White House Announcements, Regulations and Telemedicine

We are getting on the fast track.

President Obama recently announced a series of decisions to streamline the federal bureaucracy by eliminating hundreds of regulatory requirements across two dozen agencies, the changes could save $10 billion over five years. Included in the announcement was the May 5, 2011 decision to eliminate duplicative credentialing and privileging for telemedicine. CMS estimates that this will result in roughly $13.6 million in net savings.

The Administration and Congress are also considering a number of other regulatory changes related to telehealth that will further reduce costs and expand the availability and quality of care. Some of these were generated internally inside the Administration, others came as suggestions from ATA. Here are several examples:

• The President has personally declared that he wants to a policy that allows patients to have face to face video chats with their doctor.


• The Federal Communications Commission is streamlining a bureaucratically-clogged program to greatly expand rural health care networks.


• The Administration and Congress are looking at ways to eliminate red tape and allow patients to access doctors and specialists in other states without having to go through the delays, complications and costs of getting duplicate state medical licenses.


• CMS is considering changing regulations to allow Accountable Care Organizations to provide telemedicine services, reducing their costs and improving care.

Stay tuned...

Patents and Telemedicine

I have been writing about how telemedicine is finally going mainstream. That is good news. However, sometimes when you get to be popular you also get noticed by, well, others.

One area I worry about is Patent Trolling. According to Wikipedia, the term Patent Troll “is a pejorative term used for a person or company that enforces its patents against one or more alleged infringers in a manner considered (by the party using the term) unduly aggressive or opportunistic, often with no intention to manufacture or market the patented invention.” http://en.wikipedia.org/wiki/Patent_troll.

I provide this information because, over the past fifty years, telemedicine has grown enough to become a potential target of firms that have somehow gained a patent and seek to enforce it by sending out large numbers of certified letters demanding a license. As a technology-based industry, there are many patents that have been filed about various aspects of telemedicine. My advice to vendors and providers alike is to be always vigilent.

Of course, I am not pointing fingers at anyone. However, a few of you may be nodding your heads right now...

Six Misperceptions

Healthcare is a $2 trillion market in the United States and growing at a fast pace. For entrepreneurs, that figure is so alluring it is impossible to ignore. Companies, institutions and individuals from everywhere are looking to see how to get a piece of the healthcare market. It’s the gold rush of the 21st century and health technology is where a lot of companies are staking a claim. And now the attention is turning to telemedicine. The variety of new entrants is vast: vendors selling devices or software; sellers of remote health services; consultants and individuals simply wanting to get into the telemedicine job market. Every week there is a new conference, a newsletter or journal and even a new association targeting some aspect of telemedicine.

Based on the feedback from new entrepreneurs coming through the ATA offices it is apparent that there are a number of misperceptions about the telemedicine market. Here are six of them, learned over the past 18 years.

1. It’s not the technology, it’s the service. Dial up phones were a great invention. So was the VCR. They are both gone but telecommunications services and watching movies are bigger than ever. New and amazing devices and applications are coming on the market every day. But devices are tools that allow services to be provided at a distance. The focus, the purpose and the finances are on the service.


2. Despite what you hear, Medicare reimbursement is not the Holy Grail for telemedicine. It’s important, but… Medicare fee-for-service covers about 36 million Americans, 12 percent of the total U.S. population. 88 percent of Americans are covered elsewhere and 81 percent of healthcare spending comes from other sources. There are no federal restrictions on using telemedicine for billions of health dollars spent on managed care, bundled services and on alternative plans by private payers.


3. Healthcare institutions and physicians are partners, not the enemy. Transforming does not require replacing. So many new entrepreneurs in telemedicine start out with a negative, competitive attitude to traditional healthcare. We have not reached the point when someone with heart disease is going to trust their care to a computer alone. The role of doctors and hospitals is changing but they will continue to be the backbone of medicine.


4. Device regulation is not bad – it’s good; in fact it could rapidly accelerate adoption. FDA rules for wired and wireless telemedicine devices and their certification by an official government agency is a stamp of approval, providing reassurance for cautious buyers.


5. A great idea is born every minute but few of them are successful. I have heard of hundreds of stories about how a new technology, application or remote health service results in lower rates of hospitalization, improves compliance, etc. only to see it disappear a year later. Marketing, partnerships, revenue pathways and knowledge of healthcare business practices are essential, for starters.


6. Consumers don’t buy healthcare themselves. For fifty years the percent of spending on healthcare by consumers has dropped (not including insurance or co-pays). It is now about ten percent. Consumers are getting much more knowledgeable and engaged in selecting among available procedures and treatments but they don’t pay directly for healthcare products and services. The only exceptions are one-time beauty treatments and fitness fads.

I will no longer say “turning the corner” when it comes to telemedicine

For years we talked about reaching the point when telemedicine services became self-sustaining outside of temporary grants, going from promise to reality. We have long passed the point of telemedicine being a new application. After eighteen years the corner is turned and I promise to put that phrase away. This is what I mean about the reality of telemedicine:

• There are areas where remote health services have made a measurable difference in healthcare. At least half of the 5,000 U.S. hospitals are using teleradiology or other forms of remote imaging and the leading firm in this space, Virtual Radiologic, provided over 7 million reads last year. The Ontario Telehealth Network manages over 100,000 live physician-patient video consults a year for a variety of specialty and primary care services. The MedTrix Group provides 10-12 thousand video-based pediatric consults per month for the largest HMO plan in the Israel. The U.S. Veterans Administration is using remote health monitoring for 55,000 veterans.
• Revenue generated from telemedicine has resulted in profits for independent service providers and is a self-sustaining business within some healthcare delivery systems. For example, Epocrates, an online and mhealth drug interaction application is used by 1.3 million health professionals including 45% of U.S. physicians and reported a first quarter profit for 2011 of $3.7 million.
• Medical systems are integrating remote health care into the normal delivery of care. A recent survey of Washington, DC hospitals found that every hospital in the metropolitan area was using one or more telemedicine application as part of their normal delivery of health care for area residents. For example, to reduce time to catheterization , EKGs are transmitted from the ambulance to cardiologist’s cell phones at the George Washington University Hospital prior to arrival at the emergency room.

I tire of talk about needing to "prove the case." The argument that telemedicine is too new and needs more research falls away when looking at a list of a few other medical innovations that emerged around the same time or later than telemedicine (1960s-70s) and are now fully in use and reimbursed by most payer organizations including Medicare:
• Arthroscopic surgery
• CAT Scans
• Cochlear implant surgery
• Controlled drug delivery technology
• Deep-brain electrical stimulation
• Implantable cardioverter defibrillator (ICD)
• Laser surgery on human corneas
• Magnetic resonance imaging
• Permanent artificial heart implants
• Soft contact lenses