Realizing the Promise of Telemedicine for Employers

November 13, 2018

First Stop Health

Over the past few years, employer strategies for healthcare cost-containment invariably list telemedicine as a capability with high, but unrealized, potential. Finally, telemedicine services designed according to specific criteria are realizing this capability’s long-anticipated promise to both lower employer healthcare costs and transform employee access to high-quality healthcare.

Telemedicine as an Employee Benefit

Americans make 1.2 billion visits a year to doctors, and an estimated 250-400 million of these visits can be handled remotely through telemedicine. Despite its high potential and widespread availability, in 2017 there were only about two million telemedicine consults sought by a mere one million people, suggesting a market penetration of well under 1%.

Telemedicine success as an employee benefit is measured through “utilization,” which is the number of telemedicine doctor visits divided by the number of covered employees. Telemedicine utilization can exceed 100%, insofar as (1) the benefit typically covers an employee’s dependents, and (2) a patient may have more than one telemedicine visit in a year.

In its 2017 annual employer survey, Mercer found that 71% of employers with 500 or more employees provided a telemedicine benefit, through either a health plan (a “carrier-embedded” offering) or a specialty vendor. Mercer reported that employers with telemedicine programs in place in 2016 saw an average utilization rate of just 7%. Separately, a 2017 survey by the National Business Group on Health (NBGH) concluded that 96% of large employers planned to offer a telemedicine benefit in 2018 and that utilization for large employers was comparable to Mercer’s findings. 

Telemedicine for Employers: Implications of the Disconnect

The high availability and low utilization of telemedicine by employees, as compared to its potential, means both employers and employees are spending far more on healthcare for non-emergency, primary care treatment and receiving that care less conveniently at a physical location.

In 2017 a telemedicine visit with a First Stop Health doctor, for example, lessened healthcare costs by $216 per visit, which reflects a blended average of the cost savings of avoiding visits to emergency rooms, urgent care centers, and doctors’ offices.

For employers, the expense of providing employees and their dependents with telemedicine consultations, a service involving no employee copay, is significantly lower than this avoided per-visit cost of $216. Hence, the potential for telemedicine to “right-size” primary care treatment by changing employee behavior leads to substantial cost savings for both employers and employees.

The growing shortage of primary care doctors in the United States also means that many employees have to spend time getting to potentially farther medical facilities, where they may experience long waits, all for relatively minor ailments. This inconvenience forces them to take additional time from work, lowering productivity. Easy access to virtual care telemedicine, on the other hand, ensures employees receive the necessary treatment sooner and reduces absenteeism.

The Failure of the Rationed Care Model

Most employer telemedicine benefits are provided through health plans as carrier-embedded offerings. Typically, these plans offer telemedicine benefits with a significant copay or deductible and do little to promote its usage. In contrast, Mercer found that offerings with no copay or a small copay had far higher utilization. It is essential that employees be educated about the value and availability of the benefit.

Health plans offering carrier-embedded telemedicine approach the service, just like other healthcare services, through the insurer’s mindset of rationed care. Patient use is effectively discouraged through copays and the application of deductibles.

The Secret to Telemedicine Success: First Stop Health as a Case Study

There’s a stark contrast between Mercer’s and NBGH’s findings, which fall in the range of 7% utilization, and telemedicine’s far higher potential.

The contrast between the average utilization of First Stop Health and other providers is similarly stark. In 2017 First Stop Health realized average utilization across its subscriber base of 52%--many times the average of other providers. At this far higher level of utilization, telemedicine begins to realize its previously unfulfilled promise of increasing access and reducing costs for healthcare.

First Stop Health achieves this high utilization through multiple processes. Two are particularly noteworthy:

  • In most cases, the benefit is offered to employees and dependents for unlimited use, with no per visit fee.
  • The firm has created an optimized turnkey process for educating and engaging employees about their no-fee telemedicine benefit. This system can be customized to meet the specific requirements of each new client so that, when illness strikes, covered employees and dependents are aware of the availability of the telemedicine service, and how it can be conveniently accessed.

The net result is that by right-sizing care, in 2017 First Stop Health generated an average return on investment of 115% for firms of 1,000 or more employees, and nearly as much for smaller employers. On average, avoided healthcare costs more than doubled the cost savings to employers of purchasing the service.

How to Buy Telemedicine Services

For employers, several criteria should govern the purchase of telemedicine services. These include:

  • High-quality, convenient, no-fee access 24/7 year-round: The telemedicine service must be easily accessible to employees and their family members via their preferred method (telephone, computer, or smartphone) at any time, with no fee. Of course, the convenience, speed (it should take no longer than 5 minutes to connect with a physician), and quality of the healthcare offered must also be superb.
  • Proven results with contractual guarantees: Telemedicine providers should offer a contractual guarantee of annual cost savings (where the avoided healthcare costs exceed the costs of the service). These guarantees align the interests of the telemedicine provider with those of the employer and make this a no-risk employer purchase.
  • Transparent measurement and reporting of cost savings: Telemedicine providers should be tracking the specific per-visit healthcare costs avoided. The calculation must be easy to understand and regularly provided to clients and should be measured in avoided visits and not include hypothetical savings from potentially unnecessary tests, possible repeat visits to that physician, and time lost from work.
  • Turnkey engagement systems: Building employee engagement and use should be included in the fees of the telemedicine provider, and a customizable, turnkey system must be a central focus of the provider’s offering. Buyers should seek evidence of this capability.
  • 24/7 customer service: Employees, their dependents, and employer representatives should be able not only to reach a physician but also to talk to their telemedicine provider at any hour to resolve issues such as slow prescription processing by the pharmacy or questions regarding their visit or any other issues.

Telemedicine has the Potential to Save Employers Over $43 Billion Annually 

With a minimum of 200 million visits annually capable of being diverted to telemedicine, and with First Stop Health’s average savings of $216 per visit, telemedicine can deliver ever-increasing value to employers and the healthcare system as a whole. Moreover, as primary care physician shortages increase, and healthcare prices continue to rise nationally, the benefits of this convenient access to care will grow.

Originally published Nov 13, 2018 8:08:10 PM.