How to Measure Your Practice’s ROI on Telehealth

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There is no shortage of surveys and academic reports reinforcing the idea that telehealth generally improves practices’ ROI. According to a 2017 Foley report, 71% of practices realized cost savings due to its implementation, with 29% realizing a 20% or more improvement. But many articles showcasing telemedicine’s financial impacts consist of case studies highlighting particular practices, rather than a representative sample of practice types across the country. Add in the spike of telemedicine usage during COVID-19, and there is even less literature about ROI in a way that’s relevant in the present day. This lack of information is likely contributing to apprehensions about wide-scale telehealth adoption. A study this year found that out of roughly 10 concerns around virtual care implementation, executives’ most common apprehension was related to revenue and cost.

That’s why committing to a framework that can help your practice measure ROI is imperative. By tailoring these considerations to your operations and patient demographics, you’ll have a more accurate understanding of the ways in which your telehealth program is affecting your bottom line. According to a 2020 report by Manatt Health, there are a few key factors to evaluate when you’re implementing a brand new program or updating or expanding an existing one:

  • Impact on patient acuity levels: Average levels of acuity, or the intensity of care required for a patient, affects the services that are administered, thus impacting the amount of revenue derived from those reimbursements. Higher-acuity patients can lead to higher reimbursements yet steep operational costs- that’s why larger health organizations oftentimes have the clinical capabilities and economies of scale to notice more drastic financial impacts on their telehealth program.

  • Cost savings: Unsurprisingly, identifying the ways that telehealth programs could save costs is critical to assess. For example, delivering care in areas with lower costs, whether that means changes in commercial property or payroll expenses, should be evaluated.

  • New patient volume: By implementing or expanding telehealth services, will your patient volume increase? If so, by how much? And if not, what are the ways that you will increase revenue - i.e, reimbursements - or save costs in other areas? In addition, you should take into account what types of services you anticipate your new patients will receive and if/how much that differs from the bulk of the care you currently treat.

  • Patient retention: One of the goals for virtual care programs is often related to patient retention, as well as treatment or medication adherence. While adherence is often discussed in terms of medical care, it’s important to understand this as a factor that affects patient-provider relationships and ultimately patient retention. What is your current retention rate and how do you think telehealth will improve it, if at all?

  • Revenue from reimbursements: Pre-COVID, value-based care organizations arguably had a stronger incentive to implement telehealth solutions for preventative purposes compared to providers operating under a fee-for-service model. However, as reimbursement and parity requirements have changed during the pandemic, there is a greater chance that the disparity between reimbursement for in-person versus video visits will diminish.

  • Technology implementation costs: Unless directly integrated with your EHR, the cost and time that it may take to implement a telehealth platform and other supplemental software is not always a small feat, particularly for large and/or multispecialty practices. Ensure you calculate all of the upfront costs it will take to integrate the platform with your current system and workflows.

  • Program maintenance: Once implemented, additional time is required to operate the telehealth program(s), as well as coordinate or troubleshoot issues with vendors, gather data on usage, etc. Will your practice require additional staff for this, and if not, how much additional time will it require of current staff?

  • Staffing: Similar to above, consideration may need to be given to hiring additional staff or re-shifting staff priorities. Regardless, the time and cost of training employees will need to be evaluated.

Once you have a better understanding of each of those pieces and your practice has everything set up, here are some metrics you should track beyond those directly related to revenue and reimbursements. Be sure that you take inventory of these statistics prior to fully implementing your telehealth program for comparison purposes:

  • Appointment Cancellation rates: A lower cancellation rate could indicate a decrease in revenue loss

  • Readmission rates: This is most often gathered in hospital systems or those practices providing urgent care-related services, but it is useful to track if there is a comparable metric relevant to your practice.

  • Treatment adherence: How you measure adherence depends on your practice, specialty and conditions treated, but it oftentimes helps to gather this information particularly if your patients are using remote patient monitoring devices.

  • Patient retention: For those caring for patients that require chronic care management or other ongoing treatment, make sure you’re quantifying the retention rates of your patients, as well as the retention rates for those that primarily receive in-person care, virtual care and a mixture of both.

  • Patient Volume/Patient Acquisition: Track how many patients you’ve acquired from the time you implement a new or updated telehealth program, whether they utilize in-person or virtual visits.

  • Patient engagement & satisfaction: It may not be as straightforward to quantify cost savings strictly from this metric, but it gives you an idea of how well your practice is doing and potentially valuable indicators that could lead to higher volume such as organic Google search rankings.

By utilizing all of the metrics that make sense for your practice, you’ll be able to calculate how to either implement your virtual care program or optimize what you currently use.