There is only one thing you need to know about telemedicine: location doesn’t matter.
The pathologist who examines your blood tests, the radiologist who reads your MRI scan, the internist who orders your prescription or the nurse who reminds you to refill a prescription – none of these providers needs to be in the same room with you. Or in the same city. Or in the same state. Or even in the same country.
Telemedicine could revolutionize the practice of medicine, especially for the chronically ill.
Instead of making a two-hour, round-trip visit to a doctor’s office, a diabetic could communicate with her doctor by telephone or email. A nurse practitioner could remind her to conduct a home test by telephone, email or text message. The results of home testing could be sent to a physician electronically. Prescriptions could be ordered electronically, thereby taking advantage of error-reducing software. Test results and medical records could be transported electronically from specialist to specialist. All of these measures could potentially produce more care and better care.
Telemedicine could also revolutionize efforts at cost control.
Just as the widespread use of the Internet lowered seller markups on every product from automobiles to groceries, and just as e-Bay has lowered the resale price of just about everything, telemedicine promises to have a huge impact on health care prices . . . . . . unless . . . . . . unless . . . . . . well, unless no one is actually competing based on price.
In a system of nonprice rationing, telemedicine is not necessarily a boon to cost control. In fact, it could prove to be a disaster. If every Canadian patient had access to free telemedical services, it would bust the global budgets in every Canadian province in the space of a few weeks.
That may explain why the principal obstacles to telemedicine are health insurance companies and government. As buyers of care, these two bureaucracies resist paying for anything other than face-to-face medical encounters for the same reason the Canadian government is likely to be resistant.
As a regulator of care, government has erected another set of obstacles. Did you know that it’s illegal for a doctor practicing on the Texas side of Texarkana to treat a patient by phone on the Arkansas side of the same city? Did you know it’s illegal for a doctor practicing in East St. Louis (Illinois side) to interpret x-rays taken for a patient treated in west St. Louis (Missouri side). Unless these relics of misguided regulatory excess are repealed, the telemedical marketplace each of us has access to may be limited by the borders of the state in which we live.
The most interesting developments in telemedicine are occurring outside the traditional third-party payment system. For example, more than one million people are subscribers to a nationwide service operated by Teladoc Medical Services of Dallas. They can talk to a doctor by phone, any time day or night. (but pay a fee for each consultation). They can arrange for prescriptions by phone and have their medical records transferred electronically to any doctor of their choice. In most cases people who use the service pay with their own money. In some cases an employer pays the enrollment costs. But health insurers rarely reimburse for the service.
John Goodman writes about supply side health policy:
We need only look at those parts of the medical marketplace where providers compete on price and on quality. Examples:
- Cosmetic surgery
- Lasik surgery
- Walk-in clinics
- Internet drug sales
- Concierge doctors
- Medical tourism
One part of our healthcare system (the part where third-parties are absent) is teeming and bristling with entrepreneurship and innovation.
In the other part (where third-parties pay the bills), entrepreneurship has been all but extinguished. We need to make the latter more like the former
Perhaps you have heard that health markets work reasonably well when patients pay with their own money. LAZIK surgery and cosmetic surgery are two examples. Yet, the authors of a new study dispute this claim.
The article is called "Self-Pay Markets in Health Care: Consumer Nirvana or Caveat Emptor?" It was funded by the Center for Studying Health Systems Change (an RJR outfit) and appears at the Health Affairs web site. The authors (both non-economists) focus mainly on LAZIK surgery, but also include in vitro fertilization, cosmetic rhinoplasty and dental crowns. They do not find nirvana.
But first things first. Buried in the middle of the article, in the middle of a paragraph, with no bold heading and no mention in the Abstract, as though it were only of passing interest, is this amazing factoid: over the past decade, the real price of LAZIK surgery has decline by 30 percent. Equally buried, is another startler: The satisfaction rate among patients is 93 percent. And we can all be thankful the editor’s shears did not expunge this tidbit: unlike every other kind of surgery, in LAZIK surgery higher quality service routinely commands premium fees.
Is there some relationship between falling prices, high patient satisfaction, higher pay for superior quality and the fact that patients are paying out of pocket? The authors never ask this question.
John Goodman writes in the WSJ: “Our public-school system and our health-care system may seem as different as night and day. Yet both systems share something in common: Mediocrity is the rule and excellence, where it exists, is distributed randomly.
In both cases the reason is the same. There is no systematic reward for excellence and no penalty for mediocrity. As a result, excellence tends to be the result of the energy and enthusiasm of a few individuals, who usually receive no financial reward for their efforts.”
