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Research Questions

  1. What are the main setup costs and ongoing annual costs among community health centers for providing telemedicine?
  2. How do these costs vary by funding structure, type of care being delivered, and telemedicine volume?

Research on the costs of telemedicine programs has shown that they are not self-sustaining and typically require grants and other resources to operate. However, given the significant changes to state telemedicine policies that have occurred in the past few years, this research base is outdated. To address this gap in the literature, RAND researchers examined setup and ongoing annual costs associated with telemedicine implementation among nine community health centers in California that participated in the Sustainable Models of Telehealth in the Safety Net (SMTSN) initiative. Health centers that participated in the initiative offered different specialty telemedicine services (e.g., tele–mental health, diabetic retinopathy screening) and used different approaches to providing telemedicine.

Key Findings

There is significant variation in the structuring and financing of telemedicine in health centers

  • Some centers started offering telemedicine shortly before the SMTSN initiative, whereas others had been offering it since the late 1990s. Some health centers used their own staff to provide telemedicine visits, whereas others contracted with third parties. As a result, we found significant variation in both the setup and ongoing costs of providing telemedicine. The one exception to this is that we found that the majority of setup costs were related to equipment and infrastructure (and less were related to personnel or staffing costs).

Many health centers would need to add more telemedicine visits to cover operating costs

  • Even if all the centers received the full amount of the prospective payment system reimbursement for 80 percent of their telemedicine visits, fewer than half would be able to cover the annual operating costs from reimbursement alone.

Research conducted by

This research was funded by the California Health Care Foundation and conducted by the Access and Delivery Program within RAND Health Care.

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