Questioning telehealth and sustainability

This article first appeared in the July 2012 edition of Pulse+IT Magazine.

Australia has entered the telehealth arena with a number of pilot studies, many funded by government and looking at disparate aspects of the healthcare system. This, however, leads to fragmentation and no clearly defined plan for telehealth uptake. What is needed are large scale, focused services that bridge not only the urban-rural divide, but between the acute and primary care sectors, and primary care and allied health.

This short paper takes the clinical benefits of telehealth and remote monitoring as given[1]. The purpose here is to question the current lack of business thinking and consequent commercial sustainability of telehealth in this country.

Telehealth in Australia is fragmented, too focused on endless pilots and is often devalued by the systems being used for administrative internal processes instead of clinical usage. Large-scale, focused national and regional telehealth services have the ability to make a difference[2]. The recent report[3] by The Boston Consulting Group highlights the tremendous potential of the growing Internet economy.

Focusing on the three or four national health priorities and redeveloping the care delivery model and clinical protocols[4] specifically to allow and support health-at-a-distance, telehealth will positively impact service providers, families and patients. Where much good work has commenced, none of it appears to be linked to a national perspective or even to a national rollout. In this country we do not have a government position on telehealth deployments that are national, aligned with known health priorities and configured in such a way so as to maximise emerging resources like the National Broadband Network or major new hospital builds.

The private sector has been fragmented in its response to this issue until recently, when a cross section of health industry representatives released Australia’s first national telehealth strategy[5].

There is a myth which, crudely stated, is as follows: left to the market, telehealth services will emerge supported by a little public seed money.

There needs to be national plan, national resources and a deliberate attempt to provide a set of national telehealth services if we in Australia are to effectively address our dwindling healthcare budget. Telehealth should be about delivering a targeted health service to large numbers of patients in order to reduce the pressure on the acute care system and to provide better care coverage at the primary level.

Given that particular system benefit, the tactical benefit is to deliver a return on investment to those practitioners actively engaged in delivering the service[6]. From a GP or allied health perspective this implies a revenue increase.

At an operational level, the primary benefit is in patient access to treatment and convenience. Simply encouraging a series of ad-hoc pilots and projects does not necessitate a defined benefit being achieved across all three levels, which is the key requirement if regional or national sustainability is to be achieved[7].

The current dialogue across health practitioner groups and policymakers is centered on addressing the urban-rural divide in terms of health service access. That is, extending diagnostic expertise from its metropolitan concentration out towards the rural areas. I argue that this view is too restricted. The main health divides in Australia are between acute (the hospital sector) and primary (GPs and specialists) and between primary and allied health. While rural access is certainly a major issue, it should not of itself be the redress target for online real time diagnostic video and data services.

It is the siloed approach to healthcare delivery in Australia that encourages duplication, limits access and fails to address the need for team-based care arrangements, particularly for the chronically unwell. Focusing just on the rural-to-urban divide ignores the fact that key nodes within the system such as GPs and allied health professionals are also small to medium business.

The development and deployment of a national set of telehealth services (for example post-operative wound management, physiotherapy for rheumatoid arthritis patients, maternity services and oncologist consultations for cancer sufferers) will require numerous design and technical features to be addressed[8]. Many of these are well known and addressable[9]. What has not been considered in detail across much of the literature is the need to achieve sustainability, or putting it another way, return on investment.

Nationally, the use of business case development based on cost-benefit analysis to support the deployment of telehealth diagnostic video and its associated data transfer and display is decidedly rare[10]. In an Access Economics ‘Telehealth for Aged Care’ report dated November 2010, a cost-benefit analysis was provided around the introduction of telehealth intervention into existing aged care programs. Results demonstrated that over the course of the intervention (2012-2013/2013-2014), a benefit-cost ratio (BCR) of 1.61 to 1 (a 61 per cent return on investment) was possible. A recent paper dealing with tele-oncology consultation in rural Australia provides some financial insight (section 4.3)[11].

The motivation for general practitioners to maintain a subscription fee-based service is unlikely to be viable as the time to break even based on volume is too uncertain for any pilot approach. The need to buy outright or lease the technology is seriously limited by the practicalities associated with the “other end”, notably scheduling and booking.

Consider this metaphor: selling a single wrench is much harder to do than to sell a box of tools that also contains a wrench. Global literature research reveals that much of all telehealth thinking has been either about the technology, a very specific innovation or about the clinical process to prove the health outcome. I argue that there is a requirement to add an additional service value to video-delivered diagnostic consultation from the perspective of the medical practitioner in order to move towards sustainability.

Put simply, telehealth needs to have an additional attached service to make it financially appealing to frontline health professionals (GPs and allied health) who operate mainly in the private sector. Such a service add-on needs to either be fully integrated in a technical sense or have the ability to utilise the Internet carriage to actually deliver the service in parallel in real time. Some possible examples include linking pathology services, online dementia assessment tools and automated electronic prescriptions.

Visualising the normal operational day for a GP practice in Australia involving up to four practitioners and associated support staff reveals that the practice seeks at least a 15 per cent return on investment.

Limits to this primarily relate to:

  • A process design relatively unchanged for a century
  • A paper flow process which consumes 20 per cent of a full-time equivalent administrative position
  • Five or more pieces of paper for each simple consultation
  • 15 per cent of administrative office space for storage
  • Three pieces of paper for each allied health link.

Field research and focus groups with GPs[12] suggest that hosted ICT services like telehealth simplify office processes to provide a 12 per cent gain in clinician and administrative staff time. Doctors and support staff save 12 per cent and 25 per cent of time respectively on case management for chronically ill patients. For mobile doctors dealing with aged care visits and other home visits, telehealth and other mobility services offer a 12 per cent efficiency improvement.


These observations suggest two key ideas about building a sustainable service – value adding and saving and harvesting process time in a busy small to medium business otherwise known as a medical practice. Some other benefits across three tiers identified previously that will need to be captured, measured and realised are as follows:

  • The main elements needed to build a business case taking in to account the three levels of focus detailed previously. The weighting reflects what is important from a whole system perspective and will change depending upon specific clinic focus areas.
  • While public acute care services can ‘load’ video in to their current budgets and exploit under-utilised infrastructure, the reach of the service to private GPs and specialists will be frustrated unless these provider groups obtain a positive cash flow.

In the US, the home-enabled healthcare market should be thriving but only accounts for about three per cent of national health spending[13]. In Australia, a similar low rate of adoption is entirely likely unless the misalignment of incentives, the clinical value proposition, rate of patient adoption and a return on investment for providers are properly addressed via a detailed business plan.

Just as importantly, pilot projects and funding need to be abandoned in favour of national or regional projects based on a staged but full rollout of agreed key clinical services. Adopting large-scale approaches enables the take-up volumes needed for financial sustainability.

Author Details

Michael Gill
Organisation Performance Consultants
This email address is being protected from spambots. You need JavaScript enabled to view it.

Michael Gill is chair of the HISA Australian Telehealth Conference, being held in Melbourne from August 29-30.


  1. For an excellent case study refer to: Adam Darkins, M.D., Patricia Ryan, R.N. et al (Dec 2008). Care coordination/home telehealth: the systematic implementation of health informatics, home telehealth, and disease management to support the care of veteran patients with chronic conditions, Department of Veterans Affairs, Telemedicine and E-Health.
  2. Garling Report, (Nov 2008). Final Report of the Special Commission of Inquiry Acute Care Services in NSW Public Hospitals, recommendation 13. Australian Health Ministers' Conference (Dec 2008), National E-Health Strategy – summary. Page 30. National Health & Hospitals Reform Commission (2009). A Healthier Future for All Australians, Final Report. Canberra: Commonwealth of Australia. National Preventative Health Taskforce. (2009). National Preventative Health Strategy – the roadmap for action. Canberra: Commonwealth of Australia.
  3. Dean, D. et al (March 2012). The Boston Consulting Group; The Internet Economy in the G-20.
  4. A good example is provided by The Royal Australian and New Zealand College of Psychiatrists (cot 2002). Position Statement # 44, Telepsychiatry.
  5. GAP Open Forum link
  6. The current $10 million “Cooeenet@qld Initiatives”, 50% funded by Department of Broadband, Communications and the Digital Economy does not have a return-on-investment model.
  7. Large scale return-on-investment studies for telehealth are very rare and those that do exist tend to focus on the system level rather than what will provide a return for the practitioner. Some useful references include: Access Economics, The Economic Impact of an Accelerated Rollout of Broadband in Hospitals, 2003; Kahn C, 'New standard of care: health IT not only benefits patients, but will offer healthy return on investment', Modern Health, 2012 Mar 5;42(10):26. Ross C. DeVol, Kevin Klowden, and Benjamin Yeo, State Technology and Science Index: Enduring Lessons for the Intangible Economy, 2011 available here
  8. Preeston, C. (Juky 2011). Telehealth Standards; Background Paper, RACGP, July or Department of Health and Ageing, Guidance on Security, Privacy and Technical Specifications for Clinicians (draft).
  9. UniQuest Pty Ltd, (June 2011). Telehealth Business Case, Advice and Options. Final Report, prepared for the Department of Health and Ageing.
  10. Marıa E. Davalos, Ph.D. (ABD), Michael T. French, Ph.D. et al. (Dec 2009). Economic Evaluation of Telemedicine: Review of the Literature and Research Guidelines for Benefit-Cost Analysis. Vol 15, No. 10. Telemedicine and E-Health.
  11. Sabe Sabesan and Sean Brennan (2011). Tele Oncology for Cancer Care in Rural Australia, Telemedicine Techniques and Applications, Prof. Georgi Graschew (Ed.), ISBN: 978-953-307-354-5, InTech, Available here.
  12. Cisco Systems Inc. (October 2010). The Connected General Practitioner, White Paper.
  13. Kayyali, B. Kimmel, Z. et al (Sept 2011). Spurring the Market for High-tech Home Health Care; McKinsey Quarterly, page 2.

Posted in Australian eHealth


0 # George Margelis 2012-07-17 17:29
The sustainability of telehealth is intertwined with the reform needed to make the Australian health system itself sustainable. Using the Institute for Health Improvement's triple aims of improving the patient experience of care, improving the health of the population and reducing the per capita cost, telehealth can play a roll in all three. As Michael Gill highlights, telehealth needs to have an additional service associated with it to be sustainable. I would argue that what is needed is a tighter integration of telehealth with other communication enhancing technologies into the normal toolset of healthcare, with no differentiation in reimbursement models based on how the care is delivered. Healthcare providers should be given the ability to determine which modality is best suited to the individual they are tasting and the condition they are managing. They should not have to make that decision based on reimbursement codes and variable compensation. Rather it should be based on what is best clinical care, what is practical and possible, and the accountability should come back to the provider.

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