Health Economics: Theory & Practice

Self-Reflection Assignment 2

Aabhas Ajmera
2211002

Challenges faced by the telehealth industry:

Awareness – More than 56% of Americans were unaware of telehealth services. Public
education through advertisement campaigns through all forms of media, and customer
testimonials need to be utilized, along with partnership with insurance providers and employers
to increase awareness.

Utilization – Utilization of telehealth was mere 2.5%. Enhancing customer experience through
better app/website interface and easier scheduling and booking process can enhance utilization.
Further, reimbursement policies can be highlighted and mentioned clearly in health plans.

Scale – To scale up, number of doctors needs to increase for which platform needs to provide
better work-related bonuses, offer flexibility and add additional benefits. Along with this, IT
infrastructure should be maintained and secured against breach.

Regulation – Each state of USA had different license criteria. A component of remuneration
of doctors must be defined by the optimality of licenses held by him/her. The exact number of
licenses must be personalized for each doctor considering data of patients and doctors’ location
& specialization to counter regulations.

Advantages of PEPM and VFO:

PEPM
• Predictable costs- Employers know exactly what their monthly costs will be, which can
help them budget more effectively.
• The model can free up administrative resources. As employers simply pay a fixed fee
each month, accounting is easier.
• For providers, PEPM guarantees a fixed cash flow.
• It offers a larger coverage for employees under health plans covered by employers.

VFO
• VFO offers greater flexibility and reduces the cost burden on private customers.
• It reduces lock-in with a particular telehealth firm due to the subscription model.
• For providers, it offers a chance to have differential charges for services.
Comparison between Telehealth and Acuity care:

Cost – Telehealth made it possible to reduce cost of a visit to < $50, from over $70 on retail
clinic visits. Additionally, extra transportation cost and opportunity costs are saved by
telehealth.

Cognizance – Telehealth faces challenge of low awareness among customers and unfamiliarity
regarding insurance coverage.

Convenience – Telehealth significantly increased accessibility of healthcare. Even remote

locations can access the facility. Even wait times were reduced. Although, the convenience of
having a familiar face to treat you decreased.

Consumer-behaviour – Trust in technology, behavioral inertia, and treatment quality

assurance can be a challenge.

Services offered – Telehealth has improved the quality of chronic health management and
prolonged/repeated care requirements.

Doctors on other hand found it convenient and used platforms to avoid burnout and enhance
flexibility (Young moms and retired doctors).

How did DoD differentiate?

DoD introduced 3 major changes:

• Visit Fee Only(VFO) model – As utilization rates were very low, DoD moved away
from the subscription-based model and started VFO model to improve customer
turnout.
• Hiring doctors – Customers trusted a common face to treat them and prefer having a
personal connection for low-acuity care. This becomes even more necessary when
doctor is physically absent. Hence, DoD hired doctors to handle patients instead of
Uber model.
• Customer Service – Reduced wait time and increased time per patient were
incentivized for doctors.