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Can Telemedicine Disrupt The Pricing Model For Employee Healthcare?

Castlight

By Pragati Verma

When Qualcomm added telemedicine to its employee benefits package in 2012, it was hoping to cut costs and improve care. The company initiated the new approach by encouraging staff to use mobile care, including phone calls and video conferencing, instead of only in-person visits, to discuss care options with healthcare professionals.

That was two years ago. Today, almost two-thirds of Qualcomm's telemedicine users indicated they had used these services instead of making costly and time-consuming trips to emergency and urgent care facilities. The company has cut claim costs as a result.

Qualcomm is far from the only company to "log in" to telemedicine. Furnishing retailer Rent-A-Center claims to have slashed its healthcare spending by about $1.3 million in 24 months since enabling its employees to speak with practitioners over the phone and the Internet. Transportation service provider Penske Truck Leasing said it saved over $300,000 in 12 months after doing the same.

Other companies have used virtual doctors to ensure that employees are diagnosed correctly. Take Boeing, for instance, which encourages its employees to seek a second opinion through telemedicine service Best Doctors. The service has made a significant impact — Boeing claims that in 2011 alone, 30% of those who used Best Doctors saw a diagnosis change, and 59% experienced a change in treatment.

Priced to disrupt

These anecdotes suggest that telemedicine is emerging as a robust healthcare alternative. Insurance companies and hospitals are continuing to develop and offer new digital tools to connect patients with healthcare providers at the click of a button, day or night.

It's easy to see why. The use of telemedicine programs by employers could potentially save U.S. companies about $6 billion annually, according to a recent survey by the professional services firm Towers Watson. Currently, 22% of companies with more than 1,000 employees offer telemedicine consultations as a low-cost alternative to emergency room visits and face-to-face consultations with primary care physicians. In 2015, this number is expected to rise to 37%, a 68% increase year-over-year.

Expanding appeal

Companies such as Doctor on Demand, HealthTap, LiveHealth Online, MDLIVE, and Teladoc, all of which offer audio and video conferencing between doctors and consumers, are rapidly carving out a niche for themselves. They offer a variety of services, including two-way video, email, mobile apps and, in some states, the ability to write most kinds of prescriptions. These providers have also set up physical kiosks where employees can request appointments, obtain lab results, and hold brief, in-person consultations with practitioners. Payers like Aetna, Anthem, and Cigna are embracing telemedicine too.

With total costs of online healthcare quite often exceeding the price of the co-pay for an in-person consultation, virtual visits could change the prevailing pricing model of enterprise healthcare and insurance.

Pragati Verma is a freelance journalist exploring trends in new and emerging business segments. She tracks disruptive technologies and ideas, and how they intersect with business and culture.