than one activity. The
most common telemedicine activities identified were:
x
Consultations or second opinions (290).
x
Diagnostic test interpretation (169).
x
Chronic disease management (130).
x
Post hospitalization or postoperative follow - up (102).
x
Emergency room triage (95).
82
“In Pursuit of a Market Analysis for Telemedicine,” A Telemedicine Information Exchange interview
with Fran Fields of Feedback Research Services, by Bill Grigsby , June 6, 2000. For the full interview, visit
TIE Web site at http://tie2. telemed.org/news/features/market_analysis.asp#about .
83
Journal of Healthcare
Bauer, Jeffrey C., Ph.D. , “ Insights on Telemedicine: How Big Is the Market?”
Information Management
, Spring 2002.
84
To view the complete Directory, visit the OAT web site at
http://telehealth.hrsa.gov/jwgt/teldirect98/index.html
59
x
"Visits" by a specialist (78).
x
Services in patients' homes (~50).
More programs served rural patients than any other group. Of the 455 progra ms
catalogued in the general literature review, approximately 120 (26 percent) provided
health care to rural populations. Telemedicine also serves a large number of veterans and
elderly. The numbers of telemedicine encounters increased steadily throughout the
1990s.
4 The Association of Telehealth Service Providers’ 2001 survey identified 206
85
telemedicine programs, up from 170 in 1999.
5. In 2003, OAT, working with East Carolina University’s Telemedicine Center developed
and implemented an inventory of a ll of HRSA’s telehealth programs. OAT is hopeful
that this inventory will serve as a model for a more comprehensive inventory across all
federal programs.
6. In addition, the Health Resources and Services Administration (HRSA) announced in the
October 31, 2 002 Federal Register (vol. 67, page 66404) that it is requesting comments
on a proposed project to create a HRSA Grantee Telecommunications and Telehealth
Inventory and Database. Considering the fact that HRSA presently has more than 8000
grants, many of w hich have some telehealth component, this database plus the three
above could form the basis for the most comprehensive information on the nation’s
investment in telehealth (and its market) yet.
In short, there are no available or reliable data available which would allow calculation of
the value of total market demand for telehealth. These market estimates have not included
demand for telehealth services (e.g. number of consults or images required) or references
to performance measures. As such, an alter native to measuring statistical market demand
might be the identification and assessment of the telehealth needs of healthcare providers
and users. A few market research firms have prepared marketing studies that estimate the
market for their client’s spe cific interests or type of equipment, but the typically small
size of telehealth manufacturers limits the number of firms having the resources to
purchase or undertake such research.
Markets for Telehealth
Homeland Security
The Military – The military market for telehealth products and services is large, broad
and diverse. Because it is a “closed system,” there is a tendency by the military medical
community to consider itself largely self - sufficient in telehealth. Because each branch
has traditionall y supported itself, there is not a single telehealth point of coordination
within DOD, the National Guard and the Coast Guard. Until now, each branch has
managed its own telehealth programs with periodic, informal coordination.
85
The 2001 ATSP Report on U.S. Telemedicine Activity, Association of Telehealth Service Providers.
60
For the foreseeable future, much of DoD’s telehealth acquisition will be taking place on
two tracks: traditional mission - essential healthcare and homeland defense. The former
track will continue to develop in - house applications through such user/research
organizations as Walter Ree d Army Institute for Research and the Walter Reed Army
Medical Center, while the demand for the latter track is already being addressed through
various organizations, such as the Technical Support Working Group (TSWG) and the
assignments of non - Army telehe alth staff to TATRC.
The military is specifying an “all hazards response.” The lead agency for the military’s
medical technology aspect of the homeland security program has effectively been Army’s
86
TATRC. With establishment of the Northern Command, the scope of DoD’s homeland
security role also includes protecting the American population, which should include
coordinating and integrating telehealth planning, training and procurement with the
nation’s clinical and public health communities. The Army wil l then have an
increasingly important role in defining the homeland security market for healthcare
technologies.
That the Chief of Telemedicine at Walter Reed Army Medical Center is also the
immediate past president of the American Telemedicine Associatio n (ATA) has resulted
in unique military/ civilian and public/private relationships, and an equally unique
opportunity for its government and industry members to cooperate in the resolution of
longstanding issues. ATA and its members have been the primary beneficiaries of this
dual leadership.
First Responders – The “first responder” segment includes police and fire, Emergency
Medical Technicians (EMTs), emergency nurses, National Guard, and other emergency
response teams. In the case of a natural disaster , first responders would include all of the
above with the addition of Disaster Management Assistance Teams (DMATs). In the
case of a chemical, biological, radiological, nuclear or explosion (CBRN/E) emergency,
first responders would include all of the ab ove plus CBRN/E teams.
However, the definition of “first responder” applied by the Federal Emergency
Management Agency (FEMA) and the (earlier) Office of Homeland Security has left
certain groups out of discussions and planning. One might argue, for ex ample, that
homecare nurses would be among the first to respond to local threats, and, an Emergency
Medical Service (EMS) emergency room physician’s response is inseparable from that of
an Emergency Medical Technician (EMT). Additionally, initial first re sponder
discussions and funding did not include EMTs employed by non - fire systems, an
oversight when such personnel comprise most of the nation’s emergency medical staff.
Initial responsibility for equipment purchases for “first responders” has been deleg ated to
the states, either through public health or State Medical Director channels. It is important
that decision - makers consider telehealth technologies when addressing homeland security
needs. According to the Chairman of the Technology Committee of t he National
Association of EMS Physicians, “EMS is migrating away from transporting patients to an
86
See further discussion of TATRC in Chapter 2.
61
87
emergency room, and toward more video and telemedicine encounters.” This would
suggest that EMTs may be increasingly expected to provide video and telemedi cine
services at the site of an emergency.
Public health and surge capability – One of the communities affected most by the
nation’s homeland security needs has been public health. The anthrax attacks in late 2001
focused the nation’s attention on the p ublic health communities’ state of preparedness to
respond to potential threats.
There is also a significant public health responsibility for educating citizens in public
health threats and individual responses, as well as the education and training of fi rst
responders, military, clinical, and public health professionals in CBRN/E response. The
education and training capabilities offered by telehealth make this an appropriate
medium, limited only by the reach and coverage of existing telehealth networks. The
ATA has proposed a “network of (telehealth) networks” as a relatively quick and
inexpensive method for linking legacy networks to provide clinical healthcare, health
alerts, and public and professional education and training. The Southern Governors
A ssociation has adopted the ATA approach in proposing a bio - defense “network of
networks” linking public health and healthcare programs across eleven states. The
National Governors Association is also exploring a national network initiative.
In the discus sion of public health preparedness for natural or man - made emergencies,
there is a general concern that any significant disaster might overwhelm existing facilities
and response systems. This concern was reinforced with experience gained from recent
disast er response drills such as “Dark Winter.” Telehealth technologies have the potential
to significantly contribute to surge capability by linking clinical care or triage capacity
from across the nation to areas of surge or higher - than - capacity demand (much l ike what
happens when demand for electricity surges).
While the Army has integrated telehealth technologies into its rapid deployment model
and Veterans Affairs has included telehealth in surge capacity planning, the public health
and telehealth communi ties should step up their discussions of how healthcare
technologies can assist with surge preparedness and first response.
For example, there is a need first to inventory the nation’s institutional capacity to
include intensive care unit beds and emergen cy rooms. Once an inventory is established,
there is then a need to track capacity on a real - time basis. Protocols should be established
on how to transfer patients from areas affected to surge capacity facilities. There is also a
need to inventory emer gency providers to include a two or three - tier system to provide
for relief from fatigue. This would involve an emergency or homeland security personnel
88
roster system, and be integrated with the newly - established “Medical Reserve Corps.”
Each of these r equirements should be addressed from a systems approach which also
suggests information systems integration and IT investments.
87
Greg Mears, Chairman of the Homeland Security Committee, National Association of EMS Physician.
88
For more information , see: http://www.medicalreservecorps.gov/about.htm .
62
The recent outbreak of Sudden Acute Respiratory Syndrome (SARS) forced the issue of
public health quarantine or isolation to ce nter stage. Telehealth may be one of the safest
and, therefore, most important technologies to diagnose, monitor and treat patients in
quarantine for any infectious disease. Singapore, one of the early centers of SARS
infection, has applied televideoconf erencing to allow providers to monitor and families to
“virtually” visit patients. Other applications would enable patients with communicable
diseases to be isolated physically but not “virtually.”
Access: New Populations and Settings
One of the tradi tional arguments for telehealth has been its potential for providing greater
access to quality healthcare to those living in medically underserved areas. While rural
areas are the focus of most discussions on access needs, the subject of medically
underse rved urban areas has been included in discussions more recently.
Access to healthcare is a state and local priority as well. The State of Texas, a leader in
telehealth planning and coordination, has identified access to rural and urban citizens as a
state wide priority, pointing to the “maldistribution of health professionals” as a major
89
issue.
Telehealth already provides access to thousands of individuals in medically underserved
locations such as rural and remote areas, and “locked - in” patients at corre ctional facilities
and at home. Successful Indian Health Service programs on reservations, telesurgery
aboard aircraft carriers, and tele - consultations with diabetes patients in rural Tennessee
are among the many applications which demonstrate telehealth’s potential to bridge
distance, culture, national borders, and very different levels of economic development.
Demonstration programs in Micronesia and other territories are linking island villages to
mainland specialists as well.
Some characteristics that are unique to rural, remote and some urban areas may support
increased demand for the use of telehealth technolog ies to increas e access. While
primary care is generally available (although in many areas at a considerable distance),
specialty prov iders are often not. Telehealth, therefore, sh ould increase access to
specialists through local primary care providers and facilities. Currently, HHS’ Bureau
of Primary Health Care funds and supports over 3000 clinics in medically underserved
areas and the VA has been linking more than 400 “Community - Based Outpatient
Centers” with “parent” medical centers by telehealth connections. Add to these numbers
hundreds of rural, remote, and urban clinics funded by state and local governments,
private institution s and other organizations and one could conclude that any discussion of
“access” should not only include patient to provider but primary care provider to
secondary and tertiary care providers, and home healthcare patients to primary care.
89
The State of Telemedicine and Telehealth in Texas: A Special Report of the Texas Statewide Health
S ee “
Coordinating Council and Recommendations for Ensuring a Strong Telehealth/Telemedicine System in
Texas,”
February, 2002, see: http://www.texasshcc.org/tmreport.pdf .
63
To date, the co rnerstone of public telehealth demand has been increasing access to care
90
for remote or health professional shortage area populations. Response to demand for
increased access is most commonly a function of government funding and policy
decisions by state and local governments, Congress, and such federal agencies as HHS’
Office for the Advancement of Telehealth and the Bureau of Primary Health Care,
Department of Justice’s Bureau of Prisons, USDA’s Rural Utilities Service, the
Appalachian Regional Commissi on, Department of Veterans Affairs and the Indian
Health Service. A strong Rural Health Caucus, an emerging Congressional Steering
Committee on Telehealth and Healthcare Informatics, the beginnings of cooperative
research, and lobbying by such groups as th e ATA, eHealth Initiative, and others suggest
a bright future for telehealth project funding in response to increasing demand for
healthcare access.
Another aspect of demand that is likely to grow is consumer demand for convenience or
quality healthcare “ on demand.” Settings for consumer telehealth may include the
workplace, recreational areas, transportation centers and modes (e.g. resorts, cruises,
aircraft, personal transportation, etc.), schools, and virtually anywhere the need arises.
This demand dri ver may be viewed as another population seeking access for it presumes
91
that the consumer has the ability to pay for convenience.
Telehealth’s “store - and - forward” technologies such as eMail and off - line storage offer
the healthcare provider and patient the option of scheduling consultations at their
convenience and location. The provider’s ability to consult outside typical office hours
also expands his or her earning potential. Developments in telehomecare not only
connect home and provider, but also allow monitoring, consultation, and even treatment
around the clock.
Continuum of Care
The emergence of the educated consumer wanting greater control over healthcare choices
will also affect demand. One expert noted, “The United States health care i ndustry is
experiencing a substantial paradigm shift with regard to homecare due to the convergence
of several technology areas. Increasingly capable telehealth systems and the Internet are
not only moving the point of care closer to the patient, but the patient can now assume a
92
more active role in his or her own care.”
The increasingly important role of the individual consumer in driving technology demand
was underscored by another telehealth professional who suggested that “ . . . remote
90
Bashur, Rashid M.D., “Where we are in telemedicine/telehealth, and where do we go from here?”
Telemedicine Journal and e - Health
, Volume 7, Number 4; 2001, p. 273
91
One commentator at the J une 19 Roundtable warned of a trend toward “boutique healthcare” where those
that can pay more received better quality and more convenience. For example, the ubiquitous and “always
on” nature of the Internet as well as the shift in choice from the provide r to the consumer makes such
applications as “Web MD” so popular. This trend coincides with a growing population of Baby Boomers
which will choose to take charge of their own care.
92
Warren, Steve, Ph.D., Craft, Richard L., M.S., Bosna, John T., “Designin g Smart Health Care
Technology into the Home of the Future,” Sandia National Labs, 1999
64
monitoring and care management using telehealth technology have great promise in
redefining the health care encounter, and creating a better delivery system for chronic
care, and educating patients, supporting patient behavior change, and identifying
problems early whic h are still the fundamental prerequisites to higher quality and lower
93 94
cost of care.” In addition, the use of telehealth technologies coupled with the
Internet and related information technologies may shift costs and responsibilities along
the contin uum of care. For example, telehealth monitoring and communications
technologies enable a nearly seamless continuum of care following discharge, and may
shift greater responsibility to the patient.
95
The use of videoconferencing for encounters has been th e traditional form and, to a
large degree, the foundation of telehealth technology. The use of in - home closed circuit
television, cable, satellite, videophone, webcasts, streaming and other technologies offer
a virtually unlimited market for connecting Ame ricans to each other, with their healthcare
providers, and with first responders. “Vendors have yet to make a conscious effort to
help educate the medical community and related end users on the benefits of
implementation and integration of videoconferenci ng into their core communication
networks. However, improvements in videoconferencing technologies coupled with the
need to curtail spiraling healthcare costs will increasingly propel the industry to utilize
96
and implement telemedicine solutions on a routi ne basis.” Clarification of such policy
areas as digital rights, privacy, security, broadcast licensing, spectrum allocation, the
quality and accuracy of content, and multi - state licensure will be necessary to fully
realize the potential of televideoconf erencing.
Monitoring and information exchange can improve the integration and communication
between hospital and primary care services to facilitate a 'seamless continuum of care' for
families. This means that the healthcare of local or regional populatio ns can be addressed
with a progressive spectrum of appropriate delivery entities such as home healthcare,
ambulatory clinics, trauma centers, hospitals, or any other resource that is geographically
distributed and available to that community. This prospec t of instantly matching
healthcare needs with the most appropriate and most cost - effective providers through
intelligent information and decision - support systems may prove to be one of IT’s most
significant contributions to addressing the issues of access, cost, and quality. The ability
to direct patients with various needs most efficiently to appropriate providers (or linking
appropriate providers to patients) should also contribute to meeting homeland security’s
requirement for surge capabilities.
Disea se management is another important aspect of the wellness and prevention
paradigm, and future applications for telehealth technology. A prospective disease -
specific approach to delivering healthcare, disease management includes inpatient
93
Steve Brown, CEO of Health Hero Network, Inc. and a panelist at the Technology Administration’s
Roundtable “Innovation, Demand and Investment in Telehealth,” June 19, 2002 in Washington D.C.
94
Steve Brown, CEO of Health Hero Network, Inc. and a panelist at the Technology Administration’s
Roundtable “Innovation, Demand and Investment in Telehealth,” June 19, 2002 in Washington D.C.
95
The use of cameras and recording dev ices to link providers with patients.
96
Frost & Sullivan (www.conferencing.frost.com), "U.S. Telemedicine Videoconferencing Systems and
Services Market," reveals this market generated $119 million in 2000 and projects revenues to reach $275
million by 2007 .
65
treatment, emergen cy services, outpatient care, and home care, and represents a new
model of care that requires proactive intervention in illnesses at all disease stages in order
to avoid hospitalization costs. Common features of disease management are physician
guidelines, monitoring (drug and other treatment interventions), patient education, and
behavior modification interventions – all applications that could be accomplished through
telehealth.
Home Healthcare
Demographic trends suggest that any discussion of access sh ould increasingly include
healthcare at home as demographic trends suggest. Aging of the Baby Boomer generation
combined with longer life expectancies will likely mean a larger population of fragile and
chronically ill elderly, many requiring rehabilitatio n after hospitalization. Retiring Baby
Boomers favoring independent lifestyles are also increasingly likely to demand access to
medical advice and treatment from home.
Through personal health information systems, health education information and decision -
support will be publicly accessible over the Internet, through email, and through
telehealth. The public will also be expected to assume a greater responsibility for
developing personalized health risk profiles. From this information, individual
intervent ion programs can be developed to prevent onset of disease. A strong patient -
centered lifetime wellness strategy combined with a robust patient education program
could have a major impact on lifestyle - related chronic illness.
Consumer advocates seem to ag ree with the statement, "Consumer education needs to be
97
an important part of the health care mission," suggests a leading professor. Wellness
and prevention offer a strategy for coping with the costs associated with chronic illness,
as well as with injury - related and other types of healthcare encounters. An emerging
national trend is the shifting of resources to disease management, preventive care, and
health promotion. By preventing incidents requiring hospitalization and the onset of
disabilities that re quire long - term expensive treatment, significant reductions in the
economic burden of healthcare can occur.
According to recent studies and workshops, homecare was the fastest growing segment of
the medical device industry throughout the 1990s and the mo vement toward greater
independence and convenience in home healthcare, telehomecare will be an important
associated trend. Providing telehomecare to elderly or disabled populations using
telehealth raises important policy questions about access and the rei mbursement of
telemedicine services for both rural and urban patients.
It can be argued that urban patients who are very elderly, chronically ill, poor, or disabled
are as isolated and have as much difficulty getting access to needed health services as
those living in rural areas. Most of these urban patients cannot drive to local clinics and
97
Robert A. Greenes, MD, Ph.D. Professor of Health Policy and Management at the Harvard Medical
School. “To Err is Human - Healthcare Internet Strategies in Enhancing Quality and Avoiding Medical
School.” Presentation before the eHealth Colloquium, Harvar d University, August 2000.
66
many require assistance getting from point A to point B. Traveling a mile for an urban
98
patient may be as onerous as a rural patient's two hundred - mile drive to see a specialist.
“In addition to monitoring patients with chronic diseases such as congestive heart failure
and diabetes, telehomecare has the potential to provide access to high - risk patients
typically cared for in hospitals thus driving down costs and ri sks associated with
transportation to and from points of care. Telehomecare has also been shown to improve
healthcare access for disabled persons, connect socially isolated individuals to their care
99
providers, and enhance caregiver effectiveness.”
Home may also be the lowest - cost place to deliver care, but this assumption must be
proven for each situation and medical treatment needed. Such a significant shift from
traditional healthcare encounters should trigger a serious and systematic reexamination o f
coverage and reimbursement policies among Medicare, Medicaid, and the nation’s
private payers.
Demand in International Markets
Although known, adopted and deployed throughout the world, globalization of telehealth
technologies and services has yet to a chieve its market potential. This appears to be
especially true in developing countries where access to primary health care in remote and
rural villages is more limited and transportation of patients to providers is more difficult.
Generally speaking, ho wever, U.S. telehealth vendors have limited themselves to the U.S.
domestic market and U.S. companies with active installations in overseas markets appear
to be the exception rather than the rule. AMD Telemedicine is one exception, with
100
activity in over 50 countries. Other than Canada, the U.K., Japan and Australia, other
major developers and manufacturers of telehealth technologies do not have sufficient
domestic markets to justify significant research, development, and production. That
currently leaves the United States with a competitive advantage for exporting telehealth
101
technologies and services.
That the U.S. leads in telehealth technologies suggests that, with effective marketing and
responsiveness to sales opportunities, American firms can also lead in world market
98
“2001 Report to Congress,” Office for the Advancement of Telehealth.
99
Dansky et.al. , “Cost Analysis of Telehomecare.” Telemedicine Journal and e - Health, Volume 7, Number
3, 2001.
100
Japan's Health, Labor and Welfare Ministry p lans to set up telemedicine networks to provide specialized
care to people in remote areas via information technology with in the hopes of narrowing the health - care
divide between large cities and rural areas. The government will provide 500 million yen (a bout $4 million
US) a year to form networks consisting of one large hospital and three clinics working together to supervise
patients. Each patient will be equipped at home with a computer that can monitor heart rate, blood pressure
and other indicators as well as a phone capable of transmitting video. They will be linked to doctors via an
ISDN digital phone connection. Tokyo plans to establish 10 such networks a year from fiscal 2001, which
began this month, so that all 47 districts have at least one withi n five years. For data see
http://telehealth.net/subscribe/newsletter12.html#marketwatch .
101
The international market for telehealth technologies and major projects has been lar gely overlooked by
U.S. industry except for a few integrators such as AMD Telemedicine and VitalNet.
67
share. Economic assistance programs, such as those offered by the US Agency for
International Development (USAID) and multi - lateral development banks, may lead to
major telehealth projects, possibly in conjunction with broader health care or
telecommunications projects. Even though USAID has invested heavily in primary care
in many developing nations, its interest in healthcare technologies has been limited by its
emphasis on technologies “appropriate” for recipient nations. Meanwhil e (and
ironically), medical communities in those countries are among the most enthusiastic
advocates for telehealth as evidenced by their participation in international forum. For
example, the launch in 2002 of the World Health Organization’s (WHO) first
“ Collaborating Centre for Telemedicine” in Norway raises the potential for partnerships
worldwide in the diffusion of U.S. telehealth technology (e.g. a “Collaborating Center”
for the Western Hemisphere and other regions).
In 2003, DOC’s International Trad e Administration (ITA) began to target telehealth
suppliers for its export promotion programs featuring four trade missions and one
international exhibition in 2003. Although most events will include telehealth within the
larger medical device sector, ITA featured telehealth in a “virtual” trade mission to
Columbia in August, 2003.
Although ATA’s own annual exhibition held in conjunction with its annual meeting may
not include enough vendors to justify foreign buyer attendance, the collective know - how
in designing and managing telehealth programs of those participating in a typical ATA
conference would likely be considered a very attractive, exportable service. ATA’s
exhibitions have, until now, been planned and perceived as a service to its own 2500 -
3000 conference attendees (which include a few hundred foreign visitors).
It has been suggested that combining shows with a very large exhibition such as that held
annually by the Healthcare Information and Management Systems Society (HIMSS)
would be a cost - e ffective means for marketing telehealth technologies to a much broader
audience. The same synergy may be useful in marketing healthcare technologies to
donor agencies (e.g. USAID, World Bank, etc.).
Competitiveness
The United States has one of the mos t active and innovative telehealth sectors in the
world. Although trade statistics are not available in enough detail to support this
assumption, a review of international literature and the number of international inquiries
reported by ATA suggest that t he U.S. leadership role is widely recognized. It is also
evident from the trade press that competitor nations are seriously attempting to catch up.
Canada, Australia, Japan, and the U.K. all have active telehealth industries characterized
by national ass ociations and small to medium enterprises. A recent International
102
Telecommunications Union study stated: “The EC has its telemedicine/telehealth
program squarely aimed at developing a competitive European telemedicine industry as
102
European Community
68
103
well as improving the de livery of health care services to Europeans.” Japanese and
German mega - firms such as Sony and Siemens are also innovating telehealth products.
Japanese innovations, for example, appear to be targeting home healthcare and consumer
markets.
This natio n’s competitive advantage in telehealth may, in the long run, be threatened by
some potential trends:
-
Continued engagement with such issues as reimbursement, licensure and the
evidence of efficacy and cost effectiveness may distract technology firms fro m
international market opportunities and building competitive advantage.
- Limited presence of U.S. healthcare technologies in international markets will
ultimately lead to market preferences for foreign suppliers. Faced with the
prospect (or appearance) of limited American interest in supplying foreign
markets, buyers and providers may begin to develop preferences for and
dependencies on competitor technologies.
- Outsourcing of healthcare technology research, development or production, or
services to low er cost competitor nations is a relatively recent development. It
has been reported, for example, that Indian, Australian and Israeli firms are
already providing major U.S. hospitals with second and third shifts of
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radiologists interpreting images. While this practice may lower healthcare
costs and improve competitiveness in the short run, the economic, social and
political implications of outsourcing healthcare abroad are, as yet, unknown.
- A recent development in Europe also raises the prospect of inc reased
competitiveness through regional cooperation. The Telemedicine Alliance (TM
Alliance) has been set up to pave the way for a unified system of telemedicine in
Europe. This alliance links the Information Society Technologies (IST) program
of the Europ ean Commission (EC), the World Health Organization (WHO), the
International Telecommunication Union (ITU), and the European Space Agency
(ESA).
Certain actions may be necessary to sustain the U.S. advantage in telehealth technology
and competitiveness:
1. Providing timely and accurate information on telehealth research and innovation
abroad
2. Increasing the commitment and capabilities of U.S. telehealth suppliers to export
3. Supporting telehealth products and services exporters in overseas markets
4. Expanding i nternational awareness of U.S. telehealth technologies (active
programs in overseas markets funded by USAID, the Millennium Challenge
105
Account, or other US Government agencies)
5. Assuring that U.S. products and services comply with international standards
6. Re solving interoperability issues essential to exportability and market share
103
From a report of the Plenary Meeting of the International Telecommunications Union Regional
Development Conference for the Arab Sta tes. For more information, see http://www.itu.int/itudoc/itu -
d/rtdc96/023e_ww2.doc .
104
India New England News
“MGH examines India for X - ray reading help,” , January 15, 2003.
105
The Millen ium Challenge Account is defined as a new partnership between all parties involved in successful
international development: donor and recipient governments, non - governmental and private voluntary organizations,
businesses, and multilateral organizations al l working to achieve measurable development results.
69
7. Assuring that the U.S. is represented in any discussion of standards and/or trade
barriers which would affect export markets
106
8. Adding Harmonized System codes that would be used to identify telehealth
market opportunities
9. Assuring that the U.S. workforce has the level and quality of skills needed to
compete
Factors such as the lack of technical standards, state licensure rules, and infrastructure
costs affect the size and openness o f telehealth markets at home and may ultimately affect
competitiveness abroad. Internationally, U.S. exporters are faced with the uncertainties
of exchange rates, language barriers (which affect labeling requirements), regional or
national technical stand ards, and other non - tariff barriers. Until now, U.S. telehealth
manufacturers have not been routinely represented in standards - setting fora, such as the
European Union, the International Telecommunications Union, and even Underwriter
Laboratories in the U. S. The eight - point “Standards Initiative” recently announced by
107
Commerce Secretary Evans is designed to address some of these issues.
Developing nations are anxious to apply technology to improve primary care delivery but
need financial and technical he lp. USAID offers a potentially effective channel for
108
replicating the kinds of “demonstration projects” to advance awareness and adoption of
U.S. healthcare technologies in developing nations. Telehealth projects organized and
funded by the Millennium Chal lenge Account and Digital Freedom Initiative also have
the potential to significantly improve primary healthcare delivery in target nations.
Continuing innovation in telecommunications will also impact markets for U.S. telehealth
exporters. That some foreign markets are nearly completely connected by high - speed
Internet communications (broadband) gives their healthcare providers a broader choice of
technologies and range of capabilities. On the other hand, developing countries without
efficient teleco mmunications infrastructure can leapfrog forward in delivering healthcare
with the use of satellite and wireless technologies. Good market research, such as that
provided by the Commerce Department, will allow would - be exporters to select markets
based on estimated demand for their products and services, adapt their products and
services to the distinct requirements of selected markets, and assist in securing this
nation’s competitive advantage.
BARRIERS TO MARKET DEMAND
The U.S. market for telehealth doe s not fit well with the traditional model of supply and
demand because most healthcare is reimbursed by third party payers. Providers and
payers (and not patients) make economic choices and, therefore, play the role of an
intermediate consumer. Although i ndividuals will almost always choose better
healthcare, they have far less choice in what, when, where, by whom, and at what cost
106
The Harmonized System is the universally - accepted classification systems for trade in products and
services.
107
The Initiative mobilizes different bureaus of DOC to focus special emphasis on assistive technology
needs, such as international trade, manufacturing processes, standards and technology transfer.
108
Such as those funded by OAT, for example.
70
healthcare is provided. Demand created by such national priorities as homeland security
and access to quality healthcare is n ot economic. The market is affected by such factors
as:
Reimbursement policies of third party payers (also discussed in Chapter 4)
Variable and exclusive state licensure requirements
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Credentialing and privileging of providers
Perceptions of legal liab ilities
Lack of information on efficacy and cost benefits (also discussed in Chapter 2)
The need to ensure HIPAA - compliant data storage and information exchange
(e.g. patient - provider e - mail)
Reimbursement
Probably no topic is more often identified as an “issue” or a “barrier” to innovation,
demand and investment in telehealth than reimbursement for encounters. Since 88% of
Americans do not reimburse healthcare providers directly but through “third party
payers,” reimbursement “policy” is determined and a pplied by such organizations as
Medicare, Medicaid, health maintenance organizations, and employment - based insurance
plans. The following table estimates how many Americans have healthcare coverage and
by whom:
110
Table 3.a Third Party Reimbursement Patter ns
Type of Coverage Total Per cent Total
persons
(millions)
Private Insurance: Self 22,945 7.38%
Private Insurance: Employment - based 177,226 57.01%
Total private 200,171 64.39%
Medicare 28,648 9.22%
Medicaid 37,015 11.91%
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Military healthcare 8,301 2.67%
Total government 73,964 23.79%
Total Insured 274,135 88.18%
Not - insured or private pay 36,729 11.82% 11.82%
Total 310,864 100.00% 100.00%
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JCAHO is currently in the process of changing its policy on credentialing and privileging (C&P) for
som e aspects of teleconsultation by allowing a distant “treating clinician” specialist (e.g. dermatoligst) to
be credentialed and privileged through one of three options. These are: the originating site of the consult
does both the credentialing and privile ging of the distant specialist, the distant site does the credentialing
and originating site the privileging (current rule), and a new “proxy” method wherein the originating site
would accept the C&P from the distant site. In this last instance, the origi nating site would be responsible
for reporting to the distant site any “adverse” outcome arising from the distant specialist’s treatment,
leaving peer review of cases (one aspect of continued privileges) up to the distant site. Development of this
process was spearheaded by a joint DoD/VA policy group who worked in concert with JCAHO. It is
expected that this policy should take effect in early 2004.
110
Table A - 2, “Health Insurance Coverage Status and Type of Coverage by Selected Characteristics:
2000,” U.S . Censure Bureau, can be viewed at: http://www.census.gov/prod/2001pubs/p60 - 215.pdf .
111
Includes CHAMPUS/TRICARE, Veterans Affairs, and military healthcare.
71
Table 3.b underscores the point that healthcare providers are almost entirely dependent
on thi rd party payers for their revenue. Third party payers (Medicare, Medicaid,
Workmen’s Compensation, other government payers [e.g. military and veterans
healthcare services], and private insurers) comprise 88.18% of all reimbursement. Given
this, telehealth providers tend to prefer (demand) those services and equipment that are
covered by applicable third - party reimbursement policies – and will be unlikely to
provide services that will not be reimbursed. It would appear, then, that demand for
telehealth dev ices and applications is, therefore, influenced greatly by reimbursement
policies. A more accurate observation would be that, although third party reimbursement
is essential to long term sustainability of telehealth programs, providers have largely been
c ompensated by other institutions (federal and state government, non - profit foundations
and universities) to date.
Table 3b. Reimbursement for Healthcare by Source and by Provider
(figures in $millions)
Medicare Medicaid Other Worker’s Private Private All other TOTAL
Govt. Comp insurers (Self) sources
Who pays
Who benefits
Physician offices 48,370 13,896 2,025 7,419 97,193 22,865 7,299 199,067
Other providers offices 4,225 1,542 857 2,268 12,546 8,120 2,200 31,758
Mental health practitione rs 177 206 556 N/a 844 656 262 2,701
Therapists 1,368 516 n/a 1,296 2,871 803 1,331 8,185
Outpatient care centers 11,651 6,814 2,492 1,411 20,694 5,803 4,126 52,991
Other outpatient care centers 11,236 4,709 1,287 1,402 19,724 5,000 3,369 46,727
Freest anding ambulatory 1,338 345 N/a 338 2731 670 532 5,954
surgical and emergency
centers
All other outpatient care 2,983 2,912 818 1,040 6,132 1,663 1,559 17,107
centers
Home healthcare services 9,961 7,121 443 n/a 5,145 2,465 2,282 27,417
Other ambulatory care services 1,593 466 n/a n/a 1,893 703 3,931 8,586
Hospitals 138,843 52,305 22,687 4,720 155,206 22,928 10,622 407,311
Nursing and residential care 12,699 43,834 7,157 n/a 6,231 24,603 3,300 97,824
Community care facili ties for 1,093 2,827 511 n/a 567 12,374 794 18,166
the elderly
Medical and diagnostic 3,790 1,032 96 387 8,642 2,005 5,319 21,271
laboratories
Totals (millions) 249,327 138,525 38,929 20,281 340,419 110,658 46,926 945,065
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26.38% 14. 66% 4.12% 2.15% 36.02% 11.71% 4.97%
One factor that influences reimbursement decisions is the definition of what constitutes a
“patient encounter.” An encounter has been traditionally defined as an event in which
both the provider and the patient were in the same room for the purpose of providing
medical care or “service.” Medicare and other payers generally pay for visits,
interpretations, etc, and not encounters. When Medicare pays for an x - ray, there is a
facility fee and a fee to the professional for an interpretation. There is no assumption of a
face - to - face visit. When Medicare began to pay for telehealth, it removed the
requirement for patient and provider to be in the same "space" or room, but by requiring
interactive services, maintained the requirement that the patient and provider be in the
same "time." The issue now with store - and - forward technologies is that patient and
provider are no longer interactive or in the same "time."
The definition is important because, traditionally, the pa yment structure for providers’
services has defined the encounter, so there does not appear to be a single, explicit
definition of encounter.
An additional dilemma is associated with the traditional practice for physician services
paid under the physici an fee schedule. It is the physical location of the physician
providing the service that determines the place of service. For example, if a patient had
an x - ray performed by a facility in Pennsylvania, and the x - ray was read by a physician in
Florida, Medi care would consider the service to have been furnished in Florida.
Moreover, if the patient was in Pennsylvania and the x - ray was read in Israel, Medicare
112
would consider the service to have been furnished in Israel.
The definition of encounter for Medic aid is: “face - to - face contacts between a patient and
a health professional for medically necessary services and includes the recipient's visit to
113
the center, including all services and supplies incidental to a practitioner's services ...”
With the evol ution and emergence of telehealth, the traditional definitions of encounter
no longer apply. The critical elements of a definition could be considered the
significance of what takes place between the provider and patient, not the location or
timing. If t he exchange of information “establishes, changes or implements a plan of
care,” the net effect is the same as the traditional encounter, regardless of time and place.
A current definition that recognizes the role of technology is an issue that warrants mo re
and more specific attention of third party payer and provider communities.
Until recently, there was a common assumption within the telehealth community that
most third party payers were restrictive. Two recent surveys, however, one of providers
and p ayers in all 50 states, and a second of Medicaid organizations in all 50 states,
112
Center for Medicare and Medicaid Services, “FAQs” at http://questions.cms.hhs.gov/
113
“Medicaid Provider Manual” Chapter 21, issued October 18, 2002
73
suggests that the reimbursement issue may not be as widespread or as insolvable as once
114
thought. A discussion of the major third party payers reveals why.
Reimbursement by Medicare
Like many other medical services, Medicare’s reimbursement policies and regulations on
telehealth have been developed to implement legislation. For example, CMS’ policies to
implement the “Medicare, Medicaid, and SCHIP (State Chil It appears th at increasing
interest in telehealth by Congress, the states and private insurers has begun to impact the
longstanding issue of reimbursement. It is widely assumed that the degree of specificity
contained in the “Medicare, Medicaid, and SCHIP (State Child ren’s Health Insurance
Program) Benefits Improvement Act of 2000” (BIPA) was a result of growing
Congressional interest with Medicare’s restrictive approach to telehealth (such as what
was viewed as an overly restrictive response to telehealth provisions o f the Balanced
Budget Amendment of 1997). In the BIPA, for example, Congress took the
unprecedented step of specifying CPT codes within the legislation as well as specifying
more precise provisions than those that had been interpreted more narrowly in the past.
dren’s Health Insurance Program) Benefits Improvement Act of 2000” (also known as
115
“BIPA”) included expanding coverage for additional applications, and eliminating
such payment policies as fee - sharing.
Congress has traditionally played a central role in determinations of Medicare policy. The
Beneficiary Improvement and Protection Act of 2000 (“BIPA”), for example, instructs:
“The Secretary shall pay for telehealth services that are furnished via a
telecommunications system by a physician . . . to an eligible telehealth
individual enrolled under this part notwithstanding that the individual
physician or practitioner providing telehealth service is not at the same
location as the beneficiary. In the case of any Federal telemedicine
demonstration pr ogram conducted in Alaska or Hawaii, the term
“telecommunications systems” includes store and forward technologies that
provide for the asynchronous transmission of health care information in
116
single or multimedia formats.”
This legislation marked a sign ificant change in Medicare’s coverage of telehealth
services. The Act:
114
Taken from presentations to the ATA December 2002 business conference on surveys of
reimbursements policies by Medicaid and private payers by the Center for Telemedicine Law and AMD
Telemedicine respectively.
115
It appears that increasing interest in telehealth by Congress, the states and private insurers has begun to
impact the longstanding issue of reimbursement. It is widely assumed that the degree of specificity
contained in the “Medicare, Medicaid, and SCHIP (State Children’s Health Insurance Program) Benefits
Improvement Act of 2000” (BIPA) was a result of growing Congressional interest with Medicare’s
restrictive approach to telehealth (such as what was viewed as an overly restrictive response to telehealth
provisions of the Balanced Budget Amendment of 1997). In the BIPA, for example, Congress took the
unprecedented step of specifying CPT codes within the legislation as well as specif ying more precise
provisions than those that had been interpreted more narrowly in the past.
116
The “Beneficiary Improvement and Protection Act of 2000”
74
x
Expanded who could receive services
x
Expanded what services would be covered
x
Clarified home care coverage
x
Eliminated the presenter requirement for face - to - face encounters
x
Changed the payment methodology
x
Provided for coverage of store and forward in Hawaiian and Alaskan
demonstration projects
117
Medicare has also relied on efficacy and cost effectiveness studies for its analysis
leading to determinations, but has postponed some determ inations of reimbursement due
to insufficient breadth of the “review” performed under an Agency for Health Research
and Quality (AHRQ) contract with AETNA. It appears from the following summary of
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the AETNA review that telehealth applications are making progress in the areas of
access, quality, and cost, but that additional and better quality research is needed to
confirm earlier results.
A total of 28 eligible studies were identified. In the new clinical areas, few studies in
store - and - forward telemedi cine were found. There is some evidence of comparable
diagnosis and management decisions made using store - and - forward telemedicine from
the areas of pediatric dental screening, pediatric ophthalmology, and neonatology.
In self - monitoring/testing telemedic ine for the areas of pediatrics, obstetrics, and
clinician - indirect home telemedicine, there is evidence that access to care can be
improved when patients and families have the opportunity to receive telehealth care at
home rather than in - person care in a clinic or hospital. Access is particularly enhanced
when the telehealth system enables timely communication between patients or families
and care providers that allows self - management and necessary adjustments that may
prevent hospitalization. There is som e evidence that this form of telemedicine
improves health outcomes, but the study sample sizes are usually small, and even when
they are not, the treatment effects are small.
There is also some evidence for the efficacy of clinician - interactive telemedici ne, but
the studies do not clearly define which technologies provide benefit or cost - efficiency.
Some promising areas for diagnosis include emergency medicine, psychiatry, and
cardiology. Most of the studies measuring access to care provide evidence that i t has
improved. Although none of these studies were randomized controlled trials, they
provide some evidence of access improvement over prior conditions. Clinician -
interactive telemedicine was the only area for which any cost studies were found. The
three cost studies identified did not adequately demonstrate that telemedicine reduces
costs of care (except when comparing only selected costs), and no study addressed
cost - effectiveness.
Since this and similar AHRQ reports are provided to the Center for Medic are and
Medicaid Management Services (CMS) for use in determining reimbursement policies, it
appears that additional quality research is required to determine telehealth efficacy and
cost savings. Most importantly, until clinical efficacy and cost - benefi t research achieves
a much greater level of acceptance by HHS, providers, and payers, reimbursement for
117
There is a current debate over whether cost is being and should be used as a criterion by Medicare.
118
Telemedicine for the Medicare
Evidence Report/Technology Assessment Supplement No. 24,
Population: Pediatric, Obstetric, and Clinician - Indirect Home Interventions
(AHRQ Publication No. 01 -
E060).
75
telehealth will remain an unresolved issue – and a leading barrier to innovation, demand
and investment.
It has been stated that Medicare reimburseme nt policies lag behind technology and
markets. Although telehomecare is viewed as the next major market for telehealth, for
example, CMS does not have the legislative authority to make the home an “originating
site.” On the other hand, CMS states that “lo cal carriers have the authority to approve all
diagnostic tests and interpretations.” Store - and - forward technology is becoming
increasingly popular with both providers and patients because it increases scheduling
flexibility and operating costs are lower. Because the encounter is not “real - time,”
however, Medicare will not reimburse store - and - forward with the exception of
“demonstrations” in Alaska and Hawaii, and for some applications under which the
conventional delivery of health care are not delivered f ace - to - face (e.g. interpretations of
an e - ray, ECG, EEG, tissue samples, etc.).
Members of Congress have questioned the variance of CMS and Congressional Budget
Office (CBO) costing projections of proposed telehealth provisions, based on
econometric mode ls, with actual outlays. For example, CMS projections ranging from
119
$20 million to more than $1 billion as a result of BIPA provisions have, to date, proven
to be far greater than actual. CMS reports that, by the end of FY2002, only 1,350 billings
for tel ehealth coverage specified under BIPA have been approved, amounting to less than
$50,000 in reimbursement. The Congressional Budget Office substantially lowered its
estimates based in part on data provided by OAT and the Center for Telemedicine Law
(CTL). “The CTL/OAT estimates of expanding telemedicine payments under BIPA
120
ranged from $50 - $100 million over five years.”
Historically, Medicare’s use of cost models has been justified by a lack of empirical data.
The Office for the Advancement of Teleheal th (OAT), together with the Center for
Telemedicine Law (CTL) and OAT's grantees have, however, developed a series of
models to demonstrate the impact of expanding telemedicine coverage on any third party
payer's expenditures. Application of these scoring models has the advantage of
incorporating actual billing data. Preliminary results suggest that many of the modest
telemedicine reimbursement expansions (recommended but rejected as too costly in
recent years) would have had a minimal impact on additional Medicare expenditures.
Changes in telehealth coverage were announced in the Physician Fee Schedule, Final
121
Rule for Calendar Year 2003 in which CMS proposed (1) to establish a process for
adding or deleting services from the list of telehealth services re imbursed, and (2) to add
122
specific services to the list of telehealth services. The most significant change for the
telehealth industry is CMS’ process for direct stakeholder input. CMS will accept
proposals from any interested individuals or organization s, from either the public or the
119
Response to a draft of this report from CMS and Puskin , Dena S., Ph.D., (September 30, 2001)
Online Journal of Issues in Nursing
"Telemedicine: Follow the Money" . Vol. 6 No. 3, Manuscript 1.
Available: http://www.nursingworld.org/ojin/topic16/tpc16_1.htm
120
Ibid.
121
We consider the change “significant” because , until now, there was not a formal process for
stakeholders seeking changes to codes or coverage. .
122
CMS rules and procedures were not available at the time this report was published.
76
private sectors, such as from medical specialty societies, individual physicians or
practitioners, hospitals, and State or federal agencies, and, may generate additions or
deletions of services internally. Interested parti es could also request a change by writing
123
to the Group Director at CMS.
The change should give CMS greater administrative flexibility to accept the requestor’s
recommendations. Their decision criteria would include whether or not the telehealth
service or device alters a diagnosis or treatment plan, includes methods the provider
chose to use, or proves satisfactory to patients. The telehealth option must also be similar
to the corresponding face - to - face encounter (e.g. real - time).
Such changes in the past have been followed by similar changes by state (Medicaid) and
private payers. Expanded reimbursement has historically resulted in increases in
telehealth demand by consumers and in technology investments by providers. According
to the proposal, CMS would “accept requests for additions to the list on an ongoing basis,
and would consider requests submitted by December 31 of each year to be included in the
124
proposed physician fee schedule rule for the following year.” CMS expected to have
final rules implementing the proposed process by the end of 2003. While this represents
a step forward in opening the determination process to the public and offers an alternative
to dependence on Congressional leadership, CMS analysis will continue to rely on
effica cy and cost - effectiveness studies, and Congress will continue to exercise its
authority in legislating coverage.
Another recent change having potential to improve the reimbursement process was
announced by HHS Secretary Thompson in March 2003. The HHS Sec retary’s Advisory
Committee on Regulatory Reform recommended streamlining the process by which CMS
decides whether to pay for new technologies approved by FDA. The recommendation
resulted in establishing a “Medical Technology Council” (MTC). According to the HHS
press release, the MTC will work on improving Medicare policy relating to coverage,
coding, and payment for emerging technologies. According to the Administrator of CMS,
"this new council will reduce the time needed for making and implementing Medi care
coverage decisions for new technologies and making CMS' process as seamless as
125
possible for outside stakeholders."
Although data for medically underserved areas is generally unavailable, it seems
reasonable to assume that rural provider revenue mos t often takes the form of Medicare
and Medicaid reimbursement, and other federal and state government programs (e.g. the
State Children’s Health Insurance Program). One of the difficulties facing providers is
the “paperwork” required to apply for reimburse ment from third party payers. Patients
applying for Medicare enrollment must, for example, be personally visited by a health
123
Information on applying for a new HCPCS code may be found on the CM S website at
http://cms.hhs.gov/paymentsystems/hcpcs/03infopktweb.pdf .
124
Medicare Proposes 2003 Physician Pay Changes Standards for Physician Data Input Eased,” from
Medicare News,
June 27, 2002 from the CMS web site at
http://cms.hhs.gov/media/press/release.asp?Counter=465 .
125
As reported by eGov portal “Seniors.gov” on March 24, 2003
http://www.seniors.gov/articles/0303/cms.htm .
77
care professional in order to complete the multi - page Outcome and Assessment
Information Set OASIS form, a 3 - 4 hour process.
For any provider seeking reimbursement from CMS, the means for electronically
submitting cost reports is now or will soon be required. A new CMS proposal would
require hospices, organ procurement organizations, health clinics, and other specialized
healthcar e facilities to electronically submit Medicare cost reports in 2003. Hospitals,
skilled nursing facilities, and home health agencies must already submit Medicare cost
reports electronically. Electronic submission across all Medicare providers, CMS says,
wo uld allow for more accurate preparation and more efficient processing for
126
reimbursement.
Other organizations that would be affected by the proposal for electronic submission of
cost reports include federally qualified health centers, community mental hea lth centers,
and end - stage renal disease facilities. The first two years of the requirement would be
considered a transition period, CMS says, in which submission of "hard or paper copies"
of cost reports would still be permitted. Affected facilities would also be able to request a
delay or waiver of the electronic cost - reporting requirement, if implementation would
cause "financial hardship." Providers with "low or no Medicare utilization" would be
exempted.
This policy could have a significant impact on Medicare billings in medically
underserved areas. Although the full extent of technical requirements is unknown, one
would assume that every participating provider who is not already “on - line” would need
to acquire access to a PC, hard drive, modem and ph one line, or risk changes to its
relationship with Medicare as a payer.
Criteria for Determining Medicare Policy
As the nation’s largest third party payer, reimbursement policies often cast Medicare in
the role of “industry leader.” However, most thi rd party payers apply their own
reimbursement criteria, but also claim to follow Medicare’s lead.
Even though other criteria have been considered in the past, Medicare criteria includes
(by law) both cost and efficacy. Some have argued that Medicare doe s not have the legal
authority to use cost as a criterion for reimbursement. Others have suggested that cost
127
effectiveness rather than cost - benefit should be the determining cost criteria. The
Congressional Budget Office applies cost considerations only when quantifying the
impact of legislation.
There appears to be either confusion or disagreement over the role of cost - benefit or cost -
effectiveness studies in shaping reimbursement policies and legislation. Since 1989,
126
http://www.access.gpo.gov/su_docs/fedreg/a020726c.html .
See Federal Register notice at
127
Online Journal of Nursing
F or a robust discussion of Medicare criteria, see Dr. Dena Puskin in the ,
Online Journal of Issues in Nursing
"Telemedicine: Follow the Money" . Vol. 6 No. 3, Manuscript 1.
Available: http://www.nursingworld.org/ojin/topic16/tpc16_1 .htm
78
when Medicare proposed to use cost as a coverage criterion and then reversed its
proposal, the medical technology industry has assumed that efficacy (and not cost) is the
determining factor for reimbursement decisions. Recent suggestions by CMS that cost -
effectiveness may again be included as a criterion may have the effect of further and
significantly complicating regulatory and reimbursement policies because of the lack of
commonly - accepted models, the difficulty in measuring both cost and effectiveness, and
the question of responsibility for conducting such analyses.
Moreover, the availability of federal data that would allow for quantitative analysis in the
areas of policy, efficacy, and cost - effectiveness is limited. A researcher looking to the
Department of Health and Human Servic es (HHS) for data relating to the effectiveness of
telehealth programs on increasing access to quality healthcare, for example, would find
the following:
HHS programs do not routinely collect service area and outcome data
that describes how and precisely where they serve rural people and
communities. Sparse populations make the cost of conducting
household - based representative surveys expensive and limit HHS' ability
to conduct rigorous quantitative research. The diversity of rural areas and
rural communi ties limits the generalizability of research data; service
area data is not collected by race, ethnicity and disability, obscuring the
128
diversity of rural communities.
In the case of Medicare or Medicaid, however, the efficacy or effectiveness of the
tel ehealth encounter must also be measured and evaluated as criteria for reimbursement.
CMS and private third party payers use clinical studies and demonstration projects as
primary tools in applying the efficacy criterion. CMS and the Agency for Healthcare
Research and Quality (AHRQ), for example, have undertaken a long term research
project which is studying store - and - forward technology, patient self - monitoring, and
129
potential applications for non - surgical services.
The criticism by CMS, AHRQ, and o thers of the quality of clinical efficacy studies of
telehealth has been noted elsewhere in this report. Another third party payer, Aetna,
conducted the review of studies for quality funded by AHRQ. Aetna concluded that, with
a few exceptions, the effica cy of telehealth has not been clinically established because
existing studies do not meet criteria for quality. Not surprisingly, Aetna based its own
reimbursement policy, at least in part, on its own conclusions from the results of the
130
AHRQ study. Surpr isingly, however, a current industry review found Aetna to be the
only major third party private payer that specifically prohibits reimbursement for
131
telehealth (with certain exceptions).
128
Taken from “One Department Serving Rural America” report of the Health and Human Services report
to the Secretary, July, 2002.
129
Evidence Report/Technological Assessment No. 24, Telemedicine for the Medicare Population (AHRQ
Publication No. 01 - E012) .
130
Ibid.
131
Aetna Clinical Policy Bulletin 632 of November 25, 2003.
79
That AHRQ and CMS continue to base reimbursement policy on the abse nce of quality
clinical and cost - benefit studies would appear to ignore the existence of numerous studies
supporting both efficacy and cost - benefit. If providers and payers are so far apart in their
understanding of what constitutes “quality studies,” the re may be reason to expect better
communications from CMS and AHRQ on their expectations and/or why meeting those
quality expectations is not possible. On the other hand, AHRQ is not, itself, currently
funding clinical efficacy studies for telehealth appl ications.
An informal survey using clinicaltrials.gov revealed that of 11 clinical research studies
related to telemedicine/telehealth, 10 are underway, completed or planned by the
Department of Veterans Affairs and one by the National Cancer Institute. It would seem,
then, that VA, AHRQ, and CMS should be meeting to discuss how to include VA’s
research in reimbursement determinations. Such coordination would be important, for
example, to pending CMS determinations concerning telehomecare for which VA ha s an
extensive program and has undertaken peer - reviewed clinical research.
Reimbursement by Medicaid
Medicaid, a joint federal/state funded program for low - income Americans, is another
source of reimbursement for telehealth encounters. Medicaid reimbur sement is
administered by each state and policies regarding coverage vary significantly. According
132
to the latest information from OAT and the Center for Telemedicine Law, 23 states are
133
reimbursing for telehealth services through Medicaid.
“Generall y speaking, payments are provided only under the fee - for -
service Medicaid plans, and usually at both ends (hub and spoke) of the
telemedicine consultation. A majority of states also require interactive
communication between patient and provider as a condit ion for
determining whether Medicaid may reimburse the service. While having
the flexibility to pay for additional costs like line - charges, use of
equipment, or technical support, a majority of states do not reimburse
134
these expenses.”
132
Arkansas, Arizona, California, Georgia, Illinois, Iowa, Kansas, Kentucky, Louisiana, Maine, Minnesota,
Montana, Nebraska, North Carolina, North Dakota, Oklahoma, South Dakota, South Ca rolina, Tennessee,
Texas, Utah, Virginia, and West Virginia from a CTL report presented to the December 2002 ATA
conference. See: http://www.atmeda.org/news/200 3_presentations/M3a1.hutcherson_files/frame.htm
133
The Health Care Financing Administration (CMS) has not formally defined telemedicine for the
Medicaid program, and Federal Medicaid law does not recognize telemedicine as a distinct service.
Nevertheless, Medicaid reimbursement for services furnished through telemedicine applications is
available, at the State's option, as a cost - effective alternative to the more traditional ways of providing
medical care (e.g., face - to - face consultations or examinations). As described below, at least eighteen states
are allowing reimbursement for services provided via telemedicine for reasons which include improved
access to specialists for rural communities and reduced transportation costs. From the CMS Website at
http://cms.hhs.gov/states/telemed.asp .
134
Ibid p. 76.
80
A recent survey in Virginia reported that “Medicaid is available for telehealth, but
providers are not billing” because of such barriers as “motivational” (unaware of polices
135
and procedures) and “operational” (choosing to avoid required paperwork).
Although jointly fund ed, Medicaid’s federal partner (CMS) describes each state’s role
136
as
:
“Within broad national guidelines which the Federal government
provides, each of the States:
1. determines the type, amount, duration, and scope of services;
2. establishes its own e ligibility standards;
3. sets the rate of payment for services; and
4. administers its own program.”
A significant issue for telehealth providers, then, is the variability of the patchwork of
137
state telehealth policies. According the 2002 CTL survey o f Medicaid policies , no two
states shared the same policies, coverage, and understanding of telehealth. In addition:
Each state is unaware of coverage policies of other states
(although each is interested in knowing what other states are
paying for).
Most of the 23 states that reimburse for telehealth under
Medicaid show very low utilization.
Data research studies showing cost savings would convince
most Medicaid programs to reimburse for telemedicine.
States tend to use the term “telemedicine” b ecause that is the
term used by CMS.
138
Medicaid coverage for telehealth is idiosyncratic, with some states only covering
teleradiology, while others cover the full range of services. Restrictive regulatory policies
exist. For example, the state of Nebraska covers a wide range of services, but will not
reimburse for services if the provider is receiving a grant. However, California, Texas,
and Louisiana have passed laws that prohibit insurers from discriminating between
139
regular medical and telemedicine serv ices.
“Montana is a state that enjoys widespread telemedicine reimbursement from Medicaid,
140
from Blue Cross/Blue Shield, and from most private healthcare insurers.” One reason
given was the long distances that rural Montanans must travel for healthcare w hich
increases the awareness and adoption of telehealth there. On the other hand, Michigan
Medicaid and Blue Cross/Blue Shield are not reimbursing for telehealth services. There is
135
“Telemedicine in Virginia: 2002 Legislative Report”.
136
“Overview of the Medicaid Program,” from the Centers for Medicare and Medicaid Management
Services web site at http://cms.hhs.gov/medicaid/mover.asp
137
opus cit.
138
In determining its own coverage policies, Texas developed a chart of how each state reimburses
telehealth that can be viewed at the follo wing Web site: http://www.texasshcc.org/append7a.pdf .
139
The reason more states are not included as reimbursing for Medicaid is most likely due to outdated data
published on the CMS web site.
140
Stammer , opus cit.
81
a “Working Group on Telemedicine Policy” for Michigan that has developed
r ecommendations to assist in formulating telehealth policy changes to include payment
and reimbursement.
It would appear that one measure to achieve greater or more uniform telehealth coverage
by states under Medicaid would be “broad national guidelines” f rom CMS. A more
effective solution, however, might be simply a matter of providing each state cost -
effectiveness data as well as information on coverage policies of other states. The Center
for Telemedicine Law (CTL) survey has provided an up - to - date dire ctory of responsible
officials in each state. Working with CTL and the Association for State and Territorial
Health Officials, the ATA might develop and communicate cost effectiveness and
efficacy data, and a matrix of 50 state’s coverage policies to each state official.
Reimbursement by Private payers
Until very recently, there has been a serious lack of publicly available data on
reimbursement policies of private third party payers. Since 64.4% of American’s
healthcare is insured through private p ayers, it is important to understand how telehealth
reimbursement policy decisions are made, what is covered, and by whom.
In 2002, AMD Telemedicine, Inc., one of the world’s largest firms devoted exclusively to
integrating telehealth systems, released re sults of a landmark survey of telehealth
reimbursement policies of private third - party payers telehealth programs within each
141
state. Its findings were significant in that they challenged long held assumptions that
private third party payers were resistant to reimbursing for telehealth encounters.
AMD reported that of 72 programs surveyed which offered billable services, 38 programs
in 25 states were being reimbursed by private payers. AMD then surveyed the top five
payers identified for each state and fo und that only one specifically prohibited
142
reimbursement for telehealth services (even though that one payer was also reported to
be reimbursing programs in three states). In reporting on its findings, AMD emphasized
that, in filing claims for reimburseme nt, telehealth programs emphasized that the
procedures were comparable to routine medical services billed using standard CPT codes.
AMD went on to suggest that telehealth providers were more likely to get reimbursed by
simply making an effort to communica te their intent, notification of future claim
submittals, and encouraging payer questions and comments.
AMD also found that 3 private payers were reimbursing for store - and - forward
applications, 7 reimburse for facility fees, and most appeared to follow th e lead of Blue
Cross/Blue Shield which reimburses in 21 states. Moreover, Louisiana (1995), California
(1996), Oklahoma (1997), Texas (1997), and Kentucky (2000) have enacted legislation
mandating private payer reimbursement for telehealth services.
Kent ucky HB 177 (2000)
141
Results of the AMD survey can be seen at: http://www.amdtelemedicine.com/private_payer/index.cfm
142
According to AMD’s survey, AETNA was the single private payer prohibiti ng reimbursement for
telehealth. Coincidentally, AETNA also conducted an evaluation of telehealth efficacy studies on contract
to CMSS, whose results are often quoted as a reason for not reimbursing telehealth.
82
Another interesting finding of the AMD survey was that Aetna does not cover
telemedicine services as a substitute for services that are usually provided via direct
provider - patient contact, because telemedicine services have not been de monstrated to be
as effective as direct provider - patient contact. According to the AMD, Aetna is the only
major third party payer that specifically prohibits reimbursement for telehealth. This
finding is significant because it is Aetna’s survey of clinica l studies for the Agency for
Health Research and Quality (AHRQ) that has influenced CMS’ position on telehealth
reimbursement.
The potential impact of AMD’s survey on reimbursement is significant. It would appear
from the results of this survey that reim bursement by private payers may be less of an
issue than reimbursement by Medicare and Medicaid. It has also been said that Medicare
takes it lead on telehealth coverage from private payers. AMD and ATA will be placing
information about state private paye r policies on the ATA web site at
www.americantelemed.org .
Consumer Satisfaction
Consumer satisfaction with telehealth services is also an important consideration of third
party payers and consumers alike. Several studies have been published which sugges t that
consumers are either as satisfied or more satisfied with telehealth encounters that the
traditional in - person encounter. In 2002, for example, March Networks recently reported
its findings of a Canadian home telehealth pilot that was independently evaluated by
researchers from the University of Calgary’s Health Telematics Unit. According to
March, 95.5 percent of patients who received remote video conferencing homecare visits
143
were satisfied with the home telehealth experience.
Some of the reason s given for patient satisfaction include the independence that comes
with scheduling encounters at the consumer’s choice of time and place, the comfort and
privacy of consultation within the patient’s home, and the security of having 24 - hour
monitoring and access to services. Some critics suggest that remote or asynchronous
encounters lacks the “human factor” that is said to exist in the traditional person - to -
person relationship with a provider, while others suggest this attitude reflects a romantic
but im practical notion of what modern healthcare should be.
The Office for the Advancement of Telehealth recently modified its policy, and will no
longer fund studies to measure satisfaction. It has, instead, asked its grantees to analyze
performance and value - added of services provided (which includes measures of
satisfaction). OAT has also embarked on a major initiative with Abt Associates and its
grantees to develop standard performance measures. In addition, OAT, its grantees and
Abt are developing outcom e measures for a series of specialties/services for use
throughout its grantee network.
143
March Networks Home Telehealth Pilot Prove s Successful,” from their Web site at
“
.
http://www.marchnetworks.com/news/viewnews.asp?newsid=94
83
State Licensure
The issue of state licensure continues to play a role in limiting a national market for and
in dampening user acceptance of telehealth technologies, with some suggesting it is less
restrictive to sell technologies and services into foreign markets than into a neighboring
state.
Providers practicing in the field of medicine have traditionally been subject to licensure
by state medical and nursing “boar ds” in the state or other jurisdiction in which the
provider’s practice is located. Each state, territory, and the District of Columbia
independently determines its own requirements for health care providers to practice in
their jurisdiction. Executives i nterviewed for this report suggested that telehealth has
been an enigma to the boards because it extends the practice of medicine into a different
jurisdiction. State boards have restricted the practice by out - of - state telehealth providers
in a variety of ways, from prohibition to permitting reciprocity to declining to take a
position at all.
Reasons given by state medical boards for restricting telehealth activities include patient
safety, jurisdiction (e.g. How would providers be sanctioned?), and the f ear that patients
will be drawn away by out - of - state providers providing more attractive or lower cost
services. In most cases, the penalties for examining a patient in another state or
recommending treatment are severe, and may be prosecuted as tantamount to practicing
without a license.
Telehealth providers have countered that the medical boards do not consider the patient’s
“rights.” For example, if the same patient were to travel to another state for consultation
or treatment, his “right” to travel a nd to choose providers would be protected. One
argument on behalf of telehealth is essentially the right to “travel” by video or some other
form of telecommunications. To deny those patients telehealth effectively forces them to
travel physically to anothe r state in order to access the provider of choice, a potential
hardship for sick, disabled, or low - income individuals, or for those living in remote areas.
“The issue of state licensure has become even more complex with the growing use of the
Internet a nd other emerging information technologies that cross state lines. For example,
state licensing boards find it difficult to police and discipline doctors, in part, because
they lack jurisdiction over physicians who virtually cross state boundaries or becau se of
144
the failure of many doctors who practice online to openly identify themselves.”
The Center for Telemedicine Law (CTL) recently surveyed all 50 states to identify laws,
policies, and practices relating to licensure. According to CTL, 33 states have enacted
laws or regulations requiring licensure for the practice of telehealth, while three others
took the rule - making route. Of the 33, 24 require full licensure for out - of - state doctors
who practice telemedicine on a regular basis, while 9 make sp ecial purpose license
provisions for those who consult or offer second opinions on an irregular basis. The
following map represents CTL’s findings:
144
“ Health
Tracy E. Miller and Arthur R. Derse, Between Strangers: The Practice of Medicine O nline”,
Affairs,
July/August 2002.
84
Diagram 1
There are several “models” that might prove useful in thinking about solutions to the
licen sure issue as well as an examination of how some states have addressed the issue.
145
Table 3.d Models of Interstate Licensure
Consulting
A physician who is not licensed in a particular state can practice medicine in
Exceptions
that state at the request of and in consultation with a referring physician.
Some states permit a specific number of consulting exceptions per year.
Endorsement
State boards can grant licenses to health professionals in other states with
equivalent standards. Health professionals must apply for a license by
endorsement from each state in which they seek to practice. States may
require additional qualifications or documentation.
Reciprocity
Authorities of each state negotiate and enter agreements to recognize
licenses issued by th e other state without a further review of individual
credentials. A license valid in one state would give privileges to practice in
all other states with which the home state has agreements.
Mutual
Mutual recognition is a system in which the l icensing authorities voluntarily
Recognition
enter into an agreement to legally accept the policies and processes
(licensure) of a licensee's home state. Licensure based on mutual recognition
is comprised of three components: a home state, a host state, and a
harmoniz ation of standards for licensure and professional conduct. The
health professional secures a license in his/her own home state and is not
required to obtain additional licenses to practice in other states. The nurse
licensure compact is based on this model .
Registration
A health professional licensed in one state would inform the authorities of
other states that s/he wished to practice part - time there. By registering, the
health professional would agree to operate under the legal authority and
jurisdiction of the other state.
145
Originally presented to Congress in a joint Departments of Commerce/Health and Human Services
report in 1997
85
Limited
A health professional would have to obtain a license from each state in
Licensure
which s/he practiced but would have the option of obtaining a limited
license for the delivery of specific health services under particular
cir cumstances. Alabama, Montana, California, Oregon, Tennessee and
Texas have enacted legislation consistent with this model.
National
A national licensure system could be adopted on the state or national level.
146
Licensure
A license would be issued based on a universal standard for the practice of
health care in the U.S.
Federal
Under a federal licensure system health professionals would be issued one
Licensure
license, valid through the US, by the federal government.
There has been some movement, to da te, within the states toward adopting one or more
of these models. In 1998, for example, the National Council of State Boards of Nursing
proposed an “Interstate Compact,” in which participating states voluntarily agree to allow
licensed nurses (both RNs an d LPNs) from other states to practice in their state without
147
obtaining a separate license. Eighteen states have so far adopted the Compact. A
Center for Telemedicine Law map, reproduced below as Diagram 2, shows the
distribution of the states as of mid - 20 02 that have adopted, proposed, or have not yet
taken any action on the Interstate Nursing Compact.
The Center for Telemedicine Law (CTL) with support from OAT, convened a workshop
of telehealth experts and members of state licensing boards in December 20 03 to examine
various options for addressing interstate licensure barriers and other restrictions that
impact electronic clinical practice. OAT has also contracted with the Federation of State
Medical Boards for two regional pilot projects to test and eva luate solutions to address
licensure restrictions (to possibly include those developed in the CTL workshop).
Participants in the workshop seemed to favor a “compact” approach beginning with a few
limited exceptions. Federation participants were also fav orable to an updated “model
act” for states first vetted in 1997.
Diagram 2
146
The Center for Telemedicine Law recommends the following: “The Federal Government can provide a
carro t to those State licensure boards to convert their systems, because they are taking a risk. They don't
know if this new system is going to work or not, and if you give them a modest amount of financial
assistance to move in that direction, more of them ma y move in that area. The medical boards are the same
way. They are looking for ways to harmonize between the States data collection that they do for licensing,
and so there are carrots that can be offered that are not expensive, but that would help to mo ve this towards
more interoperability on the licensing.”
147
using such language as a license to practice registered nursing issued by a home state to a resident in that
state will be recognized by each party state as authorizing a multi - state licensure priv ilege to practice as a
registered nurse in such party state
86
The National Emergency Management Association administers a similar “Emergency
Medical Assistance Compact” (EMAC), which provides for cross - state - border
emergency management response, is employed by 48 states and 2 territories, and is
148
administered by the association. This Compact most closely parallels the flexibility
that would be required by Homeland Security.
In 1996, the Federation of State Medical Boards developed a “Model Act” to regulate the
practice of medicine across state lines to respond to telemedicine issues. This Act would
have required physicians practicing medicine across state lines, by electronic or other
means, to obtain a special license issued by a st ate medical board. The license would be
limited to practicing across state lines in another state and would not allow physicians to
physically practice medicine in the other state unless a full and unrestricted license were
obtained.
The Federation’s pro posed special purpose license would only be required if a physician
"regularly or frequently" engages in telemedicine. Each state medical board would define
what regular or frequent means. A license would not be required if a physician practices
across sta te lines less than once a month, or the practice is less than 1% of the physician's
diagnostic or therapeutic practice or less than ten patients annually. The Act would
exempt physicians who engage in practicing across state lines in the case of an
emergen cy. Finally, the physician would be subject to licensing and credentialing rules of
148
Craig Walker Vice President for Policy, Health Care Visions, at the Technology Administration’s
Roundtable “Innovation, Demand and Investment in Telehealth,” June 19, 2002 in Washington D.C.
87
the issuing state and to the regulatory authority of that state's medical board. To date, no
149
states have adopted the Model Act.
Section 102 of the Health Care Safety Net Amendments of 2002 (S 1533) signed into law
in October, 2002 provides for incentive grants to go to State professional licensing boards
to cooperate, develop, and implement State policies that will reduce statutory and
regulatory barriers to telemedicine. The specific language states:
It is the sense of Congress that, for purposes of this section, States
should develop reciprocity agreements so that a provider of services
under this section who is a licensed or otherwise authorized health care
provider un der the law of 1 or more States, and who, through telehealth
technology, consults with a licensed or otherwise authorized health care
provider in another State, is exempt, with respect to such consultation,
from any State law of the other State that prohib its such consultation on
the basis that the first health care provider is not a licensed or
authorized health care provider under the law of that State.
It seems that Congress, several states, and even the Federation of State Medical Boards
agree in princ iple to less restrictive rules for interstate telemedicine although most
prescribe different models. The needs of Homeland Security for regional and national
information networks for bio - defense, health alerts, and expanding emergency medical
surge capaci ties suggest that a “compact” similar to the EMAC might be a practical and
appropriate first step.
Liability
Issues such as protection of healthcare and telecommunications entities from undue
liability arising out of the use of telehealth have not yet been addressed. One of the
nation’s foremost authorities on telehealth law has stated “There is a possibility that
liability issues may be reduced as this technology matures. Doctor practice issues (the
primary area of liability) can be better documented as a track record of their decisions is
150
created.”
It is in the interest of telehealth lawyers to assist vendors and providers in understanding
issues of legal liability. Although there has not been a great deal of activity in this area,
understanding liability is important to providers evaluating risk prior to investing in
and/or adopting telehealth. Many healthcare providers claim to be unaware of their legal
liabilities under medical and malpractice law in the practice of telehealth, a reason used
b y some to defer adopting technologies. As such, the potential impact of liability on
providers could be considered additional areas where sufficient information and analysis
are lacking. Organizations such as the ATA and the Center for Telemedicine Law m ake
information available through their organizational web sites for clients and members.
149
L inda Gobis, “An Overview of State Laws and Approaches to Minimize Licensure Barriers,”
Telemedicine Today
, Volume 5, August 2002 at http://www.telemedtoday.com/statelawguide/index.html .
150
Bob Waters, President of the Center for Telemedicine Law at the Technology Administration
Roundtable “Innovation, Demand and Investment in Telehealth” on June 19, 2002.
88
There is no centralized source of such information available to the provider public at
large or to policy makers.
It has been said, “Telehealth is not on the cuttin g edge of technology because of FDA and
litigation. Physicians don’t want to be first – they are trained to be as cautious is possible
– so they will wait until the whole community accepts a new technology. This is due to
the definition of malpractice (i .e. the physician did not follow widely - accepted
151
practices).” A closer look, however, would lead to the conclusion that telehealth
technology should not be considered “cutting - edge” or even controversial. The
experience of telehealth demonstration proje cts with respect to the issue of liability could
provide that closer look, and compilation of empirical data would provide a useful insight
to insurers as well as providers.
Provider Acceptance
There are some who suggest that provider acceptance is a ba rrier to increasing demand
for telehealth because healthcare providers are typically slow or reluctant to adopt new
technologies. Healthcare marketing information and services firm Manhattan Research
notes seven key trends related to physicians and techno logies indicate otherwise - that
152
physicians are adopting technology broadly and rapidly.
It would appear that the most important factors affecting user acceptance are the
comparative and competitive advantages providers associate with telehealth techno logies.
That both regulators and payers should apply the same decision factors for approval and
reimbursement should come as no surprise in that providers, payers, and investors are
looking for significantly greater value added as a condition of acceptanc e, procurement
and deployment.
151
Ibid.
152
Robust Practice Websites Emerge:
In 2002, 34% of practicing physicians had practice websites; over
two - thirds reported an interest in having a website in the future. Consumer interest in practice websites has
also increased.
PDA and Handheld Computers Come of Age:
About one - third (35%) of practicing physicians actively
use PDAs. About two - thirds of physicians using a PDA are actively using a pharmaceutical database
application. Improvements in form, technology, and price are expected to drive growth and value.
Integrated Electronic Pharmaceutical Detailing Becomes a Reality:
36% of primary care physicians
have participated in electronic detailing programs offered by pharmaceutical companies, and more than
80% of current users expect to participate in the next year.
Some Specialists Become Very Dependent on the Web:
Information i ntensive groups of practicing
physicians, such as oncologists, neurologists, and rheumatologists become dependent on the Internet for
clincial news and pharmaceutical information.
Patient Connectivity Still on Hold:
Despite consumer demand, online consulta tions will remain in a
holding pattern until physicians see a strong economic argument to participate. Pilot programs are
beginning to justify the value.
Health Plan Portals Become a Viable Customer Service Option:
The majority of health plans are finally
offering value - added online solutions. Early adopters are also introducing e - care solutions.
E - Prescribing Resurfaces, Under New Management:
Electronic prescribing is making a comeback with
new backers, such as PBMs and insurers.
89
Telehealth demand may benefit from an “image improvement” through greater effort in
describing, quantifying, and proving the benefits of telehealth applications. It has been
said, “If you’re going to get doctors to change th eir behavior, you have to have clinical
153
value, financial value and usability.” A former President of the American
Telemedicine Association and chief consultant to the Army Surgeon General recently
suggested that telehealth’s greatest need is the ability to prove value by means of high
quality efficacy, cost - effectiveness and cost - benefit studies. Medical professionals do not
themselves usually have the training, skills, and resources necessary for efficacy and
cost - benefit analysis, so the responsibility for providing such evidence falls to others.
The Office for the Advancement of Telehealth (OAT) adds an additional factor -
awareness of and familiarity with the technologies - as another critical issue affecting
provider acceptance. OAT’s grant progra ms are viewed as many of the nation’s leaders
or “champions” for innovation diffusion. According to OAT’s Director, the primary
purpose of OAT programs is to “help communities build the human, technical, and
financial capacity to develop sustainable teleh ealth programs and networks.” Given
OAT’s record for program expansion (currently supporting 100 programs in 43 states and
3 jurisdictions), this strategy has worked well and the awareness of and familiarity with
telehealth nationwide is significantly gre ater as a result.
Medical professionals also tend to be less familiar with electronic or telecommunications
technologies, having focused their training and experience on medical science. This
characteristic, coupled with difficulties that technical prof essionals may have in
understanding medical jargon and requirements may make communications more
difficult. More recent medical graduates, however, appear to be much more technical and
accepting of technology. As a result, providers will be less acceptin g of
telecommunications and IT - related technology for its own sake, and more demanding of
viable, efficient and efficacious technical solutions to clinical care from device,
applications, and services vendors.
In a recent report titled “Diffusion of Telem edicine: A Knowledge Barrier Perspective,”
154
observed business models demonstrated differing degrees of success and failure, and
offered an insight into the complex nature of risk, user acceptance, and profitability of
telehealth programs. One key ingredie nt was the organizational and technical leadership
provided by a “champion.” The success of most programs is directly attributable to the
champions’ ability to lower the following barriers:
1 Technical barriers: Unlike business computing and software proces s innovations,
telehealth applications require technical knowledge and technical problem - solving
skills.
2 Economic barriers: Whereas most practitioners as well as studies point to other
issues such as third party reimbursement as a major impediment to th e adoption of
telehealth technologies, the lack of viable business models is also important.
153
Lloyd Hey, M.D., found er and chairman of MDeverywhere as quoted in Versel, opus cit.
Tanriverdi, Huseyin and C. Suzanne Iacono. “Diffusion of Telemedicine: A Knowledge Barrier
154
Telemedicine Journal
Perspective.” Vol. 5, No. 3, 1999. pp. 223 - 244.
90
3 Organizational barriers: Using telehealth applications on a consistent and regular
basis requires creation of new workflow routines and organizational support.
4 B ehavioral barriers: Physicians resist applications which may be resisted by
others in the organization
Two decision points for electing to use or prescribe telehealth products and services – the
clinical decision based on the technology’s contribution to meeting the healthcare needs
of patients, and the business decision based on prospective return on investment. It would
seem to be in the best interest of the telehealth community to focus its attention and
resources on influencing these two decisions w ith reliable study data.
Telehealth has also been frequently discussed as a means for improving the quality of
health care through both technology and competition. Telehealth technology may allow
individuals to exercise greater choice in their healthcare providers and provide access to
the very best providers in the nation – or even internationally. The resulting competition
could pressure healthcare providers at every level to improve quality or see declines in
their business.
Primary influences on cl inician preferences are awareness, proof of efficacy and proof of
increased productivity. Their level of awareness relates most closely with their
experience and their exposure.
In 1998, HHS’ Agency for Healthcare Policy and Research included the followi ng as
information needed by providers considering adoption of healthcare technologies within
155
their practices:
Optimal resource mix
o
Legal liability
o
Malpractice responsibility
o
Privacy regulations
o
Licensing regulations
o
Clinical efficacy
o
Medic al and cost effectiveness
o
Telehealth community leadership should make sure this data is developed, collected, and
diffused as widely as possible.
Cost Considerations
There are two dimensions to consideration of cost -- return on investment (ROI) and
r educing or containing the cost of healthcare. Whereas ROI will be discussed further in
Chapter 4, reducing or containing the cost of healthcare is one of the more important
155
J. Michael Fitzmaurice, “Tel ehealth Research and Evaluation: Implications for Decision Makers,
AHRQ, August 1998.
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justifications given for funding and adoption of telehealth technologies. Reducin g or
containing healthcare costs continues to be a top social, economic and political priority It
was reported that overall U.S. healthcare spending rose 9.3 in 2002, “the largest increase
in 11 years and the fourth year in a row that the rate of increase surpassed growth in the
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rest of the economy.” The debate over rising healthcare costs seems to be most lively
over Medicaid and Medicare, where 2002 costs increased 11.7% and 8.4%,
157
respectively.
A growing body of empirical data, cost - benefit studies a nd case studies is gradually
replacing any remaining speculation on the impact of telehealth on healthcare cost.
Although there remains a great deal of debate over the quality of these studies, evidence
points to the likelihood that telehealth application s can reduce, contain, or avoid costs
when compared with the same services using traditional approaches. Further, while
awareness in the provider community of the need for rigorous business case analyses to
support telehealth implementation is not widespre ad, there is a growing “cadre” of
technical and business - savvy physicians, nurses, physician assistants and allied
healthcare providers is forming with respect to telehealth.
158
Consider the thoughts of this telehealth “champion:”
“One of the cost models for telemedicine or where we demonstrate
savings is in the prison population, because transportation and security
costs are very expensive, not to mention the difficulties in getting
medical professionals to treat prison populations.”
“If we consider th e “convenience” model where the parent has to take
their child out of school for a doctor’s consultation, he or she may need
take off from work, drive several hours, and basically miss the whole
day for what, to the economy, is unproductive time (and possi bly
unpaid). I have seen estimates that for every dollar in health care that
a company spends for employees, between $2 and $4 are spent on lost
productivity. If the school nurse had telehealth capability (such as in
Texas), think of the productivity inc reases and cost savings.”
“Then, let’s consider another model. If I can stay in my office and go
down and see my physician through televideoconferencing and the
doctor’s office already has all of my insurance information and medical
history, just think of all time and cost savings.”
It would be very difficult, however, to suggest that telehealth technology will reduce
costs in every case. Certain applications or protocols may never be justified based on cost
reduction or avoidance alone. Cost avoidance m ay not be a satisfactory justification if
those costs are shifted elsewhere. High - quality peer - reviewed cost - benefit analyses are
necessary to driving demand as well as innovation and investment, and for convincing
such payers as Medicare that telehealth w ill reduce (and not increase) costs. Conversely,
156
Daily Health Policy Report, kaisernetwork.org, January 9,2004
157
Ibid.
158
Scott Simmons, Chief Technology Officer, East Carolina Telemedicine Center, at the June 19
Roun dtable.
92
benefits should include some quantifiable measure of increased access, improved quality,
and contribution to homeland security.
DEMAND AGGREGATION
Demand aggregation is the coordination by a group having some common interest (e.g.
geography, mission, funding sources, population served, etc.) that identifies, procures,
159
and manages its collective telehealth needs similar to a cooperative.
Because of its common need for technologies, healthcare is well
p ositioned to apply demand aggregation to the purchase of
telecommunications .
Because of its common need for networking and equipment,
telehealth is well positioned to apply demand aggregation to the
purchase of technology
The collective purchasing power of telehealth providers (possibly coupled with other
telecommunications consumers) offers the potential to reduce costs, upgrade and expand
capacity, and increase accessibility. Because telecommunications is one of the primary
and recurring costs of tele health, any savings resulting from lower rates and costs would
increase the return on any investment.
Moreover, diffusion of information on the “benefits of” and “how to start up” a demand
aggregation project or program may trigger further demand for tele health and especially
in rural and medically underserved areas.
Examples:
The Alaska Federal Healthcare Access Network (AFHCAN) provides a unique example
of demand aggregation. Although AFHCAN is dominated by such federal agencies as
the Indian Health S ervice, Department of Defense, and Coast Guard, the coordination of
health needs among 37 federal, state and local government and private partner agencies to
build a statewide telehealth network resulted from a process based on organizational and
individua l relationships.
160
The demand aggregation process is managed by the AFHCAN Project Office and
engineering services are provided by a consultant. The Project Office sets minimum
159
Berkshire Connect, a non - profit community - based “affinity group” organized to collectively purchase
telecommunications services in western Massachusetts, is a currently popular model of demand
aggregation. For more information, visit their web si te at: www.bconnect.org .
160
Each member organization, prior to initial deployment, is required to fill out an assessment and
participation survey design ed to determine their organization's level of clinical needs and readiness,
administrative support and desire, installation interests and technical infrastructure. During their needs
assessment process, member organizations are encouraged to develop a tele health team to assess their
organizational needs, answer technical questions on the participation survey, and select equipment for each
of their sites. If a member organization request s technical assistance to determine their organizational
93
hardware requirements for participation. AFHCAN finances network connection
infrastructure, but operating costs for each site are that site’s responsibility. Provisioning
of dial - up, satellite, wireless, and fiber optic links is negotiated with the carriers as a
single customer. Consequently, AFHCAN has made telehealth a househ old word in
Alaska (even promoted in the annual Iditarod Sled Dog Race).
Another example of local demand aggregation is the Mountain Area Health Education
Center (MAHEC) program in North Carolina. Established initially as a network for
providing health education to rural and mountainous Western North Carolina health care
professionals, MAHEC added its “Center for e - Learning and Telehealth” to offer and
support videoconferencing technologies and streaming video to 15 sites. MAHEC’s
vision was described a s “access to continuing education for health care professionals as
161
well as to health services for patients.” Discussions with Buncombe County (NC)
Health Department and MAHEC revealed interest in applying the demand aggregation
model to link their respect ive organizations in purchasing telecommunications services as
a single and much larger customer.
Opportunities:
The most recent data on telemedicine activity in the Veterans Health Administration
(VHA) of the Department of Veterans Affairs (VA) show that the VHA is performing
162
over 243,000 teleconsultations annually. These data rank the VHA as the worlds’
leading provider of telemedicine and telecare services. VA’s telehealth networks or
“VISNs” offer a unique opportunity to surrounding networks of pr oviders to link and
aggregate demand. Individual VISNs and VA’s Community Based Operations Centers
are currently reaching out to their communities and regions with an offer to collaborate
on utilization of telehealth technology and telecommunications.
The initiative being undertaken by the Southern Governor’s Association has many of the
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elements of “vertical” demand aggregation based on a single common goal – bio -
needs, the AFHCAN Project Office (APO) is notified and follows up by scheduling a site visit to facilitate
the process. Once the needs assessment is complete, technical design staff of the APO and Al aska Clinical
Engineering Services (ACES) work with each organization to review local area network (LAN) and wide
area network (WAN) connectivity, the technical design, and, if required, refine the equipment selections.
ACES is responsible for maintaining an inventory of equipment and will order any additional equipment to
fulfill the design. ACES then works with the organization to schedule dates for equipment deployment.
Organizations have three options for deployment installation: (1) the organization i nstalls all equipment, (2)
ACES installs all equipment, or (3) shared installation. If ACES is responsible for the installation, then
ACES staff will pull all required equipment from stock, configure and burn - in the equipment, re - package
the equipment for shipping, track the shipments, and finally follow up with on - site installation and testing.
ACES provides warranty and technical support for one year to the sites deployed by them.
If an organization elects to install the equipment themselves, rather than use ACES, then the organization
will schedule trips to Anchorage for their staff to be trained on all aspects of the deployment. Staff
members receive training on all aspects of the hardware and installation and configuration of the software.
The staff me mbers configure and burn - in their own equipment at the ACES facility with oversight by
ACES, then assume full responsibility for the equipment once the equipment is re - packed and shipped from
the ACES facility to the site. In this case, ACES does not provi de any ongoing support to the sites.
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In an August, 2002 interview with David Rue - Blanchard, Director of MAHEC
162
Adam Dawkins, M.D., Chief Consultant for Telemedicine, Department of Veteran Affairs
163
Vertical aggregation occurs when the demand occurs wi th a single industry sector, such as healthcare.
94
164
defense. Other approaches to demand aggregation would include “horizontal” markets
where he althcare is one of several major customers/sectors in a locality for broadband
telecommunications. Horizontal aggregation diversifies uses and users and, as such,
spreads the risk more broadly.
Demand aggregation is not an exact science nor is there a gr eat deal of data available
other than a few examples. The DoC’s OTP is working with the Appalachian Regional
Commission, the Economic Development Administration, and states’ organizations in
encouraging local and regional demand aggregation initiatives. In addition, HHS’ OAT
reports it is moving toward community - based programs that could act as a major
incentive for demand aggregation among healthcare providers and telecommunications
users.
164
A horizontal market would include, for example, a locality where demand is made up of diverse
consumers outside a single industry sector, such as healthcare, education, and industry.
95
Chapter 4 – Investment in Telehealth
165
Current telehealth invest ment opportunities are often too risky and/or expensive for the
private sector to pursue alone. The issue of reimbursement poses the greatest risk for
without revenue there is no return on investment. The prospect of competition from
government or not - for - profit telehealth programs might also limit significant private
investment except for large organizations having established markets, such as private
payers, or geographic areas or populations where healthcare needs are not being met.
This chapter prov ides a quantitative and narrative assessment of how public and private
entities are investing in telehealth programs and adoption, and a qualitative assessment of
what investment and financial issues should be resolved in order to meet the primary
public p riorities of improved access, quality, and homeland security, as well as reduced
or contained cost.
CURRENT INVESTMENT
Although quantitative data is not readily available, public and private investment in
telehealth technologies is estimated to be $380 million or more annually, or less than one
per cent of the total domestic healthcare technologies market of around $80 billion (see
the section on Estimated Demand in Chapter 3). Over 35 federal organizations within 10
federal departments and independent a gencies (see Chapter 2, Table 2.b), 49 state
governments, numerous universities, private payers, and private not - for - profit
organizations fund at least some part of hundreds of telehealth programs in all 50 states
and territories.
Provider investment in t elehealth devices and applications has been essentially driven by
program subsidies and contracts (e.g. prisons) with the exception of teleradiology and
VA/DOD healthcare systems for which reimbursement policy is well - established.
Significant additional pr ivate investment in innovation (research and development) of
telehealth technologies, on the other hand, is linked to reimbursement policy. An October
2002 CMS report entitled” Health Care Industry Update - Medical Devices and Supplies”
comments that “Inve stors scrutinize FDA approval process and Medicare coverage and
166
payment decisions that can affect the speed of technology adoption.” The report also
quotes a Wall Street analyst as saying that “public equity investors are concerned about
165
Public or private , investment in telehealth takes the form of capital and operations. In healthcare, capital
(i.e. usually comprised of assets having a life of more than one year) is invested in devices, application
software, and telecommunications infrastructure (such as telecommunications, furnishings, real property
and other technologies). Investment in “human capital” includes the acquisition of know - how through
education and training. “Operations” generally refer to the more routine costs of doing business such as
r ent, salaries, administration, transportation, and marketing, costs that may not be completely covered by
third party reimbursement.
166
“Health Care Industry Market Update - Medical Devices and Supplies,” published by CMS, October 10,
2002 Page 30.
96
the lag time bet ween a new device’s commercial launch and obtaining Medicare
167
coverage.”
Federal government
The primary investment vehicles for telehealth at the federal level include:
direct procurement
1. for technology products, supporting technologies and
infrastruct ure (most common in “closed” systems such as DOD and VA).
demonstration projects
2. are the most common means of funding capital
investment in technology in non - DOD/VA programs. Demonstration projects can
include all the federal Departments and agencies sho wn in Table 2.a and more
(e.g. other NIH Institutes and Centers). Grants are usually awarded on a
competitive basis but are also included as legislative “earmarks” or monies
appropriated for specific projects in states and Congressional districts in annual
appropriations or in individual legislation not tied to the appropriations process.
Congressional oversight of or interest in an agency’s grants may, therefore, be
associated with more than one House and Senate committee.
direct investment
3. in federal telehealth provider operations. Direct investments
primarily involve such organizations as the Department of Defense, Department
of Veterans Affairs, Department of Health and Human Services, Indian Health
Service, and Department of Justice’s Bureau of Pris ons, but may also include
smaller clinics for such agencies as NASA.
Telehealth infrastructure, which may be acquired through any one of these vehicles, is
funded through a few federal grants programs. The “Distance Learning and
Telemedicine Grant/Loa n Program” of USDA’s Rural Utilities Service (RUS), for
example, funded North Carolina’s Mountain Area Health Education Center “Healthlink,”
which was later expanded with grants from the private Reynolds and Duke endowments.
RUS programs require matching contributions. In 2002, RUS lowered its match
requirement to 15%, which doubled the number of projects (46 distance learning and 25
telemedicine) in 33 states, at an amount of $27 million in grants.
Telecommunications infrastructure is essentially compri sed of telecommunications and
facilities and may range from a “Plain Old Telephone Service” (POTS) phone line with
low transmission speeds and capacity to ultra high speed broadband (such as Internet 2)
to cable to various forms of wireless and satellite. Telecommunications infrastructure
investment decisions may be made solely on the basis of cost or may include such other
factors as availability, functionality of the application, the need for higher quality and
more reliable transmission.
USDA’s Rural Utilities Service and Commerce’s National Telecommunications
Information Administration provide grants for purchasing and installing
telecommunications infrastructure, which may or may not be linked to a federally funded
167
Ibid
, Page 6.
97
project or program. Universal Serv ices Access Corporation (USAC) provides non -
appropriated operating capital in the form of buy - downs of telecommunications service
charges in order to eliminate differences between rates among different classes of users.
In 2002, for example, 746 rural hea lth providers were able to provide healthcare using
long distance telecommunications at rates comparable to their urban counterparts. This
168
number, however, represents a very small proportion of the nearly 4000 rural clinics
recognized by the federal gove rnment, suggesting that the potential for expanding
infrastructure is significant.
State governments
States follow a similar pattern by funding procurement for state clinics and institutions,
projects and direct investment. Illinois, for example, grante d $450,000 among 10
hospitals in 2001 to establish capabilities (i.e. computers, videoconferencing equipment,
infrastructure and initial telecommunications charges as well as training for hospital
workers). The hospitals will be linked by the “Illinois Cen tury Network,” a statewide,
high - speed telecommunications system created in 1999 to integrate and expand data,
voice and video communications among schools and libraries.
Texas has one of the most comprehensive state telehealth programs to fund infrastru cture
investment. In 2001, the Legislature enacted sweeping legislation to reflect the high
priority given telehealth. The Texas Telecommunications Infrastructure Fund Board
(TIFB) has since awarded grants to 87 telehealth programs. An interesting exampl e of
“demand aggregation” is the Texas Rural Hospital Telecommunications Alliance
(TRHTA), characterized as a “statewide telehealth utility”. The Alliance’s objective is to
become a telehealth application service provider to assist rural and public health care
providers. The Alliance used the State’s Telecommunications Infrastructure Fund Board
(TIFB) Internet Connectivity Grant Program as the scalable foundation on which to build
services. In 2002, TRHTA was awarded nearly $14 million in grants with an ad ditional
$1.56 million in matching funds for 255 sites for local network, workstations and
software; secure Intranet over statewide backbone; broadband internet access with email;
supporting services.
Private sector
There has also been some attention rec ently to venture capital as a source of investment
dollars. For example, Guidant Corporation has recently partnered with Bay Area venture
capital firms Vanguard Ventures and Fremont Ventures to establish Vesalius Ventures,
169
a telemedicine venture accelera tor focusing on identifying and funding early stage
opportunities in telemedicine, medical informatics and technology.
Private sector investment focuses on telehealth programs and technologies in response to
specific markets. Although data is not readi ly available, discussions with telehealth
168
U.S. Census Bureau 2001
169
“Guidant Partners with Prominent Venture Capital Firms to Form Vesalius Ventures,” Guidant
Corporation press release of August 2, 2002. For entire article, see:
http://www.guidant.com/news/200/web_release/nr_000264.sh tml.
98
providers and suppliers suggest that private payers such as Partners Healthcare represent
the primary investment within the private sector.
National Health Technology and Information Infrastructure
Over the pas t several years, there has been a great deal of discussion in healthcare, policy
and technology circles about the merits of a national network of healthcare information.
Much of the discussion is centered on the pros and cons of an “individual electronic
medical record” (i.e. a digital personal medical history). The events of 9/11 and since
have elevated this discussion of a national medical network or “grid” to a higher level
due to perceived needs for an integrated emergency response, bio - detection and bio -
defense, interoperability of data and equipment, and the communication needs of first
responders.
A comprehensive and timely response to bioterrorism attacks requires investment in data
acquisition, threat detection, and a response infrastructure. V arious national organizations
have called for federal leadership in this area. For example:
1 “To protect public health and national safety, the American Medical
Informatics Association (AMIA) recommends that the federal government
dedicate technological resources and medical informatics expertise to
170
create a national health information infrastructure (NHII).”
2 A recent report issued by the National Committee on Vital and Health
Statistics noted, “Based on public hearings about the NHII vision, NCVHS
has determined that the most important missing ingredient, which could
accelerate and coordinate progress on the NHII, is leadership, specifically,
171
Federal leadership.”
3 A 2002 proposal by the Rand Corporation to develop a National
Information Technology Inf rastructure included healthcare applications.
4 A 2002 initiative of HHS, DOD and VA to jointly develop data standards
leading to a common electronic medical record.
5 In October 2002, the Healthcare Information and Management Systems
Society (HIMSS) launched a “National Health Information Infrastructure
172
Task Force.” According to HIMSS, the task force will focus on
activities to help the healthcare industry create and adopt a national health
information infrastructure (NHII). Initial projects for the HIMSS tas k
force will include creation of an inventory of existing
technologies/practices in healthcare, identification of areas that need to be
addressed, and development of a HIMSS “version” of the NHII.
Current visions of a NHII lack a central authority that wo uld oversee development and
address such issues as standards development, reimbursement, physician licensure,
170
Tang, Paul C. “AMIA Advocates National Health Information System in Fight Against National Health
JAMIA
Threats.” vol. 9 No. 2 March/April 2002, pp. 123.
National Committee on Vital and Health Statistics. “Information for Health: A Strategy for B uilding the
171
National Health Information Infrastructure.” U.S. Department of Health and Human Services, November
15, 2001. p. 3.
172
For more information on HIMSS, visit their web site at http://www.himss.org /ASP/index.asp .
99
quality control, etc. The National Committee on Vital and Health Statistics (NCVHS)
reflects this sentiment in a recent report:
“Although many o f the basic components for the NHII already exist and are
operating in their own spheres, they lack the interconnections that could make them
more useful in concert than they are as isolated pieces. Many non health - specific
communication technologies are a lready available, affordable, and widely used in
multiple sectors of U.S. society. For the most part, however, their full potential is
not realized because they are proprietary, incomplete, or uncoordinated. Also,
many existing programs and activities in t he public and private sectors provide a
foundation for the NHII, but they are fragmented and dispersed throughout
agencies and organizations that lack a mechanism for coordination. Their impact
173
would be enhanced if they were part of a comprehensive NHII fr amework.”
Telehealth has been discussed as one of the key NHII technologies for several reasons:
1 Hundreds of telehealth networks are currently operational throughout the
nation.
2 Telehealth applications can use any (or all) of the existing
telecommunica tions infrastructure (e.g. Internet, telephony [any
composition or speed], wireless, satellite, and cable).
3 Telehealth networks can be readily converted to apply other data and
devices.
Integrating even the most diverse information system and telecommunic ations network
into a NHII is technically feasible. The challenge has been met, for example, by the many
information systems conversions resulting from corporate mergers and acquisitions (i.e.
banks).
One of the first steps must be the development of a n ational systems architecture
featuring a common data structure to include commonly understood elements and
definitions. The Consolidated Health Informatics (CHI) project being pursued by DOD,
VA and HHS represents a substantial federal effort to build a s ingle information
infrastructure by linking existing databases.
National health information systems already exist such as Medicare’s OASIS and CDC’s
Health Alert Network. Several federal agencies are currently developing national or
regional health inf rastructure for homeland security purposes, such as the Centers for
Disease Control and Prevention (CDC) which is working with state and local health
departments to design a nationwide “national epidemiological detection and surveillance
system” (NEDSS).
The military has begun to integrate its medical records across its service branches via the
Composite Health Care System (CHCS) II. This is the largest automated information
systems project in DoD and is based on a client - server architecture with a cent ralized
patient record data repository accessible from PC workstations in clinicians’ offices.
Providers utilizing CHCS - II have a desktop application that grants access not only to the
Ibid ., p. 3.
173
100
patient’s electronic health record, but ancillary services such as lab oratory and radiology
reports, and pharmaceutical drugs ordering. Further, based on the detail provided in the
encounter documentation, levels of diagnostic complexity can automatically be calculated
for accounting purposes. At of the release of this rep ort, CHCS - II has been deployed to
seven military medical treatment facilities (MTFs) and worldwide deployment of the first
major “block” of functionality is expected within a year. Tri - Care On - Line, also being
developed for DoD, is working with the VA to provide a “portal” for patients and
providers to help increase their access to care (e.g. appointment scheduling, education,
patient - provider e - mail)
As noted in Chapter 3, the Southern Governors Association is also planning a “networks
of networks” usi ng existing telehealth infrastructure and programs as a building block or
“backbone” for integrated bio - defense. To the extent that the several independent
discussions of a national health information infrastructure can be coordinated (good) or
integrated (better), the Southern Governors’ initiative may provide a “proof of concept”
th
test bed. Funding for this initiative was proposed in the 107 Congress; a similar
th 174
proposal is expected in the 108 .
A national systems architecture should begin with a coor dinated, interagency,
intergovernmental and public/private process to define requirements and select one or
more of these systems to anchor a NHII. The next step would be development of a
common data structure among stakeholders at all levels, to include common data
elements, common data element definitions, and common data interfaces. Important
stakeholders in the discussion of a NHII include the Federal Chief Information Officers
Council which has been charged with coordinating the cost effective develo pment and
integration of information systems.
.
The Markle Foundation’s “ Connecting for Health…A Public - Private Collaborative”
established an initiative to “catalyze specific actions on a national basis that will rapidly
clear the way for an interconnect ed, electronic national health information infrastructure”.
The Foundation proposed that this be accomplished through the eHealth Initiative and
other avenues by focusing on three key areas:
1. Accelerating the rate of adoption of national clinical data stan dards
throughout the nation’s health care system in order to facilitate
interoperability.
2. Identifying practical strategies and solutions for developing an
interconnected electronic infrastructure that will ensure the secure and
private transmission of med ical information and support the continuity of
personal health information across plans and providers.
3. Actively working to understand what consumers will need and expect from
an interconnected health information system and identifying key steps for
meetin g their needs.
Lastly, the Institute of Medicine published a report on patient safety in November, 2003
which “addressed key areas related to the establishment of a national health information
infrastructure, including: a process for the ongoing promulga tion of data standards; the
174
Per Jon Linkous, Executive Director, American Telemedicine Association
101
status of current standards - setting activities in health data interchange, terminologies, and
175
medical knowledge representation.” This report is viewed by some as the most
important of a series of institutional endorsements of an NHII.
Although there has been a great deal of discussion of the “need” for a NHII, very little
attention has been paid to its cost and attendant policy barriers to its development. If the
need is justified by homeland security requirements, characteri stics of a resulting NHII
may be quite different from one justified by considerations of healthcare - related access,
quality or cost. It is important that there be robust public discussion on the issue of a
NHII in which its goals, merits, requirements, co sts and benefits are examined closely.
Meanwhile, any further federal investments in telehealth applications and
telecommunications infrastructure should be considered in the context of integration
and/or interoperability with existing systems and networks .
LEVERAGING CAPITAL RESOURCES
Blended Funding
Most of the nation’s older and larger telehealth programs have blended funding from a
variety of sources. The sustainability of many telehealth programs depends on how
creative and effective their manager s are in leveraging funding and other revenue
sources. The Telemedicine Information Exchange’s database of programs and the annual
report published by Bloch Consulting group are two good sources of information on how
programs are leveraging capital resourc es creatively.
For example, North Carolina’s Mountain Area Health Education Center (MAHEC)
blends funding from OAT, eRate and private foundations with fees from users to manage
the Western North Carolina “Healthlink” network. MAHEC supplements its miss ion -
related revenue by providing technical support to rural hospitals in designing telehealth
infrastructure and in obtaining telecommunication cost discounts under the Universal
Service Program for Rural Health Care Providers (USAC). In their funding year ending
June 30, 2001, these combined discounts amounted to over $117,000.
Not - for - profit organizations have also become attractive alternative sources of telehealth
and infrastructure funding. MAHEC’s network build - out has been funded in large part by
No rth Carolina’s Duke and Reynolds Foundations, and, the “e - NC Initiative,” a statewide
effort to connect North Carolina to the Internet recently awarded nearly $4 million in
incentive funds to support connectivity efforts in western North Carolina for last mile
solutions. 80 private organizations support “eNC” through cash and in - kind contributions.
176
175
“Patient Safety: Achieving a New Standard for Care,” Institute of Medicine, Washington DC, November
2003
176
Federal Telemedicine News
Source: , 1/6/03 . For additional information, visit the eNC web site at
www.enc.org.
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The objective of blended funding and creative financing is program sustainability. The
patchwork of third party reimbursement policies coupled with an uncert ain outlook for
federal and state capital investment make this approach necessary for many programs, but
distractive for program managers.
Universal Services Access Corporation (USAC)
USAC reimburses not - for - profit rural telecommunications users the dif ference between
rural and urban rates. “Such a program can make a world of difference to rural healthcare
projects,” reported the former telemedicine director for the Midwest Rural Telemedicine
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Consortium. There are issues related to USAC, however, such as difficulty users have
in complying with administrative and paperwork requirements, suggestions that the
program does not meet the needs of rural providers, unawareness of the programs among
rural providers, and restrictions placed on use of USAC (or “ru ral health care provider
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discount”) funds.
There is also a great deal of debate over the use of USAC’s annual and cumulative
collections. For example, the discount program for rural health clinics is authorized to
disburse up to $400 million per ye ar, although actual disbursements in FY2002 amounted
to less than $20 million. Some have viewed USAC’s collections in excess of its
disbursements as a means of funding investment in telehealth infrastructure. Others
caution that these “surpluses” are not real. It would appear that confusion about the
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USAC program may also be an underlying cause of its lower than expected utilization.
Public - Private Partnerships
Private telehealth companies have entered into “partnerships” with providers for such
reas ons as research, development, testing and promotion of products.
As discussed in the second chapter, TATRC conducts much of its research with private
sector “partners.” This arrangement not only increases the probability that the Army’s
investment is act ually commercialized, but also assures the private partner the use of
TATRC’s know - how and resources for research, development, testing and evaluation.
The arrangement is also important to the private partner for providing an instant market
and distributi on channel for its product.
177
Healthcare Informatics
Lisa Stammer, “Telemedicine: Getting Ready to Take Off,” , January 2002.
178
For example, funds used for healthcare must be separated from libraries and schools the reby
discouraging demand aggregation.
179
The FCC ruled recently that any leftover funds allocated to help schools and libraries provide Internet
access will be returned to the telecommunications companies that levy a surcharge to fund the program.
Government Technology
reports that by next April, some of the unused money in the e - rate program will be
distributed as additional funding to schools and libraries next y ear. But a sizable portion of these funds --
estimated at $970 million by the FCC -- will be returned to telecommunications carriers to reduce
consumer telephone bills, the agency said. The e - rate is paid by contributions from telecom carriers to the
unive rsal - service fund, which ensures that customers in rural areas get rates that are comparable to those
paid by city customers. Most carriers pass on the extra charges to their customer in the form of line - item
fees on telephone bills.
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The Department of Veterans Affairs also partners frequently with private sector
technology firms. The advantage to VA is an opportunity to test new technologies, while
the private partner takes advantage of VA’s know - how and patient population to
demonstrate its products, establish a customer base, and to strengthen marketing content
through “official” efficacy and cost effectiveness studies.
In 2001, the National Institute for Standards and Technology (NIST) partnered with
C omputer Motion to advance the state of the art of surgical robotics and telehealth. By
developing a unique robot control architecture and system, Computer Motion will allow a
mentoring surgeon and a student surgeon located in different places to
simultaneously control a surgical robot performing minimally - invasive surgical
procedures on a patient. If successfully developed, the technology will enable substantial
cost savings for hospitals and health - care organiz ations by maximizing the training
effectiveness of their top surgical staff and training opportunities for others. It should also
significantly advance the field of minimally - invasive surgery and the number of
practitioners, with corresponding benefits to patients and society, since these procedures
dramatically lower costs through shorter hospitalization and recovery periods.
Telehealth projects also benefit from partnerships between universities or governments
and the private sector. Drew University’s partnership with Nortel Networks for remote
eye examinations in the Watts section of Los Angeles is one such example. Telehealth
“champion,” Dr. Charles Flowers, leveraged a $50,000 grant from the Los Angeles
County Commission and the investment of tele communications infrastructure by Nortel
to create a $120,000 point - to - point turnkey system for remote eye care. Nortel has
benefited from the partnership through product testing and public relations, while Dr.
Flowers has leveraged his project’s success t o add additional telehealth services to his
practice.
Homeland Security Funding
Telehealth is one of 18 applications approved for use in the first significant disbursement
of homeland security funding. Federal and state governments and healthcare
commu nities are still in the very early stages of identifying strategies and planning for
homeland security investments. A scenario where funding is made available to upgrade
or expand communications and information technologies in healthcare institutions and
public health departments seems most likely, at least for the foreseeable future. The
extent to which telehealth is being included in state level security planning is unknown.
State homeland security funding will most likely be blended with existing prog ram
funding to add capacity and capabilities. It is likely, however, that homeland security
funding will not provide a continuing revenue stream but will be earmarked primarily for
capital investment.
Not enough is yet known about the Department of Homel and Security’s priorities/goals
related to national health and safety to begin to estimate what levels of investment should
be allocated. It is assumed that as the new Department becomes more established, a
systematic approach to healthcare technology nee ds assessment will evolve.
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PRIVATE INVESTMENT
In order to discuss investment required to meet the nation’s healthcare priorities of
access, quality, cost and homeland security, four assumptions are critical.
1. Government funding for current and/or expa nded telehealth
programs is limited and levels of future funding are uncertain.
2. The vast majority of healthcare providers practice in the private
sector.
3. Any significant growth in telehealth innovation and adoption
would likely result from private sector i nvestment.
4. Anomalies in the healthcare market suggest that economic,
policy or other incentives may be needed to motivate private
investment.
Investment in telehealth technologies is an extremely complex subject. Healthcare
affects every American. Theref ore, the size of the market, the large federal presence in
the market as investor, payer and provider, and the multitude of stakeholder interests
complicate the interface of private sector firms who would be investors. If greater
innovation and adoption of telehealth technologies is linked to increased private
investment, the question of what would motivate private individuals and firms to invest is
important.
Private investors (institutions and individuals) expect a financial return on their
investments. Public investors (i.e. taxpayers) have other expectations such as providing
for the public good, cost - effective access to the best possible quality of healthcare for all
Americans, and protecting the nation from threats to its health.
The array of pub lic, private and not - for - profit third party payers includes major health
management organizations and insurance companies. In addition to reimbursing
providers, many third party payers finance and manage their own telehealth programs and
networks. Becaus e private payers are primarily interested in profitability or shareholder
value, they are most concerned with achieving the best possible return on their telehealth
investments.
This section analyzes possible strategies that may increase investment in t elehealth and
contribute to the intersection of national priorities with private investment goals.
Increase Demand by Increasing Access
In order to achieve a satisfactory return on private investment in telehealth technologies
and infrastructure, the n umber of reimbursable encounters must achieve a minimum
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level. Because fee - for - service providers earn income from the volume and type of
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For example, it has been estimated by one telehealth provider interviewed that $1500 per month would
be required of a rural clinic for recurring basic broadband charges. If referring physicians are reimbursed at
a rate of $20/referral, at least 75 referrals would be required per month.
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healthcare services provided, they may only invest in devices, applications and
infrastructure that will help achiev e the highest volumes of and highest rates for
reimbursable services. Volumes can be increased by expanding patient access and/or
expanding the range of clinical services. Greater productivity of the clinician and the
clinical staff may also lead to higher volumes of reimbursable services (e.g. more patients
or services per hour). Providers may, however, encounter difficulties in achieving even
minimum volumes needed to justify technology investments due to both demographics
(e.g. sparse populations) and ec onomic conditions (e.g. ability to pay) within their
practice areas (i.e. markets).
However, many healthcare providers may not have much more than a “Plain Old
Telephone Service” (POTS) network connection. It would be reasonable, then, to expect
such prov iders to limit their investment to devices and applications that would be
compatible with POTS. The additional telecommunications cost of increasing access to
patients (e.g. building the volume of encounters over long distances) and to other
providers (e.g . expanding services) may be a “disincentive” for private sector providers to
invest in upgrading their capabilities unless those technologies contribute value (i.e.
increased revenues, improved quality, increased productivity, and/or reduced delivery
cost ) greater than the additional investment required.
Without economic, policy or commercial incentives for the private sector to invest in
medically - underserved areas, either the public or not - for - profit sector must take
responsibility for increasing acces s. The (U.S.) Department of Health and Human
Services (HHS) and States having medically - underserved populations have funded
extensive programs for many years to increase access. As discussed earlier, not a great
deal is known about the impact these progr ams have had on increasing access and
improving health because of the lack of data. One need that has been addressed through
educational grants and immigration programs is the recruitment of physicians for
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underserved areas. Another initiative was the 198 9 Medicare program to provide a
premium of 10% for reimbursement to providers in medically - underserved areas, a
program rescinded in 2001 because it wasn’t working.
Another counterincentive to investment (because it has a significant affect on demand)
a re differences in Medicare reimbursement for providers in different areas of the country.
"The disparity in payment stems from geographic adjusters in each of the three elements
of the physician fee schedule -- practice expense, work expense and liability insurance
costs. Those adjustments can mean differences of thousands of dollars in reimbursement
between high - cost and low - cost areas. Fee - for - service Medicare payments for the average
patient in Miami in 1996 was $8,414, while the average patient in Minne sota cost the
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program only $3,431." While resolution of this issue will most likely await serious
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For example, a special J - 1 visa is currently offered to attract foreign physicians to shortage locations in
exchange for service commitment s.
182
To achieve access to quality healthcare for all Americans, a significant program to build and connect
infrastructure would be required. Estimates to build out the nation’s broadband to provide access to most
locations range from $100 to $200 billion . Because of distances and terrain, fiber optic technology may not
be an economical option, as is true of wireless in many locations. Satellite links may prove more
economical through services which may offer monthly lines for as little as $35.00, as wel l as reception
“kits” that may cost from $1000 - $10,000. Satellite broadband offers scaleable broadband connectivity up
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Medicare reform, its impact on telehealth adoption and investment (as well as other
innovative medical technologies) is significant because, although revenue s (e.g.
reimbursements and out - of - pocket payments) are generally lower in less urban areas,
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technology expenses may be as high or higher.
The following Table 4.a discusses incentives that individuals interviewed during the
course of this research and rep ort suggested might be effective in motivating investment
to increase access:
TABLE 4.a INCREASE ACCESS IN MEDICALLY - UNDERSERVED AREAS
GOALS METHODS INVESTMENTS POSSIBLE INCENTIVES
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Increase Basic infrastructure Needs assessment Database of technology usage and
connectivity resources of rural and remote providers;
Additional functionalit y Eliminate regional and local disparities in
Expanded service reimbursement rates/amounts;
Develop a healthcare - relate d ISP;
Address economic impact of Medicare
requirement for submitting billings
Provider participation Expand reimbursement Higher or comparable third party payment
for services schedules for providers in medically -
underserved areas;
Increase third par ty payer payment
schedules for technology applications;
Faster depreciation for technology expenses
Public awareness Multimedia campaign Campaign sponsorship (e.g. public service
announcements);
AMA endorsement
Expand Multi - use functiona lity and Local and regional Medicare, Medicaid and other third party
applications horizontal integration (e.g. collaboration; payer coverage of additional services;
health, education, Technical guidelines; USAC incentives for extending collaboration
security, communications) Integration services by offering additional coverage
Low bandwidth Technical guidelines;
applications Integration
Expand Expand current TH Technical assistance Technical assistance to grantees
networks networks
Add spokes to hubs
Link networks Federal grant programs Technical assistance for IT and
telecommunications standards and
Interoperability
Improve Quality and Flexibility
to 2 Mbps. Stratos' fixed satellite services, for example, claims multiple voice/fax connections and high -
speed WAN/LAN connectivity at $1.00 per minute.
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For example, due to demographics and greater competition, telecommunications costs in urban areas
tend to be lower than in rural or remote areas. The AFCHAN program in Alaska, for example, reports
healthcare costs that are 300% greate r than in the lower 48 states due to such unique as isolated villages,
long distances and generally higher costs of living.
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Cost estimates to equip an estimated 58,000 physicians in non - metropolitan areas with a basic
infrastructure of a personal compute r, telephone, Internet access and eMail are estimated at around $300
million (based on start - up investment of $5,500 per site). Linking rural providers to nearby telehealth
networks may be simply a matter of dialing up access numbers, and adding sites may incur costs at the
“hub” (although interoperability may be an issue). Theoretically, a concentrated effort to link and train
even the most rural or remote providers with telehealth networks could be accomplished efficiently and
economically within a shor t period of time.
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The role of technology in improving healthcare quality and patient safety has been a
focus of attention since the 1998 Institute of Medicine report “Crossing the Quality
Chasm” identified the intuitive role that automation of clinical procedures and
recordkeeping can reduce human error is somewhat intuitive. For telehealth, quality of
healthcare can be defined in oth er ways as well. For example, expanded access to
primary and secondary healthcare through the AFHCAN program improves the quality of
care (and quality of life) of remote Alaskan villagers. Teleradiology services provide
faster turnaround times between spe cialists and clinicians for everything from broken
bones to mammograms, thus contributing to improvements in quality of care.
Telemonitoring allows patients to recover or rehabilitate at home where, some studies
suggest, the healing process is more effecti ve. Other studies suggest that mental health
counseling is, in some cases, more effective when televideoconferenced, allowing the
patient the security of privacy and the flexibility of connecting with a counselor on his or
her schedule. The flexibility af forded by telehealth technology also offers the provider
and patients more options than a face - to - face encounter.
It is in the areas of quality and flexibility where investment in telehealth technology can
have the most impact. While government can desi gn and invest in research and
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demonstration projects for improving quality, providers make sure those programs
benefit the patients. Technologies that improve the quality of healthcare must, by
definition, be designed for and distributed to providers, ca regivers, or patients.
There is, of course, the potential that improvements to quality of care innovated by
providers would benefit the telehealth community in general, and should be encouraged.
One incentive to develop and diffuse innovative improvemen ts would be “fast track”
protection of intellectual property in the form of patents and copyrights, a change that the
Patent and Trademark Office has incorporated into its rules of practice for medical
submissions with certain conditions.
Table 4.b below identifies methods, investments and possible incentives that individuals
interviewed during the course of this research suggested might lead to improvements in
the quality of healthcare delivery. For the most part, these incentives are directed at the
pr ovider. It is important to note that, currently, the payer benefits most from reduced
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healthcare costs as a result of quality improvement. It was suggested by interviewees
that these possible incentives have the potential to motivate the provider and co uld, in
turn, benefit both payer and patient.
185 The Quality Interagency Coordination Task Force (QuIC) was established in 1998 to “ensure that al l
Federal agencies involved in purchasing, providing, studying, or regulating health care services are
working in a coordinated manner towa rd the common goal of improving quality care.” Discussions with
the Federal agencies indicate that organization is no longer meeting or functioning on a regular basis.
186
In 2002, CMS announced a demonstration project that would offer bonuses to provider s that improve
the quality of care provided to Medicare beneficiaries. The project aims to encourage practices to
coordinate care of chronically ill beneficiaries; it tests incentives to provide efficient patient services; and
promotes the utilization of clinical data to improve efficiency and outcomes. Bonuses will be funded from
cost savings the project is expected to produce.
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TABLE 4.b IMPROVE HEALTHCARE QUALITY
GOALS METHODS INVESTMENTS POSSIBLE INCENTIVES
Reduce illness Disease Payer incentives for Bonus payments or investment credits
management disease management to pro viders for applying quality
improvement technologies
Preventive medicine Individual tax credits or subsidies for
programs enrolling patients in preventive
maintenance programs
Information technology Accelerated depreciation on disease
management devi ces and applications
Professional and eLearning infrastructure Individual or business tax credits for
patient education and applications program enrollment/development
Reduce Telehomecare Adoption of: Accelerated depreciation on
hospitalization Devices and applications telehomecare devices and applications;
Information technology Expanded Medicare/Medicaid
reimbursement for monitoring services
Remote monitoring Adoption of: Acc elerated depreciation on remote
Devices and applications monitoring devices and applications;
Information technology Expanded Medicare/Medicaid
reimbursement for monitoring services;
Bonus payments or tax credits for
reduced hospitalization rates and
reduced outpatient visits
Reduce medical Aut omate clinical Applications such as Expanded investment credits for drug
errors protocols automated drug decision support and distribution
Application of prescription and distribution systems;
information systems Expanded investment credits for use of
technology Informatics and evidence - based
medicine;
Expanded investment credits for
automating medical records;
Bonus payments to or lower
malpractice premiums for providers
based on quality or patient safety
metrics
Education and training Double tax deductions fo r education
and training expenses
Improving Productivity and Reducing Cost
It is widely recognized that investments in information technology contributed to a
reduction in operating costs and improvement in productivity that accompanied an
upsurge in competitiveness and success of the U.S. financial services industry over the
last twenty years. The Internet’s contributions of eCommerce, eGovernment, and eMail
have reduced the cost and increased the productivity of most sectors of the nation’s
economy. As discussed elsewhere in the report, the healthcare sector has yet to fully
benefit from the same level of investment in and adoption of technologies. Where that
investment has taken place, however, there are numerous examples of reduced cost and
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increas ed productivity.
187
For example, in a recent presentation to the President’s Information Technology Advisory Council, the
CIO of Harvard Medical Ca regroup, John Halamka, M.D., stated that administrative costs for processing a
reimbursement transaction dropped from $5.00 to ten cents with automation.
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Reduced cost and improved productivity through the adoption of telehealth and other
healthcare technologies will initially benefit the provider through higher profitability
(additional revenues through higher volumes and lower costs), more efficient
administration, reduced human errors, higher patient satisfaction and the ability to
increase patient volumes. The provider’s reduced costs and improved productivity could
be directed in ways that eventually benefit the payer through the au tomation of billing
and reimbursement, as well as improved data collection and the introduction of
innovative applications such as electronic medical records and computerized
pharmaceutical order entry. Ultimately, the widespread adoption of telehealth and other
healthcare technologies holds the promise of benefitting the nation through improved
health and lower costs. Table 4.c below identifies suggested methods, investments and
possible incentives that might assist in reducing the nation’s healthcare cost s.
TABLE 4.c REDUCE HEALTHCARE COSTS
GOALS METHODS INVESTMENTS PERFORMANCE MEASURES
and POSSIBLE INCENTIVES
Automate Adopt information Rationalization of Awar ds, recognition and other
administration technology reimbursement policies; incentives for effective cost
Automation of reduction programs;
administrative operations Expanded investment tax credits or
accelerated depreciation for
automation expenses;
Low - interest loans for automation
Integrate Integration Systems integration Metrics related to cost reduction
applications software, systems such as change in costs per
integr ation encounter;
Tax policy which incentivizes cost
reduction and use of metrics
Education and Professional training Certification programs for
training programs healthcar e technology
integrators/professionals
Increase Adopt information Automate healthcare Metrics related to productivity such
productivity technology financial data systems as numbe r of total staff hours per
and applications; encounter or total costs per
Develop and adopt encounter;
applications for Design and implement tax policies
measuring productivity which incentivize productivity
measurement
Education and Needs assessment Formal recognition for produ ctivity
training Curricula development gains resulting from telehealth
eLearning programs investments
Share resources Technology Awareness campaign to Favorable tax treatment for buyer
cooperatives include “best practices;” cooperatives or for sharin g
Establish buyer “co - ops;” technology resources
Practice demand
aggregation
Reduce telecom USAC Awareness campaign Revised USAC policy allowing
costs for providers blend of eRate with other
applications
Increase return on Create business and Industry indices/benchmarks
investment return on investment
models;
Undertake data
collecti on/surveys;
Undertake cost - benefit
analyses
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In attempting to identify investment required, it would be useful to understand under
what circumstances private and/or rural providers would invest in technologies, and to
what de gree access, quality and cost are important criteria.
Responding to National Emergencies and Increasing Homeland Security
Healthcare providers will need to be connected electronically in order to effectively
participate in the Centers for Disease Contro l and Prevention’s (CDC) Health Alert
Network (HAN) and National Epidemiological Detection and Surveillance System
(NEDSS) bio - defense networks and other regional or national information systems
relating to homeland security and national emergencies. Inve stments in technology must
meet the primary requirements of multi - use and interoperability. To accomplish this
most effectively and efficiently, homeland security and clinical healthcare needs must be
integrated locally, regionally and nationally.
It ha s been suggested that, to assure access to homeland security information systems, all
healthcare providers possess a minimum of a computer, electronic interface with the
Internet (i.e. an Internet Service Provider), broadband telecommunications (if availab le),
and eMail. Training costs must be included in the baseline because some portion of the
users will not have the technical know - how necessary to operate the equipment or utilize
the applications effectively. Another widely - accepted notion is that any homeland
security applications should be multi - use (i.e., so integrated with day - to - day, routine
clinical protocols and business processes that transition to homeland security uses
becomes second nature).
The elevation of homeland security as a nationa l priority and the substantial funding
being made available introduced the potential for widespread direct government
procurement or subsidization of healthcare technologies. Participants in the June 19
Roundtable heard “The money is available for any tele medicine initiatives that address
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issues of bioterrorism and first responders.” More precisely, states have proposed
action plans for responding to conventional emergencies and bio - terrorism, and the
Federal government, through FEMA and HHS, has disburs ed initial funding for first
responders and public health bio - defense programs respectively. These initial “tranches”
will funtion as a stopgap measure until the Department of Homeland Security is fully
functional and can apply a systematic methodology to needs assessment and funding.
Until comprehensive assessment of homeland security’s healthcare
technology needs is undertaken, research and development
of “multi - use” functionality will be speculative.
188
Dr. George Alexander, Medical Advisor, Office of Homeland Security at the Technology
Administration /OTP “Innovation, Demand and Investment in Telehealth” Roundtable on June 19, 2002.
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Telehealth programs and networks already in place or being undertaken can provide real -
time information and examples to help speed an integrated national response to homeland
security needs such as the diffusion of healthcare information, syndromic surveillance,
surge capacity and mobile response teams. For example, the Southern Governors
Association is undertaking a project to connect existing telehealth networks across eleven
states into a single bio - defense network. Another example may be a newly - organized
Northern Command that has its own telehealth c apabilities. Awareness of these and other
current projects might lead investors to consider network linkages or other collaborative
strategies.
BUSINESS MODELS
Through the use of some common models describing what works in telehealth programs,
what th ey cost, and what is required, potential investors can begin to simulate costs and
cash flow, and to evaluate risk, as in a cost - benefit analysis. As one authority suggested,
“We need an integrated cost model across the board to account for the true cost o f care so
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that we can really understand the benefits of these new technologies.” Entrepreneurs
and institutions contemplating investment will be interested in models that work (and
why some don’t).
There are several different types of applicable business models. One type that may
instructive are models designed to facilitate provider acceptance. If, for example, the
provider is unable to finance the capital investment or is unsure of the acceptance or
integration of the technology by patients or staff, a leasing or outsourcing model may be
most appropriate. Leasing has been effectively applied to telepathology, for example,
where the provider may network a device to a remote laboratory for analysis or diagnosis.
The services or outsourcing model has be en widely practiced in teleradiology, where a
provider’s investment may be limited to a scanner. (Teleradiology has become so routine
in some radiology departments that the term telehealth is not even applied.) Both models
should be considered for investm ent in medically - underserved areas where patient
volumes are low, and where pathology and radiology specialists may not be available.
Others models might include:
x
Telehomecare . Private profit or not - for - profit agencies employing visiting nurses
appear to be the most popular business model (although reimbursement policies
impact this field). Technologies used for this model include automatic drug
monitoring, card iac or pacemaker monitoring, disease management, and
videoconferencing. The agency may purchase and hold title to the devices and
applications, or require that the patient do so.
x
Mental health which would employ video - conferencing, informatics, or wire less
devices for consultations or monitoring. One telementalhealthcare provider
reports that patients are both more satisfied and more easily treatable because
videoconferencing allows greater scheduling flexibility and greater privacy than
189
Comments by Steve Brown, CEO of Home Health Hero, Inc. at the TA/OTP June 19 Roundtable.
112
group counseli ng. Recent coverage of mental health by Medicare has made this
model more attractive.
x
A combined telehealth network and health education network that should
increase utilization and add revenue streams. This model has the added
advantage of being able to tap distance and lifelong learning resources as well as
healthcare. An example of th is model is the Mountain Area Health Education
Center program described earlier in this report.
x
Use of eMail and/or the Internet as the telecommunications platform. While only
13% of doctors use e - mail to communicate with patients, a growing number say
they would use it more if email usage is reimbursed. To address these issues,
companies such as Blue Shield of California and a group of Silicon Valley
employers are testing a program called “webVisit” from Healinx Corporation that
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reimburses doctors $20.0 0 for certain online consultations. Medem Inc., the
for - profit Internet company backed by the American Medical Association and
other physician groups, has recently launched a service that will enable doctors to
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charge patients for online “visits.” As the Internet and the use of eMail
become ubiquitous, this model becomes more significant for addressing the
priorities of access and cost.
There are many other models. It is important, however, that service delivery and cost
models integrate the clinic’ s routine workflows and protocols, and be able to link all
specialties across the enterprise (e.g. clinic, hospital or network).
Telehealth has a long enough track record that empirical models can be coupled with
“best practices” and “lessons learned.” What is often missing are the development and
application of financial “benchmarks” and industry indices which underscores the need
for additional research and data collection of investment and cost - benefit indices.
In a traditional business model, cap ital for start - up and investment in equipment and
facilities would be managed separately from capital required to maintain a company’s
operations. Because an average of 84% of a typical healthcare provider’s revenue is
received as “reimbursement” from thi rd party payers (see Table 3b.), such measures of
financial performance as “return on investment” and “profit and loss” depend almost
entirely on how much of the business’ revenue is generated by reimbursements. Given
this, telehealth providers will invest in services and equipment that are covered by
applicable third - party reimbursement policies – and are unlikely to invest in technologies
that will not be reimbursed.
Business Models - Lessons Learned
Successful telehealth programs have relied on the m ulti - use aspect of their technologies.
Multi - use means that a hospital may use a videoconferencing network for distance
The Wall
Landro, Laura. “New Guidelines to Make Doctor - Patient E - Mails Profitable, Less Risky.”
190
Street Journal
(Technology & Health) Jan. 25, 2002.
The Wall Street Journal
Carrns, Ann. “Medem to Enable Physicians To Charge for Online ‘Visits’.”
191
(Technology & Health) June 6, 2002.
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learning for clinicians, administrative conferencing, public health education, community
development and/or patient care. Such networks as the Midwest Rural Telemedicine
Consortium depend on “secondary uses” to keep them up and running. The primary use
of their network is educational programming and administrative conferencing. Another
cost - saving measure comes from partnering with other organizations to help build and
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pay for the network.
Issues of privacy, security, reimbursement, and liability still restrict the development of
telehealth business models that, in the past, have been created with “cost savings” in
mind. Recognizing tha t poor information flow in healthcare settings contributes to gross
inefficiencies, inequities, and quality variations, business models that focus on telehealth
as an enabler of better, faster, cheaper information flow will present better cases for
profita bility. More recent business models have incorporated these considerations and
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have emphasized how telehealth programs “make” money.
As previously discussed, business models of telehealth applications also contend with
estimating revenue streams from a patchwork of public and private reimbursement
policies. Although payers publish reimbursement policies, their ever - changing nature
coupled with complicated language and exclusions suggests that only those investments
having some administrative capacity ar e best able to manage the research and paperwork
associated with claims. In both public and private payer systems, administrative
paperwork requirements act as a significant barrier to investment in and implementation
of telemedicine programs and especial ly for smaller clinics (see Chapter 3 for discussion
of the impact of “paperwork” on demand and operating costs).
Sustainability
There are only a few types of economic models – teleradiology services, mental health
services, telepathology, teledermato logy and home healthcare agencies - that project
sustainability (i.e. positive cash flow) for telehealth investments without an infusion of
external funding. All models demonstrating sustainability include routine reimbursement
by third party payers in so me fashion. The more rural, uninsured and/or less affluent the
market segment or geographic area, the less likely the telehealth program will be
sustainable without external assistance directed toward capital investment and operating
expenses. At the same time, budgetary pressures on federal and state grant making
agencies and third party payers have required that telehealth programs become self -
sustaining.
If the goals of access, quality, cost and even homeland security are going to be met,
however, a re quirement for self - sustainability may not always be a priority. In rural
areas, for example, it is unlikely that telehealth providers will experience the volume of
encounters and revenue that would cover operating costs or recover capital invested in
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Healt hcare Informatics
Stammer, Lisa. “Getting Ready to Take Off.” January 2002. p. 4.
.
http://www.healthcare - informatics.com/issues/2002/01_02/take_off.htm
193
International Jou rnal of Medical Marketing
Kirsch, Gorm. “The Business of eHealth.” . Jan 2(2): 106 -
110. p. 106.
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tech nology. The Medical Director of the University of Virginia’s Office of Telemedicine
has said:
“In the absence of federal or grant funding, small clinics and hospitals
are least likely to afford the capital expenditures and the ongoing
telecommunications costs inherent in the establishment and maintenance
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of a telemedicine facility.”
Sustainability is important in another sense because, without it, there is limited incentive
for competition, and even less incentive to innovate, improve quality and expan d
services.
A program’s likelihood of self - sustainability can be increased by engaging in
partnerships and by applying general business principles. There are examples of
telehealth programs serving rural, uninsured and/or less affluent markets that have
a chieved profitability and sustainability by expanding their services to non - traditional
customers. For example, the Telemedicine Center at East Carolina University contracted
with the Bureau of Prisons to provide telehealth services at corrections facilit ies in
Eastern North Carolina. Teleradiology firms are contracting with corporations to provide
pre - employment X - rays, EKGs, etc. Home healthcare agencies are contracting with
Veterans Affairs to provide telemonitoring services to veterans.
The free e xchange of such business case information and lessons learned is a favorite
subject whenever telehealth professionals gather. A mechanism for continuing and
extending this exchange is needed as well as the development of sustainability or
profitability be nchmarks (e.g. comparative return on investment rations).
Reimbursement Policy
Any discussion of investment will assume that that the “investor” is interested in
monitoring the value and effectiveness (i.e. “return”) of his or her investment, and will
ex pect that the “return on investment” will achieve certain results. Return on investment
(ROI) in a typical private (healthcare) business takes the form of:
1 Revenue for services performed
2 Reimbursement for services performed
3 Increased value of assets
4 Inc reased value of labor (e.g. skilled workforce)
5 Secondary markets created
From a national perspective, estimating ROI in healthcare is difficult because of
economic externalities and the difficulty in quantifying and measuring national social and
non - econo mic priorities such as increased access to quality health care and homeland
security. From a private perspective, reimbursement decisions need to be timely,
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In testimony given by Karen S. Rheuban MD, Medical Director, Office of Telemedicine, University of
Virginia Health System to the U.S. House of Representatives’ Commerce Committee on September 7,
2000.
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consistent, and “innovation - friendly” so that new or expanded uses of technology are not
penalized vis - à - vis established methods of care. Timelier adjustments to reimbursement
policy, which are necessary to balance coverage and cost, must be considered by policy -
makers, in part, to minimize risk to investors.
“Scoring models” developed jointly by th e Office for the Advancement of Telehealth
(OAT) and the Center for Telemedicine Law (CTL) offer a series of cost models that use
actually data from OAT grantees to provide a more accurate estimate of the impact of
expanded coverage on third party payers. For example, the CTL/OAT estimates of
expanding telemedicine payments under the Benefits Improvement Act of 2000 (BIPA)
ranged from $50 to $100 million over five years, compared to a Congressional Budget
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Office estimate of over a billion dollars.
Whi le contributing more accurate estimates, scoring models such as CTL/OAT’s
consider neither productivity increases nor the impact of reimbursement policies on
access, quality, and homeland security. As of December 2002 (two years into BIPA),
CMS reported a ctual utilization of only 1,350 approved billings totaling less than $500
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thousand. Better scoring models and other technology evaluation process
improvements may be considered when public policymakers turn their attention to
Medicare reform, and as legis lation relating to Medicare reimbursement of telehealth is
th
considered in the 108 Congress.
Telecommunications infrastructure costs and availability
As the need for providers to transmit data increases, the need for higher speed and higher
capacity tel ecommunications such as broadband becomes more important. The
advantages of broadband for Internet and voice - over - internet applications include the
“always on” feature needed for store and forward applications. Higher capacity
bandwidth is also important for accuracy and clarity in digital imaging applications such
as teleradiology, teledermatology and pathology. A central question for telehealth
providers is the availability of broadband capacity in their locality.
The next consideration is the cost o f broadband service and associated technologies such
as modems and audio - visual equipment. The potential for significant increases in the
telecommunications - related costs are another risk for investors, especially if those cost
increases cannot be absorbed within existing fee structures or payer reimbursement rates,
or, cannot be offset by improved quality or productivity. In an informal assessment of 26
telehealth programs conduced by the University of Missouri in 2002, 12 programs
considered the cost of telecommunications services to be the single biggest barrier to
sustaining their telehealth programs. An additional four programs placed
telecommunications cost near the top of their list of barriers. These concerns are even
more significant for the rural and medically - underserved areas most often identified as
the primary beneficiaries of telehealth investment.
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Online Journal of Issues in
Puskin, Dena S. (September 30, 2001) "Telemedicine: Follow the Money"
Nursing
, Vol. 6, No. 3.
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From a presentation by Craig Dobyski, CMS at the ATA’s December 2002 Conference.
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As previously discussed, programs such as USAC were intended to offset higher
telecommunications costs associated with rural and medically - unders erved areas. USAC
has, however, been criticized for failing to fully disburse USAC funding due to a low
level of utilization. Prospective applicants complain that an excessive paperwork burden
associated with USAC application requirements falls hardest on those small, rural
providers that need to offset higher telecommunications costs the most. North Carolina’s
Mountain Area Health Education Center reports a very high utilization of USAC because
it has aggregated demand. (MAHEC also offers assistance to ru ral providers in
completing and submitting USAC paperwork on a reimbursable basis).
Techniques such as demand aggregation and an “eCommerce approach” may assist in
reducing the burden of paperwork. However, a significant and sustained effort will be
requi red to educate investors and extend business models and sustainability “best
practices” to providers throughout the nation’s continuum of care.
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