The Cost-Benefit of Telehealth

Telehealth integration into the healthcare industry is no longer a trending experiment. In fact, telehealth is now embedded into the fabric of healthcare more than ever, and it’s a resource that is rapidly rising in popularity with patients and providers alike. Despite its challenges and gray areas, many providers have already adopted these services and have been regularly treating patients virtually.

For most healthcare businesses, telehealth proves to be a worthwhile investment that adds a valuable option to the way patients traditionally receive medical treatment. Practices that have not yet adopted telehealth are now wondering if it is too late to yield a worthwhile ROI. Learn more about how telehealth can help your healthcare business thrive.

What Is the Cost-Benefit Analysis of Telehealth?

Telehealth is undoubtedly valuable for patients. A report by the National Committee for Quality Assurance (NCQA, 2025) generously projects that by 2029, telehealth will have saved patients $540 million.

Many are wondering if the ROI for providers of telehealth technology is comparable.

One cost-benefit analysis study published in the Journal of Medical Internet Research (Snoswell et al., 2020) sought to measure the cost savings of telehealth for providers. Research found that the most valuable aspect of telehealth is the level of service it allows hospitals and private practice health systems to provide their patients, a value that extends beyond the bottom-line costs it saves practitioners. Patient satisfaction offers cost advantages to telehealth for healthcare providers, extending beyond quarterly reports.

What Are the Main Benefits of Telehealth?

To weigh the value of telehealth against its costs, it’s important to first define the benefits it offers.

Patient Benefits

One of the most obvious advantages of virtual healthcare is the level of convenience it offers for a majority of patients and the access it gives to patients who are immobile or unable to easily travel. Even for patients who are not immobile, telehealth saves a significant amount of time and money by reducing expenses such as gas, vehicle mileage, and lost work time. For rural populations, this benefit impacts the cost-effectiveness of telehealth even more significantly.

To this point, a cost-benefit analysis of pre-hospital telehealth published in the Journal of Telemedicine and Telecare (Langabeer et al., 2017) had some interesting results. First, there was a small but noticeable (6.7%) reduction in unnecessary emergency room visits, as well as an average reduced time of 44 minutes for ambulances back in service. While these are positive outcomes, what is more impressive is that the average cost for a patient seen by telehealth was around $100 less than those seen onsite at the emergency facility.

It may seem like the offset of the patients’ savings falls on the healthcare providers, but this simply is not the case. Various studies show that emergency care facilities, hospitals, and private practices that incorporate telehealth services do, in fact, save money on per-patient costs over in-office visits.

Healthcare Provider Benefits

The advantages of telehealth for providers and healthcare business owners begin with increased productivity. The flexibility of virtual appointments allows for more efficient scheduling. In addition, while last-minute patient cancellations for virtual appointments can have less of an impact on the bottom line, there are fewer telehealth appointment cancellations overall.

What Are the Financial Benefits of Telehealth for Healthcare Providers

Fewer cancellations equate to less profit loss for healthcare providers. A study on the overall impact of patient no-shows published in Risk Management and Healthcare Policy (Marbouh et al., 2013) explained how appointment cancellations can reduce the operational efficiency of a healthcare system.

Similar research in Medical Decision Making (Berg et al., 2013) assigned a specific value to the loss caused by no-show patients. They found that an 18% no-show rate attributed to an average $725 deficit in the daily expected net gains for the average healthcare institution. This can quickly equate to a loss of hundreds of thousands of dollars for no-show incidents alone.

Another study published by the Journal of the American Medical Informatics Association (Cummins et al., 2024) found that telehealth appointments are 64% more likely to be completed than in-person care appointments. This alone could potentially offset the cost of telehealth service offerings in the long run.

Not only does telehealth result in fewer cancellations and a full schedule, but it also equates to less time spent by the physician. A more precisely filled schedule with limited downtime waiting for patients means more free time for staff, too. This can lead to improved work-life balance, better productivity, and the provision of higher-quality healthcare overall.

A telehealth impact study published by the American Medical Association (AMA, 2020) found that 55% of the 1,594 physicians who participated agreed or strongly agreed that telehealth improved their satisfaction with their work. In addition, 56% agreed or strongly agreed that telehealth improved their practices financially.

What Are the Costs Associated With Telehealth Services?

The benefits of telehealth are only half of the equation. Understanding the cost of telehealth can further shed light on its ROI for practitioners.

Initial Implementation – One-Time Expenses

While telehealth may reduce costs eventually, it requires upfront costs, such as:

Ongoing Operation – Recurring Expenses

In addition to upfront expenses, potential recurring costs include the following:

Depending on the type of license (e.g., reciprocal license, licensure compact, or out-of-state telehealth provider registration) and its terms and conditions, most of these credentials must be kept up-to-date with fees paid annually.

Long-Term Sustainability – Down-the-Road Expenses

Even after having telehealth in place for a significant amount of time, there may be additional costs, such as:

Non-Economic Costs

Some common challenges in implementing telehealth services are non-economic costs that are intangible and more difficult to value. These types of issues typically work themselves out over time, but they do pose disruptions in the flow of an otherwise regular workday.

Examples of these non-economic costs are:

Variables That Can Save on Costs for Practitioners

Some costs are negotiable; for health systems on a budget, there are a few opportunities to implement cost savings. For instance, rather than paying to license telehealth software for installation on every computer in the facility, opting to keep telehealth software in the cloud is more economical.

Learn about some even simpler ways to implement telehealth while remaining mindful of spending:

Starting With Basic Equipment

Depending on the video quality necessary for the practice or the level of observation required to administer a certain type of healthcare, video camera equipment can make or break your telehealth services. Costs in this area can vary significantly. A rolling cabinet that houses a mobile telehealth station with an enclosed computer and an assortment of audio and video equipment can cost hundreds of thousands of dollars.

For most providers, a simple, high-quality video camera device mounted in a designated virtual appointment space can be accomplished for a tenth of the price. Of course, there is also a middle ground, and it is important to remember that these decisions are best defined by practitioner and patient needs. Your ITSM can help you choose a system that meets but does not exceed your needs.

Offering After-Hour Appointments

Once telehealth services are well-established, practices may consider offering virtual after-hours or extended-hour visits. These visits can potentially be carried out from the small telehealth space mentioned above or even the physician’s or the physician assistant’s home. After-hours services can also justify increased fees to offset other costs of telehealth care.

Challenges of Offering Telehealth Services

Any new frontier faces challenges, and telehealth is no exception. While boundaries do exist for both patients and physicians, the industry is working to overcome these challenges and tackle new ones. One of the most pressing difficulties in telehealth success is technological barriers.

It may be difficult for older patients to learn new technology. Inexperienced individuals often struggle to access and navigate the software and technology required for telehealth appointments. In these instances, however, training or assistance could mitigate the lack of familiarity and comfort some users experience with telehealth systems.

The Evolution of Telehealth

Telehealth has come a long way since it first began. Several sources cite the “first documented use” of telemedicine. Telehealth Nursing Tools and Strategies for Optimal Patient Care (Martich, 2016) credits NASA’s monitoring of astronauts’ physiological vital signs via sensors sewn into their space suits. Others claim nurses at Massachusetts General Hospital, who remotely provided 24/7 treatment to patients located at a medical station at Logan International Airport, were the first pioneers of telemedicine.

Both of those events occurred in the 1960s. Other claims, like those made in The Evolution of Telehealth: Where Have We Been and Where Are We Going? (Nesbitt, 2012), date back to the 1920s and as early as the late 1800s. Regardless, one thing is certain: telehealth has been adopted and adapted since the onset of the digital revolution.

Telehealth and the Pandemic

The pandemic fast-forwarded the need for a broadened telehealth capacity. As a result, it is still undergoing transformation and troubleshooting among healthcare professionals who have embraced telehealth tech trends wholeheartedly. Others, however, may need a little more time.

Parsing the Cost-Benefit of Telehealth

With renewing technology that seems to perpetually reinvent itself, some healthcare systems find it challenging to keep up with the technological trends of the industry. As providers are encouraged to view the value of telehealth as service-beneficial rather than cost-saving, the actual ROI of telehealth costs is ambiguous, to say the least.

There are countless studies, including those mentioned above, that measured the effectiveness of telehealth in various facets and found it to be beneficial to the medical provider’s bottom line from a business perspective. This strongly suggests that the benefits of telehealth do, in fact, outweigh the costs and that the telehealth ROI potential is strong. There is enough potential, in fact, to make investing in telehealth a good option to grow a healthcare organization, hospital, or private practice.

Those who do not offer telehealth services may become a slowly dying niche within an otherwise telehealth-based care industry. In the future, if not already, it will be imperative for organizations to provide telehealth services to stay relevant and competitive within their practice areas and communities.

Nothing Ventured, Nothing Gained

It can be overwhelming for businesses in the medical field to keep up with the latest trends in healthcare IT. Technology changes and improves so quickly that any given upgrade does not guarantee your system will not be outdated sooner than later. Thus, offering telehealth services is no longer optional. Telehealth will inevitably become more of a necessity as the technology that drives it becomes more available and the demand for teleservice technology becomes more widespread.

Hospitals, private practices, and other healthcare organizations can circumvent many of the challenges and barriers to providing telehealth services by employing a reliable healthcare ITMS framework. Integrated IT support ultimately helps healthcare practices maintain uptime and data security, as well as reduce costs and save time.

Learn more about telehealth ITMS services by scheduling a consultation with Healthcare ITSM. If you prefer, you may also call us at 520-201-2330 to discuss how we can support your telehealth business.

 

---

Sources:

1. National Committee for Quality Assurance. (2020). Taskforce on Telehealth Policy: Findings and recommendations—Telehealth’s effect on total cost of care. https://www.ncqa.org/programs/data-and-information-technology/telehealth/taskforce-on-telehealth-policy/taskforce-on-telehealth-policy-findings-and-recommendations-telehealth-effect-on-total-cost-of-care/
2. Contreras, C. M., Metzger, G. A., Beane, J. D., Dedhia, P. H., Ejaz, A., & Pawlik, T. M. (2020). Telemedicine: Patient-provider clinical engagement during the COVID-19 pandemic and beyond. Journal of Gastrointestinal Surgery, 24(7), 1692–1697. https://pmc.ncbi.nlm.nih.gov/articles/PMC7605980/
3. Dullet, N. W., Geraghty, E. M., Kaufman, T., Kissee, J. L., King, J., Dharmar, M., … & Marcin, J. P. (2017). Impact of a university-based outpatient telemedicine program on time savings, travel costs, and environmental pollutants. Value in Health, 20(4), 542–546. https://pubmed.ncbi.nlm.nih.gov/27913657/
4. Keesara, S., Jonas, A., & Schulman, K. (2020). COVID-19 and health care’s digital revolution. New England Journal of Medicine, 382, e82. https://pmc.ncbi.nlm.nih.gov/articles/PMC7280239/
5. Reed, M. E., Huang, J., Parikh, R., Millman, A., Ballard, D. W., Barr, I., & Kim, E. (2014). Patient–provider video telemedicine integrated with clinical care: Patient experiences. Medical Decision Making, 34(8), 1129–1135. https://journals.sagepub.com/doi/10.1177/0272989X13478194
6. Ding, R., Ma, Y., Shi, J., Liu, Y., & Ma, T. (2024). An evaluation of the economic impact of telemedicine in rural regions. Cureus, 16(2), e57382. https://pmc.ncbi.nlm.nih.gov/articles/PMC11245742/
7. American Medical Association. (2020). AMA Telehealth Impact Study. https://www.ama-assn.org/system/files/2020-10/telehealth-impact-study.pdf
8. Bask Health. (2023). Telemedicine startup costs: What to expect and how to budget. https://bask.health/blog/telemedicine-startup-costs
9. U.S. Department of Health and Human Services. (n.d.). Licensing across state lines. https://telehealth.hhs.gov/licensure/licensing-across-state-lines#telehealth-registration
10. McGonigle, D., & Mastrian, K. G. (2015). Nursing informatics and the foundation of knowledge (3rd ed., Chapter 1). Springer Publishing Company. https://connect.springerpub.com/content/book/978-0-8261-3233-8/part/part01/chapter/ch01
11. Institute of Medicine (US) Committee on Evaluating Clinical Applications of Telemedicine. (1996). Telemedicine: A guide to assessing telecommunications in health care. National Academies Press. https://www.ncbi.nlm.nih.gov/books/NBK207141/