Many articles in medical journals and magazines speak to the importance of telemedicine, i.e., the remote diagnosis and treatment of patients using telecommunications technology, and confirm its benefits in a reformed healthcare industry. However, few providers know how to incorporate telemedicine into their delivery systems. Two application examples include performing relatively prosaic tasks such as chronic care management via telephone or the internet (now reimbursable by Medicare) and evaluating acute stroke patients via sophisticated tele-stroke devices that allow providers to perform patient exams and review diagnostic imaging studies remotely. There are more on the way.
From a finance and valuation perspective, what is true about other new and evolving services also applies to telemedicine services. Moreover, no concrete valuation methodology currently exists for such services. Concerning clinically integrated networks (CINs), the statement is “If you have seen one CIN, you have seen one CIN.” The same applies to telemedicine services. Many questions are unanswered, and for some, there’s little precedence for methodologies that have become industry-accepted standards.
Therefore, what does a lack of historical precedence for valuation methodologies mean to practices today?
To ensure that the economics of any telemedicine arrangement are both fair-market value and commercially reasonable calls for a rigorous process. The primary areas to consider are as follows:
- What are the services provided?
- Is the service similar to a call coverage/availability arrangement, or is the service comparable to a routine office visit?
- What is the time commitment of the physicians involved?
- Is there equipment used?
- If so, who owns it, and should there be a lease arrangement in place?
- What revenue, if any, is generated?
- Do the services generate a billable professional fee from third-party payers?
- Is there a cash-based charge to patients?
As telehealth services rise in prominence, economic considerations will increase in significance. Attention to these key points along with others specific to each arrangement will help ensure that the economics of a telemedicine arrangement can be supported from both a fair market value and commercial reasonableness perspective.
Incorporating telemedicine into your delivery system is one of many ways to create higher-value healthcare services. If your organization would like to move forward in delivering high-value healthcare through the use of technology, Coker Group’s experts can help you determine a fair market value to pay providers for providing care via telehealth linkages. Further, it will increase your understanding of how to bill optimally for these services.
Whether your organization is starting to build a telemedicine program or is on the leading edge, there are always new options to consider in this rapidly developing area. Both Coker Group’s Strategy and Operations Service Line and our Information Technology Service Line have a wealth of first-hand knowledge and experience around telemedicine, telehealth, and eMedicine. We can assess your needs and customize a set of recommendations specific to your organization in this realm. Don’t get left behind by early adopters or undercut by niche providers in this novel and critical component of the delivery system.
To learn more about how Coker can assist your organization to incorporate telemedicine or improve your existing telemedicine structure, please call 678.832.2021 to speak with Ellis “Mac” Knight, MD, MBA, Senior Vice President/CMO. If you would like to learn how Coker can help with the valuation aspects of telemedicine, call 678.832.2021 to speak with Justin Chamblee, CPA, Senior Vice President.