Hospital CEO: Telehealth could dampen future health care construction

The pace of health care construction has picked up considerably in the past year, but the key question: Will it last?

Bryan Mills, CEO of the Community Health Network hospital system, said the answer will hinge heavily on telehealth. That’s the health care industry’s term for delivering health care over the Internet and cell phones, instead of in person. It's sometimes referred to as telemedicine.

Indianapolis-based Community has been delivering psychiatric services online for years, especially to smaller hospitals’ emergency rooms, when they receive a patient with mental illness having a crisis.

"If something that’s labeled as crisis can work, then something that’s labeled as maintenance can also work." Mills said, referring to the consultations with physicians, nurses and health coaches that are critical to helping patients control such chronic diseases as diabetes, hypertension, asthma, disease and mental illness.

Mills envisions those services enhancing the face-to-face health care visits in order to keep patients healthier. To the extent health care providers are successfully using telehealth to improve patients’ health, then Mills foresees the number of hospital stays and surgeries needed per patient trending down. If it does, then hospital systems won’t need to build as many buildings.

"We believe that there’s a lot of things that we do that we could do virtually," Mills added. "At that point in time, then you don’t need the space to do it."

That’s a lot of ifs. And it’s clearly not happening yet. The value of health care construction projects in Indiana this year has nearly doubled from last year, according to data from Maryland-based market research firm Revista. The same trend is playing out nationally as hospital systems have gotten comfortable with the changes coming from Obamacare, and as the law and an aging populace bring more patients than ever into the health care system.

But health care providers are clearly going to try to use telehealth to handle some of this increased demand.

Analysts at IBISWorld, a Los Angeles-based market research firm, expect revenue for telehealth services to grow 40 percent a year from now until 2020, rising from $649 million this year to a whopping $3.5 billion in 2020.

“Coverage will be expanded to include more physicians and more specialties and also a range of communications,” IBISWorld analyst Sarah Turk told Kaiser Health News. “So instead of it being only interactive video consultation, it could be text messaging as well.”

Other analysts agree.

“The industry has clearly hit an inflection point where consumers are demanding it, employers see it as a cost savings, and insurers are more and more pushing it as a benefit,” Ryan Daniels, an analyst at the Chicago-based investment bank William Blair & Co., told the Boston Globe. “We think it’s going to grow tremendously.”

Texas-based Teladoc Inc., one the pioneers of physician consultations over the Internet, saw its revenues doubled last year to $43.5 million. Boston-based American Well Corp. also told the Boston Globe its revenues doubled, although the private company declined to provide specific figures.

Indianapolis-based VoCare Inc. is a telehealth company that has raised millions of dollars to deploy a remote monitoring technology for homebound elderly patients.

A limiting factor has been insurance reimbursement, noted Kaiser Health News, Medicare, the nation’s largest health plan, pays for telehealth services only in rural or medically underserved areas.

But other changes by health insurers are encouraging the use of telehealth, noted Mills. His hospital system has entered a new contract with the Anthem Blue Cross and Blue Shield plan that will pay Community a bonus if it reduces spending for the 70,000 Anthem customers it serves.

That three year deal covers about 25 percent of Community’s $2 billion in annual revenue, so roughly $500 million per year.

Community has formed a joint venture with Chicago-based VillageMDs, which it calls Primaria Health, to help it identify the patients most in need of extra help and then to provide extra staff members to physician offices to reach out to those patients.

Telehealth could be one of the tools Community uses. The goal, Mills said, is to provide better upfront care to patients so they need less care down the road.

“That’s what we’re trying to do,” Mills said. “This isn’t just a finance play. Because if it’s not enhancing the quality, then we don’t have a quality product.”