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Telehealth is Inexpensive yet Drives up Costs

88% of telehealth visits would not have been made if not for the convenience factor (Volume 10, Issue 5)

Direct-to-consumer telehealth has been touted as a solution to booming healthcare spending. Telehealth companies promise employers cost savings; each consultation is under $50 compared to emergency department or office appointments which can be considerably more. For the patient, it seems like an ideal solution – access to a physician’s expertise from the comfort of their living room. In select cases, telehealth could also increase access to care in remote locations. For physicians, though, there are concerns about reimbursement and the risks of misdiagnosing serious conditions.


Researchers recently studied the most common condition for which telehealth is used – acute respiratory infections. They compared the time and dollar value saved in accessing immediate care via telehealth to the added travel and waiting room time of a physical visit. Telehealth reduced time per visit by 31%, cost per visit by $13, and travel time per visit by 37 minutes.

The researchers found that the telehealth visits were not substituting for physical visits; instead 88% of telehealth visits were for patients who otherwise would not have sought care at all. This resulted in a $45 increase per patient utilizing telehealth care. Furthermore, direct-to-consumer telehealth providers were more likely to recommend having additional testing, prescriptions, or follow-up in-person appointments, likely due to increased liability concerns. The cost of follow-up management was higher for telehealth visits ($9) than physical appointments ($6).

As these data apply only to patients with commercial insurance presenting with upper respiratory infections, it is impossible to generalize the implication of telehealth on overall health care spending in other situations. Acute respiratory infections tend to be self-limiting conditions in which medical care, regardless of how it is delivered, has little effect on the overall health outcome. On the other hand, telehealth management of lifelong chronic disease such as diabetes or mental illness may have a benefit, especially if telehealth can be used to expand services to underserved populations. There could also be a unique role for direct-to-consumer telehealth to limit overuse of care by frequent utilizers of emergency department services.

Expanding telehealth to patients who already have good access to health care likely increases overall costs. What remains to be determined, however, is telehealth’s great promise: dramatically changing access to care in low resource and remote locations to provide better care to the underserved.

This Policy Prescriptions® review is written by Angela Song. Ms. Song is a medical student at Baylor College of Medicine.


The use of direct-to-consumer telehealth, in which a patient has access to a physician via telephone or videoconferencing, is growing rapidly. A key attraction of this type of telehealth for health plans and employers is the potential savings involved in replacing physician office and emergency department visits with less expensive virtual visits. However, increased convenience may tap into unmet demand for health care, and new utilization may increase overall health care spending. We used commercial claims data on over 300,000 patients from three years (2011-13) to explore patterns of utilization and spending for acute respiratory illnesses. We estimated that 12 percent of direct-to-consumer telehealth visits replaced visits to other providers, and 88 percent represented new utilization. Net annual spending on acute respiratory illness increased $45 per telehealth user. Direct-to-consumer telehealth may increase access by making care more convenient for certain patients, but it may also increase utilization and health care spending. PMID: 28264950

Ashwood, JS, et al. Health Affairs. 2017; 36 (3): 485-491.