Cost-center status for telehealth programs key to sustainability

Telemedicine

There are myriad business models being applied to telehealth centers to keep them growing and sustainable, but for now they should remain cost centers, according to a research study in Telemedicine and e-Health.

The researchers, from the University of New Mexico Health Sciences Center for Telehealth, began the study as a way to find other means of funding for their organization. They set out to examine business models at various telehealth centers to determine how they were achieving sustainability. They chose nine centers in all, including but not limited to, the University of Virginia (UVA), Marshfield Clinic Healthcare System, University of Pittsburgh Medical Center (UPMC) and the University of New Mexico (UNM).

At UVA's telehealth center, they learned, most of the income comes from fees. Those can include per encounter charges, contract fees for services provided and fees for individual videoconferences.

On the other hand, the telehealth center at Marshfield is considered a cost center within the organization, since, while it does not directly produce profits, it is considered necessary to the entity's mission.

UPMC's center is considered both a cost center and a profit center, the researchers note. It receives central funding from the university, but also provides stroke and psychiatry services through contracts.

Meanwhile, the researchers’ facility, UNM, functions as a cost center, but does not provide direct services or run a network.

From review of the centers above, as well as six others, the researchers found five general approaches to sustainability: grants, telehealth network membership fees, income from providing clinical services, per encounter charges and operating as a cost center

They note that the “majority of telehealth centers have been established as cost centers that may be supplemented with grants, contracts, or other user fees,” and add that at the current time, this should remain the go-to business model.

To learn more:
- here's the study abstract