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Is Telehealth Really Saving Money for Employers?

A woman is taking a picture of a doctor on her phone.

​Along with other virtual services since the pandemic started, there has been an increase in interest and adoption of virtual health care solutions. While telehealth options existed pre-pandemic, they weren't highly utilized. That's because employers weren't often offering access to this type of care as part of their benefits offerings and reimbursement rules limited patients' care options to primarily in-state providers.

The COVID-19 pandemic, though, changed all of that.

"Forward-thinking employers recognized the efficiency and value of this delivery model and quickly evolved their plan designs to meet employee expectations and cut health care costs by providing additional virtual solutions," explained Dr. Sadhna Paralkar, national medical director and senior vice president at Segal, an employee benefits and HR consulting firm. "Adding telehealth services offers their employees immediate access to care versus waiting several weeks to get into a brick-and-mortar facility and time away from work for appointments."

As the popularity of telehealth among employees and employers continues to grow, many companies are looking at the benefits of the virtual model and its potential to save time and money.

"Telehealth" is a term that was used largely pre-pandemic. Since then, new and, according to some, more accurate terms have emerged, like "virtual," "digital" or "online" care.

Virtual care and telehealth are not the same, said Wei-Lei Shao, president of Omada, a virtual-first chronic care provider, even though there is a tendency to use the terms interchangeably. Telemedicine, or telehealth, Shao said, "is a digital replacement of conventional, in-person care." Virtual care, in contrast, "is a broader scope of remote health care services, including clinical or nonclinical support."

Neither, though, represents a total replacement for in-person visits, which may be either required or preferred. Still, the option is helping employers improve access while potentially driving down costs for the organization and employees.

Increasing Interest

A recent survey from Omada Health and the Digital Medicine Society found that 53 percent of employers and plans believe virtual care is a principal means of improving patient care and outcomes. These solutions, Shao said, "can drive improvements in health equity across an organization and can deliver more support for employees managing their health."

Patients like the option, said Paralkar, who points to a recent Business Group on Health (BGH) report that suggests 91 percent of adults who have used virtual care would do so again, preferring this model over in-person visits. This interest has increased across all age groups. Employers are also interested in a virtual-first plan design, with their interest growing from 32 percent for the 2023 plan year to 69 percent for the 2024-25 plan years.

Employees now see telehealth as a "must-have" versus a "nice-to-have" benefit, Paralkar said. Before 2020, she said, telehealth was considered "alternative health care." Now, though, because of its widespread adoption during the pandemic, consumers have come to demand it as an option. She pointed to Teladoc Health as an example, saying it's seen "a 48 percent increase in total annual visits since 2019."

But is it an option that can positively impact costs for employers—and employees? To some extent, that is yet to be seen as organizations evaluate their experiences, but there is already evidence to suggest that virtual care can be a more cost-effective option.

Evaluating Costs

Paralkar noted that the flat-fee model for virtual visits—offered by carriers like Teladoc and Amwell— has "traditionally been significantly cheaper than brick-and-mortar visits." In addition, she said, "a study by Dr. Niteesh Choudhry of Harvard Medical School validated that telehealth is effective by resolving patient issues with a single visit, reducing office visits and reducing the number of costly visits to emergency rooms and urgent care facilities."

The health care system itself also benefits from virtual care, Paralkar said. "Telehealth programs help redirect care from ER and urgent care and drive improved diagnosis and health plan savings," she said. She points to a study by Jefferson Health System that calculated that "each avoided emergency department visit garnered cost savings ranging from $309 to more than $1,500."   

When evaluating their own expenses, companies should look at both short- and long-term costs, Shao said.

"If this isn't done, companies could be spending more money or moving expenses from one area to another, ultimately undermining their intention to provide solutions to their employees," he said.

Other Considerations

In addition to costs, Paralkar said there are other considerations that companies and their HR and benefits advisors should consider, including the average wait time to be seen by a doctor and access to mental health services, a growing need for many companies. She suggested that organizations:

  • Ensure that vendors provide adolescent mental health resources.
  • Integrate mental health care with other care. Whether it's a primary or chronic condition, integration is important for clinical outcomes.
  • Check that vendors address diversity, equity and inclusion issues.

Finally, she recommended, "Make sure your vendors offer hybrid solutions," noting that "84 percent of employers believe that integrating virtual health and in-person care delivery is essential, according to the BGH report."

The bottom line? Telehealth is here to stay, Paralkar said, and it is a model employers should consider integrating with general medical care options, especially for behavioral health needs. Interest is likely to continue to grow as employers, employees and health care systems realize the benefits that virtual care can offer for both reducing costs and improving access to care.

Lin Grensing-Pophal, SHRM-SCP, is a Wisconsin-based business journalist with HR consulting experience.


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