Cheap and Easy Telemedicine Benefits Are a Waste of Your Money

July 26, 2016

First Stop Health

“I saw a billboard here in Washington D.C. advertising vision correction surgery, and the billboard claimed that they have “the cheapest Lasik in town.” And I’m thinking, ‘If you’re going to be operating on my eyeballs with a laser beam, I don’t want the cheapest in town!’”

We don’t tend to quote Jeff Foxworthy regarding medical advice, but he hits the nail on the head with this funny bit on finding high-quality healthcare:

I’ve been the victim of “getting what I paid for” in a money-saving purchase, only to regret the cheap service provided and the time wasted implementing the wrong solution.

If you implemented a carrier-provided telemedicine company or a very low PEPM provider that charges the employee a consultation fee, you are probably feeling the same way. We all make bad decisions sometimes based on cost, but fortunately this one can be corrected.

Cheaper Doesn’t Mean Better

Low-cost telemedicine generally translates to low utilization, or low-value telemedicine. What seems like a good deal to “try out” a new benefit that will in theory give your employees access to money saving healthcare will just end up costing you hundreds of thousands of dollars.

Changing employee behavior is hard, especially when it comes to making healthcare decisions, and most telemedicine companies won’t be transparent with you about just how difficult it can be to transition your employees to this new system.

It’s All About Utilization

The dirty little secret in telemedicine is that utilization is the key to a successful benefit. Telemedicine has the potential to drive real savings by diverting healthcare claims through avoided in-person physician visits. However, the promise of potential savings through telemedicine is nothing but a facade if employees never engage with the provided service.

From the employer’s perspective, a low-cost/low-value telemedicine experience would look like this:

After the year is up, you review utilization rates and look at what you spent. When the rubber meets the road, utilization was surprisingly low (probably less than 5% unless the broker or benefits consultant worked hard on driving utilization), and the program woefully under-delivered on the promise of healthcare claims savings. You spent more on the program than you saved in avoided costs. With a low-utilization telemedicine benefit, your ROI (for a 1,000-employee company) is between about -$4,000 and -$12,000, depending on how low utilization was (about 1% with a carrier-provided version or (7% with an employer-provided solution). Another way to look at it is if the carrier has a solution embedded with the health plan that is “free,” or included in the premium, low utilization means you are actually paying $100K more in healthcare claims than you would have paid with a high utilization telemedicine provider.

So how do you achieve telemedicine utilization that drives savings? It’s all about changing behavior. You need to invest in high-quality telemedicine, not the cheapest PEPM solution. Cheap and cheerful is great when shopping for new clothes, where price per use, can be disregarded after a few wears. But when it comes to shopping for healthcare, investing in quality is key for a healthier tomorrow.                 

Changing Behavior Isn’t Easy

You may think mobile apps and a technology-laden user experience would sell themselves, and employees will flock to this new, modern way of seeking care. But the fact is that changing behavior is hard and technology actually works against you because healthcare is about trust.

Engaging with employees on a consistent basis is what drives change. Our high utilization rates come from communication and engagement with employees. The year-long process works to curb outdated, expensive behaviors and reinforce the use of telemedicine for medical needs in a market where seeing a doctor is expensive!


This is the mindset you need to make your telemedicine benefits work like they should and drive the savings in avoided claims costs that they should. Checking the box by providing a low PEPM telemedicine solution (or worse, one embedded with the carrier) that charges a consultation fee will only serve to frustrate your HR team. Look for a solution that will drive the savings in healthcare costs that your company and your employees need.

The Diagnosis

The only way to accomplish your goals of providing a savings-generating benefit for your company is to buy a telemedicine solution that is completely aligned with your goals. A telemedicine company should provide comprehensive, customized engagement strategies that drive real utilization and hard dollar savings.

Originally published Jul 26, 2016 1:00:00 PM.