Telehealth: Impacts on Outpatient Healthcare Services and Facilities
By Steen Watson, CEO, Chestnut Funds
Q4 2023 Telehealth, or what is sometimes called telemedicine, has the potential to transform the delivery of outpatient healthcare services and chronic disease management. Telehealth refers to the use of digital platforms and devices to deliver health services remotely, such as online primary and specialty care consultations, remote monitoring, and virtual care.
In this edition of Viewpoints, a report we publish periodically on topics of interest and relevance to Chestnut’s investment activities, we will provide our thoughts on how telehealth may have the potential to impact the quality, accessibility, efficiency, and cost of outpatient healthcare services and how those impacts may relate to the demand for medical outpatient buildings (MOBs) and other healthcare real estate properties.
The COVID-19 pandemic accelerated the use of telehealth services. A nationwide study of private insurer claims found that telehealth visits increased by more than 700% in March through June 2020, when compared to the same months in 2019. The study found that in the period of March to June 2019, 0.3% of provider-patient interactions were telehealth visits versus 23.6% during the same months in 2020. The Centers for Medicare & Medicaid Services (CMMS) found a similar rapid increase in that 7% of eligible Medicare users used a telehealth service in the first quarter of 2020 compared to 47% in the second quarter of 2020.
Telehealth use has since declined from its pandemic heights, with CMMS reporting that a steady 15% of Medicare users used a telehealth service for the fourth quarter of 2022 and the first quarter of 2023. Similarly, Peterson-KFF’s Health System Tracker analysis found that only 8% of outpatient visits between March and August 2021 took place via telehealth, down from 13% of outpatient visits for the same time period in 2020.
The experience during the pandemic led providers and patients to see the value proposition associated with telehealth, but once in-person visits became possible again, both patients and providers welcomed the chance to return to in-person visits. This was both because of the preference for in-person interaction and because the existing technologies and processes were not usable to the extent desired. Nonetheless, as innovation comes to telehealth, usability will increase, and the use of telehealth will likely expand.
The Impact on Outpatient Services
Telehealth services have rapidly expanded and developed and begun to transform the healthcare industry in recent years. As with any significant technological or process innovation in the healthcare industry, it takes time and extensive research to fully understand the impacts, especially in the context of patient outcomes. However, it is our view, based upon third-party projections of telehealth’s potential and our own extrapolation that considers how improvements in healthcare service delivery and outcomes have historically been achieved, that telehealth may serve to improve the quality, accessibility, efficiency, and cost of healthcare services.
Quality
Telehealth can improve the quality of outpatient healthcare services by potentially enabling more accurate diagnosis, personalized treatment, and continuous monitoring. Telehealth offers the promise of allowing patients to consult with their providers remotely, using video, audio, or text communication. These remote consultations can reduce the risk of spreading infectious diseases, increase patient satisfaction, enhance the patient-provider relationship through more frequent and convenient interaction, and facilitate interdisciplinary provider collaboration.
Accessibility
As the US population ages and chronic diseases such as diabetes, cancer, and heart disease remain widespread, telehealth can increase the accessibility of outpatient healthcare services by overcoming geographical and financial barriers along with allowing for physician-patient interaction across time zones. Telehealth enables patients to access care from anywhere with an internet or network connection, at any time, using their own devices. This can be of particular benefit to rural and medically underserved populations, who may face long travel distances, limited access to healthcare services, and high costs of traditional care. This increased accessibility may provide the opportunity for healthcare providers to increase the number of patients cared for by physicians and clinicians.
Efficiency
One promise of technological innovation in healthcare is that it offers the opportunity to enhance the efficiency of outpatient healthcare services by optimizing workflows, reducing waste, and increasing productivity. Telehealth can streamline the processes of scheduling, triaging, documenting, and billing by using digital platforms and tools. These applications can save time, reduce administrative burdens, and improve the patient experience.
Cost
As the cost of healthcare services continues to increase, health systems, insurance companies, and healthcare providers are eager to rein in costs. Controlling costs increases the affordability of healthcare services but also helps to bolster healthcare service provider profitability. Telehealth can reduce the need for physical infrastructure, equipment, and staff by shifting delivery of healthcare services to virtual settings. This can lower operational costs, increase scalability, and create new revenue streams.
The Impact on Outpatient Facilities
While telehealth has been growing in popularity, a trend further boosted during the COVID-19 pandemic, as a way to provide convenient, safe, and cost-effective care to patients, it also poses some challenges and limitations for both providers and patients, such as technical issues, privacy concerns, regulatory barriers, and quality of care. Additionally, while telehealth uses for mental and behavioral health skyrocketed during the pandemic, telehealth use across other specialties varies substantially, according to updated McKinsey & Company analysis of telehealth trends. Therefore, our view is that the use of telehealth is not likely to replace the need for MOBs entirely, but rather to complement and enhance the healthcare services provided within them as telehealth technology evolves for easier use.
MOBs are where most outpatient care is delivered. MOBs are essential when providing specialized, complex, or emergency care that cannot be delivered through telehealth. MOBs also facilitate other benefits such as strengthened communication through provider-patient face-to-face interaction, the opportunity for physical examination, and access to diagnostic and imaging equipment. Telehealth may also enable providers to expand their reach and serve more patients across different locations, actually increasing the need for more or larger MOBs.
Nonetheless, with investments to improve the supporting technologies and establish virtual health platforms increasing and with potential regulatory changes that would allow Medicare/Medicaid billing for telehealth services, telehealth may one day negatively impact demand for MOBs in some markets. The most likely way that would occur, in our view, is that telehealth could reduce the need for in-person routine or follow-up visits that can be conducted remotely. This would take on greater significance in markets where access to outpatient facilities is limited.
Weighing all of this, our view is that the demand from healthcare service providers to lease space in MOBs will remain high, especially for certain types of services and populations that require more frequent or intensive care. While telehealth is a valuable and growing tool that can improve the delivery and quality of some healthcare services, it is not a complete substitute for in-person healthcare service delivery that can be provided in MOBs. Rather, we believe that telehealth works within the current outpatient healthcare delivery framework and in concert with in-person care delivered in MOBs to potentially create a more efficient, effective, and patient-centered healthcare system.
Sources :
American Medical Association. Henry, Tanya Albert. (January 2023) What to Expect in Telehealth in 2023? Here are 5 Predictions.
The American Journal of Accountable Care. Alvandi, Maryam. (March 2017) Telemedicine and its Role in Revolutionizing Healthcare Delivery.
JAMA Network Open. Bandeian, Stephen; Hatef, Elham; Lans, Daniel; Lemke, Klaus W; and Weiner, Jonathan P. (March 2021) In-Person and Telehealth Ambulatory Contacts and Costs in a Large US Insured Cohort Before and During the COVID-19 Pandemic.
McKinsey & Company. Bestsennyy, Oleg; Gilbert, Greg; Harris, Alex; and Rost, Jennifer. (July 2021) Telehealth: A Quarter Trillion-Dollar Post COVID-19 Reality?
Peterson-KFF Health System Tracker. Amin, Krutika; Cox, Cynthia; Lo, Justin; and Rae, Matthew. (February 2022) Outpatient Telehealth Use Soared Early in the COVID-19 Pandemic but has Since Receded.
Prim Care. Shaver, Julia. (December 2022) The State of Telehealth Before and After the COVID-19 Pandemic.
Rand Corporation. Damberg, Cheryl and Hussey, Peter. (Retrieved October 18, 2023) Innovation in Delivery: How can the U.S. Health Care System Connect People with Appropriate Care?
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