The Economics of Telehealth: An Overview

Abstract

Background: Telehealth has long offered promise for improving health care access, but due to restrictive regulations and technology limitations, historic use has been low. Despite telehealth's unprecedented expansion during the COVID-19 pandemic, economic questions remain, raising uncertainty about telehealth's future. Methods: We used an economics lens to conduct a narrative review of the vast medical literature and nascent economic literature on telehealth. We reviewed evidence on demand-side and supply-side forces influencing telehealth adoption and evidence on telehealth's impact on health care use, costs, effectiveness, and equity. Results: Current evidence is sparsely distributed across care types, telehealth modalities (e.g., phone, video, secure messaging), models of telehealth delivery, and pre- and post-pandemic periods. While the literature provides some signals that patients and clinicians are responsive to monetary costs of telehealth, more robust studies are needed, including studies on patient and provider time costs. Telehealth adoption appears to modestly increase outpatient care use, but evidence of its impact on costlier emergency or inpatient care use is needed. There is a lack of studies on monetary costs of telehealth, particularly the impact of telehealth on production costs. Importantly, there is a lack of high-quality studies on the comparative effectiveness of modalities. While there is a growing literature on disparities, studies that address confounders are needed to assess if telehealth can deliver on its promise to improve access for underserved populations. Conclusion: Our review paves the way for a stronger economics literature on telehealth, highlighting areas of future research.

Keywords: digitalization; health care costs; health economics; technology; telehealth; telemedicine.