Health Care Economics and Risk Mitigation

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HealthCare Economics and Risk Mitigation

HealthCare Economics and Risk Mitigation

Technologyhas provided a new platform on which the health care providers andtheir clients can communicate in the virtual world. Communicationbetween the two parties can take place on the telemedicine ortelehealth platforms that facilitate the remote delivery of healthcare services (Principi, 2015). The remote delivery of medical careis the relevant problem that is discussed in this paper. The mainpurpose of adopting the telemedicine technology is to address thechallenges associated with access and the cost of medical care. Theadoption of telemedicine is considered as one of the proactiveapproaches to delivery of medical care because it facilitates theearly diagnosis, treatment, and management of the health. This paperwill weigh between the economic benefits of using the emergingtechnologies to deliver health care and a situation in whichproviders meet with their clients physically and recommend the mostviable option.


Thepurpose of the two alternative solutions is to address the challengesof access and a high cost of delivering health care. Thesealternatives include telemedicine or telehealth technologyand thephysical meeting between health care providers and their client. Theevaluation will be conducted by determining their impact onprevention of diseases, patient safety, and their economicimplications. Telehealth refers to remote delivery of clinical aswell as non-clinical services. Telemedicine is the application oftelecommunication technology to deliver clinical services, includingthe diagnosis and treatment (Principi, 2015). Many stakeholders inthe health sector believe that the application of thetelecommunication technology is better than offline provision ofmedical care. However, the two approaches (including the remote andoffline provision of health services) have different economicimplications, which creates the need for a though evaluation of therisks and benefits associated with both of them.

RisksAssociated with Telehealth/Telemedicine

Telehealthhas made it easy to access health care services. However, onlineprescription results in liability and patient safety concerns. Adecline in patient safety results from the difficulty of establishinga suitable relationship between the provider and the patient, whichlimit the ability of doctors to diagnose clients properly (Cascella,n.d). Different jurisdictions have different laws that regulateprescription via telemedicine. For example, some jurisdictionsrequire physicians to have prior physical contact with their clientsbefore making a prescription via telemedicine (Rivera &ampHollender, 2015).

Thedelivery of health care via telehealth faces the challenge ofinformed consent. It is quite difficult to inform clients about thepotential risks, alternatives, and benefits of the proposed treatment(Cascella, n.d). Some of the key factors that make it difficult toissue an informed consent when delivering health care via telehealthinclude technology failure, glitches, and the lack of hands-on clientevaluation. However, some states allow the health care professionalsto provide either verbal or written informed consent when deliveringservices via telehealth.

Telemedicineis also associated with an increase in the chances for data breach tooccur. Information that is stored in the electronic form is morevulnerable to the peril of theft than the hard copy records(Cascella, n.d). In addition, the provision of services through thetelecommunication platforms faces the risk of licensing. Some statesoffer abbreviated while others provide full licensure. By shiftingfrom physical to telemedicine, the health care organization shouldalso be prepared to face the risk of delayed or the lack ofreimbursement for different services due to legal challenges (Rivera&amp Hollender, 2015).


Thereare five key factors that should be considered when making a choicebetween telehealth and physical delivery of medical services. First,one should consider the cost of deploying each of the systems. Itcosts about $ 1,600 to deliver services via telemedicine ortelehealth compared to conventional home-based nursing that costs $77,000 per patient per annum (American Hospital Association, 2015).Therefore, the health care facility can reduce the cost of care byadopting the technologies.

Secondly,the health care facility should consider the costs savings associatedwith the risk of readmission. It is estimated that health carefacilities in the U.S. spend about $ 26 billion each year to treatpatients who are readmitted, where $ 17 billion are spend on thosewho do not receive proper medical care (Principi, 2015). Telemedicinecan be used to avoid the extra cost of $ 17 billion by providingproper care management and follow-up services through the onlineplatforms. Patients who are discharged from the hospital will be ableto access medical management services, which will lower the risk ofrecurrence of the illness.

Third,one should consider the preventative outreach services that areprovided through telehealth. It is estimated that about 1 in every 10cases of hospitalization results from medical conditions (such asheart condition and diabetes) that are preventable (Principi, 2015).Telemedicine facilitates convenient and regular monitoring of healthcare, which lowers the risk of suffering from medical conditions thatmight require hospitalization. For example, it has been confirmedthat the use of telemedicine reduces the number of patients who arehospitalized for diabetes, depression, and mental conditions by 20 %,56 %, and 40 %, respectively (Principi, 2015). A combination of thesebenefits result in $ 2,000 annual savings per patient (Principi,2015).

Fourth,one should consider the expenses that are associated with theoutcomes of inadequate assessment, which occurs when health servicesare delivered via telemedicine. The risk of prescription of the wrongmedication increases the cost of health by allowing the illness todevelop into chronic medical conditions that are expensive to treat(Principi, 2015). In addition, the unlucky patients who experiencecases of wrong medication incur additional expenses when they seekfor the correct medication.

Fifth,technology glitches are common challenges that the health carefacilities that adopt telemedicine platforms face. The affectedhealth care facilities incur the costs of maintaining technology andrepairing systems that fail regularly (Principi, 2015). Health carefacilities also lose money when technology fails since their clientscannot access the telemedicine services. Moreover, obsolescence is acommon challenge that affects all systems that are based on themodern technology. Therefore, a health care facility should beprepared to incur the cost of replacing devices and software used inthe telemedicine platforms on a regular basis in order to keep itup-to-date.

Conclusionand Recommendation

Remotedelivery of medical care is considered as a major health issue. Adecision to shift from physical to remote delivery of medical careshould be based on the economic benefits of the change. Afterconducting an evaluation of the two alternatives, this paperrecommends that the health care facility should adopt telemedicine ortelehealth. The health care facilities should adopt thesetelecommunication technologies because they have more economicbenefits compared to physical delivery of medical care. For example,a health care facility will be able to achieve annual savings ofabout $ 2,000 per patient by avoiding shifting to telemedicineprovision of health care (Principi, 2015). Telecommunicationtechnology is also more effective in preventing hospital readmissionthan the offline option. Therefore, the telemedicine or telehealth isthe most viable solution.


AmericanHospital Association (2015). Telehealth:Helping hospitals deliver cost-effective care.Washington, DC: AHA.

Cascella,M. (n.d). Virtualrisk: An overview of telehealth from a risk management perspective.Fort Wayne, IN: MedPro Group.

Principi,B. (2015). The difference between telehealth and telemedicine.AmericanWell.Retrieved August 19, 2016, from

Principi,B. (2015). How hospitals are reducing medical costs with telehealth.AmericanWell.Retrieved August 19, 2016, from

Rivera,J. &amp Hollender, A. (2015). Telemedicinereimbursement and compliance issues.St. Louis: Husch Blackwell, LLP.

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