Impact of Telehealth and Process Virtualization on Healthcare Utilization

Abstract

Telehealth has emerged as a tool to improve patient access by virtualizing healthcare services, particularly during the COVID-19 pandemic. However, concerns have been raised that telehealth may actually increase healthcare spending by leading to new types of utilization. Our research provides empirical evidence that this concern is unfounded based on a state-wide study of patient visit-level data of telehealth use in 58 hospitals in Maryland from 2012 to 2021. On average, telehealth use can reduce future outpatient visits by 13.6% within 30 days after a telehealth visit, leading to a cost reduction of $239. The benefits of telehealth are most apparent for diseases with high potential for process virtualization, such as mental health, skin disorders, metabolic, and musculoskeletal diseases. Although telehealth has a substitution effect on future healthcare utilization, this effect is not observed among rural patients who use telehealth as a gateway to utilize more primary care and specialist services. Our findings suggest that policymakers should promote the use of telehealth in a value-based healthcare environment by providing monetary incentives to expand telehealth use among patients and providers, and expand the scope of telehealth services to include consultation with specialists especially among rural patients.