Remote health care delivery, or telehealth, has become increasingly common, particularly since the COVID-19 pandemic. Telehealth is especially beneficial for patients who have difficulty visiting their preferred healthcare providers in person. Although the use of this technology was already rising before the pandemic, it has now become a standard part of healthcare delivery.
A recent paper by Zihan Ye and her colleagues investigates the financial effects of telemedicine on patients’ long-term access to acute care. Their research reveals that while telemedicine offers convenience, it may have unintended negative consequences for rural hospitals.
Urban hospitals, equipped with better infrastructure and workforce, are the primary providers of telehealth services, allowing rural patients to access superior care without the need to travel.
However, the study highlights that this shift towards urban telehealth services impacts rural hospitals negatively. Data analysis from medical claims and hospital financial statements shows that rural hospitals lose patients to urban hospitals offering telehealth, leading to decreased local care access.
This patient loss results in rural hospitals facing financial challenges, including reduced investments and divestment of critical care resources, such as physicians and intensive care units.
The competition between hospitals due to telehealth services intensifies, often leading to price wars. Urban hospitals can charge more and attract more patients through telehealth, while rural hospitals, unable to match this influx, face lower patient numbers and subsequent indirect price reductions.
Insurance reimbursement policies further complicate the situation for rural hospitals, which often deal with under-reimbursement from Medicare and Medicaid compared to commercial insurances.
As urban hospitals dominate telehealth revenue, rural hospitals experience financial strain, leading to downgraded credit ratings and higher yield requirements for bonds.
This increased financial burden makes it difficult for rural hospitals to compete and remain operational. Ye suggests that patients and policymakers should consider these long-term financial ramifications and the potential negative spillovers to rural healthcare when advocating for or using telehealth services.
