How artificial intelligence is revolutionizing healthcare

There’s currently a shortage of over seven million physicians, nurses and other health workers worldwide, and the gap is widening. Doctors are stretched thin — especially in underserved areas — to respond to the growing needs of the population.

Meanwhile, training physicians and health workers is historically an arduous process that requires years of education and experience.

There’s currently a shortage of over seven million physicians, nurses and other health workers worldwide, and the gap is widening. Doctors are stretched thin — especially in underserved areas — to respond to the growing needs of the population.

Meanwhile, training physicians and health workers is historically an arduous process that requires years of education and experience.

Fortunately, artificial intelligence can help the healthcare sector to overcome present and future challenges. Here’s how AI algorithms and software are improving the quality and availability of healthcare services.

AI health assistants

One of the most basic yet efficient use cases of artificial intelligence is to optimize the clinical process. Traditionally, when patients feel ill, they go to the doctor, who checks their vital signs, asks questions, and gives a prescription. Now, AI assistants can cover a large part of clinical and outpatient services, freeing up doctors’ time to attend to more critical cases.

Your.MD is an AI-powered mobile app that provides basic healthcare. The chatbot asks users about their symptoms and provides easy-to-understand information about their medical conditions. The platform has a vast network of information that links symptoms to causes.

The assistant uses natural language processing and generation to provide a rich and fluid experience, and machine learning algorithms to create a complex map of the user’s condition and provide a personalized experience.

Your.MD suggests steps and measures to remedy the illness, including warning users when they need to see a doctor.

UK’s National Health Service (NHS) has approved the information Your.MD provides. This means as opposed to self-diagnosis, users don’t have to worry about the authenticity and reliability of the guidance they get.

Other health assistants such as Ada integrate their technology with Amazon Alexa to improve the user experience. Ada becomes smarter as it gets familiar with the user’s medical history. Aside from generating a detailed symptom assessment report, Ada also provides the option to contact a real doctor.

Babylon Health, another intelligent health companion, complements its assistance by following up with users on past symptoms, and in case the need arises, setting up live video consultation with a general practitioner.

Health assistants save patients a trip to the doctor for more trivial diseases. Also, in areas where doctors and clinics are in short supply, it can save patients hours of waiting in line.

Early and precise diagnosis

The treatment and prevention of rare and dangerous diseases often depends on detecting the symptoms at the right time. In many cases, early diagnosis can result in complete cure. Conversely, a late or wrong diagnosis can have damaging or potentially fatal results. Human skills and experience are limited and hard-to-earn when it comes to examining images and samples and making reliable decisions.

AI algorithms can quickly ingest millions of samples in short order and glean useful patterns. And unlike humans, they don’t lose their edge when they grow old. Several institutions and firms are investing on this scheme in developing healthcare solutions.

Researchers at Stanford University have created an AI algorithm that can identify skin cancer. They trained their deep learning algorithm with 130,000 images of moles, rashes, and lesions. According to results its efficiency in diagnosing skin cancer rivals that of professional doctors. The researchers hope to make it available through a mobile app some time in the future. This can be an opportunity to provide inexpensive screening to anyone with smartphone.

DeepMind, a Google-owned AI company, is using machine learning to fight blindness in cooperation with NHS. Researchers at the firm are training a deep learning algorithm with a million anonymous eye scans. This will help spot eye conditions such as wet age-related macular degeneration and diabetic retinopathy at early stages. According to the experts, in some cases, they might eventually be able to prevent 98 percent of most severe visual loss.

Morpheo is an AI platform that helps in the diagnosis of sleep disorders. The traditional process of analyzing sleep patterns is complicated and time consuming. With the help of machine learning algorithms, Morpheo is assisting doctors by automating the identification of sleep patterns. The creators believe this will help in creating predictive and preventive treatments.

Dynamic care

For some diseases, identifying the right treatment path and adapting it to changes overcoming patient health is critical and challenging.

IBM is having its own foray at fighting cancer with AI, and its Watson for Oncology platform is getting ready for production. The platform will be used in a Florida community hospital to help treat cancer patients. Watson is especially adept at analyzing both structured and unstructured data.

It ingests reams of clinical trial data and medical journal entries, then finds patterns and presents cancer care teams with a list of effective therapies and treatment options.

Experts at University of North Carolina School of Medicine tested Watson with one thousand cancer cases. The platform gave the same recommendations as professional oncologists in 99 percent of the cases.

This can prove crucial to smaller hospitals and medical centers that are lacking in human expertise and technical resources.

Other firms are using artificial intelligence to take small yet crucial steps in the treatment of illnesses. One example is AiCure, a mobile app that uses AI and image analysis to control patient adherence to prescriptions. This includes making sure patients take their medication on time and perform other tasks ordained by their doctor. This can be useful for people with serious medical conditions and patients who might go against their doctor’s prescriptions.

What lies ahead

Artificial intelligence has challenges to overcome before it gains full traction in many fields. And healthcare is no exception, especially where privacy is concerned. Last year, DeepMind ran afoul of UK authorities and privacy groups over its data sharing deal with the NHS. Medical information is sensitive, and institutions that handle it need to mind their collection, storage and sharing policies.

Some firms are considering blockchain, the distributed ledger that supports Bitcoin and Ethereum, as a solution. Morpheo, for instance, uses blockchain to ensure transparency and privacy of patient data on its platform.

Another open-ended question is how artificial intelligence will affect jobs in the healthcare sector. At the current stage, it’s a given that caring for humans is the job of humans. For the moment, no algorithm is able to emulate both the social and professional functions of a doctor or nurse. In fact, robots are not replacing but enhancing human efforts to improve the overall quality and availability of health services.

Will the suggestion-making role of AI-based healthcare tools someday turn into decision-making? Only time can tell. But recent developments in artificial intelligence show that machines still have quite a few surprises up their sleeves.

Can Consumers Be Smart Health-Care Shoppers?

Patients are told they need to take greater control over their care. But are laypeople capable of sifting through all their choices to make the right decisions—particularly when it comes to costs?

Patients are told they need to take greater control over their care. But are laypeople capable of sifting through all their choices to make the right decisions—particularly when it comes to costs?

The Kaiser Family Foundation, a health-care research nonprofit, found deductibles for individual workers have soared in the past five years, rising 67% since 2010 without adjusting for inflation. That’s roughly seven times earnings growth over the same period.

A separate Kaiser analysis of tens of millions of insurance claims found that patient cost-sharing rose by 77% between 2004 and 2014, driven by a 256% jump in deductible payments.

A movement has been growing to give patients more information and choice.

Efforts are under way to improve price transparency and help patients navigate a confusing system where prices can vary based on a range of factors. In some cases, patients are consulted by caregivers as partners when deciding on care. And some programs are springing up that reimburse doctors based on the quality of care they provide rather than the quantity, making them more likely to encourage patients to monitor and help their conditions.

Devon M. Herrick, a health economist and senior fellow with the National Center for Policy Analysis, says consumers can take simple steps to save a lot of money. Amanda Frost, a senior researcher at the Health Care Cost Institute, says the system is too complex for patients to grapple with in most cases.

By Devon M. Herrick

Devon M. Herrick PHOTO: MARKIE PADDOCK

Conventional wisdom holds that it is impossible to compare prices for medical care as consumers do in other markets. But it’s not only possible, it’s easier than most of the naysayers realize.

For the critics, the argument comes down to one thing: There’s a lot of information out there, and it can be confusing for laypeople to sort out what kind of care is appropriate and how they can get the best deal on it.

But shopping for care and lowering costs don’t necessarily mean poring over websites to compare the benefits of medications and treatments, and then hunting for the best price that’s available for them. With just a small effort, anybody has the chance to drastically lower their health-care costs—without committing to undertake a daunting amount of research.

Here’s a look at some of the steps anyone can take, to show how easy the process of lowering costs can be.

Start with your doctor’s office. Physicians are very willing to discuss lower-cost treatment options with patients. Often, merely asking doctors questions about cost and financial concerns is enough to prompt the doctors to recommend less-expensive care or simply monitoring a condition to see if it gets better on its own.

Being smarter about prescription drugs represents another simple technique that can have a big impact on patients’ costs. And, again, it’s not a matter of comparing the efficacy of different treatments yourself—simply tell your doctor that the cost of medicine is a consideration.

The free drug samples doctors often hand out are for brand drugs, which typically come with high prices once you need a refill. Patients can start by asking their doctor if he or she can prescribe a less-expensive generic drug instead.

It’s also possible to compare prices for diagnostic services and lab work. Consider my wife’s experience in scheduling a CT scan. When she called a local hospital outpatient clinic, she was taken aback when told her share of the cost would be $2,700. I’m a former hospital accountant; hospitals charge higher prices than anywhere else. Avoid them if you can.

I used Google to check for CT scans using the billing code my wife’s doctor had ordered. In less than 10 minutes, I found a cash price for $403 that included the radiologist fee. Always ask about cash prices; they are often cheaper than your insurer’s negotiated price. (But remember: Paying cash for these kinds of procedures may not count toward your deductible.)

Critics argue that the public doesn’t seem to want to shop for health care. People want to get quality care and be confident about their choices, so they would rather make a choice based on personal recommendation, not price.

What’s more, these naysayers argue, patients lack a sufficient incentive to shop for care, because how much they save depends on how their benefit plans and deductibles are set up.

It’s certainly true that Americans want to know they are getting good care, and they are unlikely to switch doctors to save small amounts of money. If there were no consequences, of course they would choose convenience and peace of mind like they do in any other market.

But people are losing that luxury. The average employee deductible for self-coverage is soaring—to the point that many families are essentially paying all of their medical bills out of pocket. That means that people won’t be able to avoid the incentive to shop around for care.

As for the argument that many Americans can’t do simple shopping because they don’t have access to a lot of providers, they can still ask their doctor about less-expensive treatments for their condition. And they can still pay the cash price for their service out-of-pocket, which is often less than their health plan’s negotiated price. An hour’s drive to a neighboring town for an MRI or CT scan could save hundreds, maybe a thousand dollars or two.

Acting like a prudent health-care consumer is not that hard. And consumerism spurs providers to act more like competitors.

Dr. Herrick is a health economist and senior fellow with the National Center for Policy Analysis. Email him at reports@wsj.com.

NO: The System Is Too Complex for People to Make Useful Choices

By Amanda Frost

Amanda Frost PHOTO:HEALTH CARE COST INSTITUTE

When it comes to making decisions about our health care, being a “smart shopper” takes more effort than most of us are willing to put in.

Advocates for price transparency would have us believe that we, as “consumers,” should consider our health care a product to be shopped for, like a pair of shoes. But mainly we are “patients,” with varied, often time-sensitive health-care needs. There is an important distinction between presenting the information—and choices—to patients and asking consumers to make complicated decisions about their health care based on that information.

The health-care system is complex: Less than 15% of Americans can correctly answer questions about basic components of traditional health insurance. Choosing health-care services and providers may be even more complicated, especially for the half of all American adults that have at least one chronic condition.

More important, the public seems to not want to shop for health care. In studies, fewer than 5% of respondents used health-care shopping tools when available. This lack of use has persisted over time, even as tools have improved.

When it comes to their health care, people generally don’t want more choices; rather, they want to know that they are getting good care and to feel confident in their range of choices. Most Americans prefer to choose their providers based on recommendations from their friends or their family, rather than on price.

People also lack a sufficient incentive to engage in price shopping. A single, well-informed and motivated consumer who needs an expensive elective procedure may be able to spend time researching and save money by shopping for the lowest price possible, but this scenario is the exception rather than the norm.

Available evidence is not cause for optimism about how much money can be saved with more choices and publicly available prices. While large health-care payers may save some money from consumer shopping, the average person will likely see little, if any, savings.

And what savings are possible will largely be determined by insurance-benefit design. No consumers could shop their way to a lower copayment, or out of making a deductible payment. Factor in the associated opportunity costs, and the average American won’t save money.

Finally, many Americans don’t live in places with lots of providers and health-care choices. Transparency efforts centered on consumer shopping rest on the assumption that people have multiple options to choose from.

Some say people can avoid complexity entirely and take simple steps to save a lot of money—such as asking a doctor for generic drugs and paying cash for procedures, which can carry a lower price.

But health-care prices are much more complex than those scenarios make them appear. Prices vary by procedure, provider, facility and negotiated insurance rate.

As for asking a doctor how to save on costs, we cannot expect doctors to be experts on everything. No health-care provider could memorize the price of every service or drug, nor do most have access to a tool that provides this information. For most patients, their insurance determines their costs, and providers don’t generally have access to all of the necessary information about a patient’s insurance to give the advice people need about costs.

Even the seemingly simple switch from a brand prescription to a generic version might be complex. Some drugs don’t have generic versions, some generics are as expensive as the brand versions, and some may not be covered—or be well-covered—by a specific insurance plan.

The estimated price and quality of a health-care service or provider should be available to anyone who wants it. But we should not expect people to make complex decisions about their health care using those abstract measures.

Smart shopping might work for some people. But for the vast majority of consumers, it isn’t even a choice.

Dr. Frost is a senior researcher at the Health Care Cost Institute. Email her at reports@wsj.com.

How U.S. Health Care Became Big Business

Health care is a trillion-dollar industry in America, but are we getting what we pay for? Dr. Elisabeth Rosenthal, a medical journalist who formerly worked as a medical doctor, warns that the existing system too often focuses on financial incentives over health or science.

“We’ve trusted a lot of our health care to for-profit businesses and it’s their job, frankly, to make profit,” Rosenthal says. “You can’t expect them to act like Mother Teresas.”

Health care is a trillion-dollar industry in America, but are we getting what we pay for? Dr. Elisabeth Rosenthal, a medical journalist who formerly worked as a medical doctor, warns that the existing system too often focuses on financial incentives over health or science.

“We’ve trusted a lot of our health care to for-profit businesses and it’s their job, frankly, to make profit,” Rosenthal says. “You can’t expect them to act like Mother Teresas.”

Rosenthal’s new book, An American Sickness, examines the deeply rooted problems of the existing health-care system and also offers suggestions for a way forward. She notes that under the current system, it’s far more lucrative to provide a lifetime of treatments than a cure.

“One expert in the book joked to me … that if we relied on the current medical market to deal with polio, we would never have a polio vaccine,” Rosenthal says. “Instead we would have iron lungs in seven colors with iPhone apps.”

Interview Highlights

On what consolidation of hospitals is doing to the price of care

In the beginning, this was a good idea: Hospitals came together to share efficiencies. You didn’t need every hospital ordering bed sheets. You didn’t need every hospital doing every procedure. You could share records of patients so the patient could go to the medical center that was most appropriate.

Now that consolidation trend has kind of snowballed and skyrocketed to a point … that in many parts of the country, major cities only have one, maybe two, hospital systems. And what you see with that level of consolidation is it’s kind of a mini-monopoly.

What happens, of course, when you have a mini-monopoly is you have an enormous sway over price. And so, what we see in research over and over again is that the cities that have the most hospital consolidation tend to have the highest prices for health care without any benefit for patient results. So consolidation, which started as a good idea in many places, has evolved to a point where it’s not benefiting patients anymore, it is benefiting profits.

On the ways the health-care industry stands to profit more from lifetime treatment than it does from curing disease

If you’re a pharmaceutical manufacturer and you have a problem like diabetes, for example, if I invented a pill tomorrow that would cure diabetes — that would kill a multi-billion dollar business market. It’s far better to have treatments, sometimes really great treatments … [that] go on for life. That’s much better than something that will make the disease go away overnight.

On how prices will rise to whatever the market will bear

Another concept that I think is unique to medicine is what economists call “sticky pricing,” which is a wonderful term. It basically means … once one drugmaker, one hospital, one doctor says “Hey we could charge $10,000 for that procedure or that medicine.” Maybe it was $5,000 two months ago, but once everyone sees that someone’s getting away with charging $10,000, the prices all go up to that sticky ceiling. …

What you see often now is when generic drugs come out … the price doesn’t go down to 20 percent of the branded price, it maybe goes down to 90 percent of the branded price. So we’re not getting what we should get from a really competitive market where we, the consumers, are making those choices.

On initiating conversations early on with doctors about fees and medical bills

You should start every conversation with a doctor’s office by asking “Is there a concierge fee? Are they affiliated with a hospital? Which hospital are they affiliated with? Is the office considered part of a hospital?” In which case you’re going to be facing hospital fees in addition to your doctor’s office fees. You ask your doctor always … “If I need a lab test, if I need an X-ray, will you send me to an in-network provider so I don’t get hit by out-of-network fees?” …

Often that will be a little hard for your doctor, because they may have to fill out a different requisition, but it’s worth asking. And any doctor who won’t help you in that way, I think, isn’t attuned to the financial cost that we’re bearing today.

On getting charged for “drive-by doctors” brought in by the hospital or primary doctor

You do have to say “Who are you? Who called you?” and “Am I going to be billed for this?” And it’s tragic that in recovery people have to think in this kind of keep-on-your-guard, somewhat adversarial way, but I think if we don’t push back against the system in the way it bills, we’re complicit in allowing it to continue.

On how to decipher coded medical bills

Don’t be alarmed by the “prompt payment discount.” Go back to the hospital and say, “I want a fully itemized bill. I want to know what I’m paying for.” Some of it will be in codes, some of it will be in medical abbreviations. I’ve discovered you can Google those codes and find out what you’re being charged for, often, and most importantly, you might find you’re being charged for stuff that obviously you know you didn’t have.

Elizabeth Rosenthal is editor-in-chief of Kaiser Health News, an editorially independent news program of the Henry J. Kaiser Family Foundation and a partner of NPR’s. Neither KFF nor KHN is affiliated with Kaiser Permanente. Radio producer Sam Briger and web producers Bridget Bentz and Molly Seavy-Nesper contributed to this story.

How Flawed Science Is Undermining Good Medicine

A surprising medical finding caught the eye of NPR’s veteran science correspondent Richard Harris in 2014. A scientist from the drug company Amgen had reviewed the results of 53 studies that were originally thought to be highly promising — findings likely to lead to important new drugs. But when the Amgen scientist tried to replicate those promising results, in most cases he couldn’t.

A surprising medical finding caught the eye of NPR’s veteran science correspondent Richard Harris in 2014. A scientist from the drug company Amgen had reviewed the results of 53 studies that were originally thought to be highly promising — findings likely to lead to important new drugs. But when the Amgen scientist tried to replicate those promising results, in most cases he couldn’t.

“He tried to reproduce them all,” Harris tells Morning Edition host David Greene. “And of those 53, he found he could only reproduce six.”

That was “a real eye-opener,” says Harris, whose new book Rigor Mortis: How Sloppy Science Creates Worthless Cures, Crushes Hope, and Wastes Billions explores the ways even some talented scientists go wrong — pushed by tight funding, competition and other constraints to move too quickly and sloppily to produce useful results.

“A lot of what everybody has reported about medical research in the last few years is actually wrong,” Harris says. “It seemed right at the time but has not stood up to the test of time.”

The impact of weak biomedical research can be especially devastating, Harris learned, as he talked to doctors and patients. And some prominent scientists he interviewed told him they agree that it’s time to recognize the dysfunction in the system and fix it.

“If it’s not operating at full steam … and not doing everything right,” Harris says, “it’s worth pointing that out and saying, ‘No. Think about this. Let’s make it better.’ ”

The following has been edited for clarity.

Half of Americans are responsible for only 3 percent of health care costs

Here’s a simple reason crafting health policy is so devilishly hard: Most Americans are pretty healthy and a few are really sick.

The top 1 percent of health-care spenders use more resources, collectively, than the bottom 75 percent, according to a new study based on national surveys. Slice the data a different way, and the bottom half of spenders all together rack up only about 3 percent of overall health care spending — a pattern that hasn’t budged for decades. This creates a fundamental inequality in the country’s health spending that is the crux of the challenge policymakers face: They need a system that works for people who are ill, but is attractive to those who are healthy and spend little on health care.

Here’s a simple reason crafting health policy is so devilishly hard: Most Americans are pretty healthy and a few are really sick.

The top 1 percent of health-care spenders use more resources, collectively, than the bottom 75 percent, according to a new study based on national surveys. Slice the data a different way, and the bottom half of spenders all together rack up only about 3 percent of overall health care spending — a pattern that hasn’t budged for decades. This creates a fundamental inequality in the country’s health spending that is the crux of the challenge policymakers face: They need a system that works for people who are ill, but is attractive to those who are healthy and spend little on health care.

The political debate over health care often focuses on how a new system will meet the needs of the sick: Will cancer patients or people with diabetes access and afford care when they need it? But the Health Affairs study, “Most Americans have good health, little unmet need and few health care expenses,” shows just how important the healthy people who spend very little on health care are. The message you draw from that, however, may depend on your politics.

Health Affairs

“The key takeaway message really is most people are in good health; they don’t spend a lot of money, and yet it’s important to have them be part of our insurance system. If they’re left out of the system, we’re not going to have the funds to take care of people who are very sick,” said Marc Berk, a health policy researcher and contributing editor of Health Affairs who led the analysis.

But Tom Miller, a resident fellow at the American Enterprise Institute, disagreed. He said that the study is based on quick and incomplete snapshots of health and argued that it is yet another way to divert from the health-care discussion we should be having: about how to rein in spending. Using this data to argue about where to get premium dollars from — from the pockets of the well or the sick — simply allows the system to grow ever bigger and prop up an even-more-expensive medical system.

“We all get diverted by hoping we can hide the bill under someone else’s pillow,” Miller said. “I think that’s the political argument you hear — these low spenders, we’re scared to death they might catch on to the fact they’re getting taken to the cleaners” by being forced to buy expensive health insurance they don’t need.

According to House Speaker Paul Ryan earlier this month, the inequality in spending and sickness is the “fatal conceit of Obamacare.” Ryan used a graph that showed that chronically ill people are a narrow slice of the population, but a big driver of spending.

“The whole idea of Obamacare is the people … who are healthy pay for the people who are sick; it’s not working and that’s why it’s in a death spiral,” Ryan said.

As critics have pointed out, this was part of how the Affordable Care Act was designed, and it is how insurance traditionally works. The auto insurance of people who don’t get into car crashes helps foot the bill for those who do. The premiums from homeowners who never file a claim help underwrite the insurance payouts for those whose houses burn down. It’s the same for health, and a major challenge in the exchanges, where people buy individual plans with government subsidies, has been getting enough healthy people to sign up to keep the premiums reasonable for everyone.

A conservative vision of health care would have people take more responsibility for their own health care costs, but the graph above presents policy challenges as well, because it suggests that solution wouldn’t just be a matter of making people at all levels smarter shoppers. It would saddle those with the bad luck of being sick with costs that could quickly become untenable.

To different people, the pattern suggests very different policy implications: Berk thinks the data are a powerful argument that everyone needs to pay in to the system; to Miller, it suggests the opposite.

“We should probably leave a lot more people alone,” Miller said. “There’s unexpected catastrophic coverage, but don’t micromanage every detail of coverage for people who are just going to be fine.”

Virtual Doctor Visits May Not Reduce Healthcare Spending

Consultations with doctors by phone or video conference appear to be catching on, with well over a million virtual visits reported in 2015.

The convenience of ‘telehealth’ appeals to people seeking care, and the notion that it costs less than an in-office visit would makes it attractive to employers and health plans.

Consultations with doctors by phone or video conference appear to be catching on, with well over a million virtual visits reported in 2015.

The convenience of ‘telehealth’ appeals to people seeking care, and the notion that it costs less than an in-office visit would makes it attractive to employers and health plans.

But a new study suggests that although telehealth services may boost access to a physician, they don’t necessarily reduce healthcare spending, contrary to assertions by telehealth companies.

The study, published 6 March in the journal Health Affairs, shows that telehealth prompts individuals to seek care for minor illnesses that otherwise would not have induced them to visit a doctor’s office.

Telehealth has been around for more than a decade, but its growth has been fueled more recently by the ubiquity of smartphones and laptops, says study investigator Lori Uscher-Pines. She is a policy researcher at the RAND Corporation, a nonprofit think tank based in Santa Monica, California.

These virtual consultations are designed to replace more expensive visits to a doctor’s office or emergency room. On average, a telehealth visit costs about $79, compared with about $146 for an office visit, according to the study. But the researchers found that virtual visits generate additional medical use.

“What we found is contrary to what [telehealth] companies often say,” Uscher-Pines says. “We found an increase in spending for the payer.”

The researchers found that only 12 percent of telemedicine visits replaced an in-person provider visit, whereas 88 percent represented new demand.

Face to face:

The researchers examined 2011-13 utilization data of 300,000 people enrolled in the Blue Shield of California Health Maintenance Organization (HMO) plan offered by the California Public Employees Retirement System (CalPERS), which covers current and former state employees and their families. CalPERS’ Blue Shield HMO started offering telehealth services, available 24/7 to its beneficiaries, in April 2012.

The researchers focused on virtual visits for respiratory illnesses, which include sinusitis, bronchitis, pneumonia and tonsillitis, among others.

Although a single telehealth visit for a respiratory illness costs less than an in-person visit, it often results in more follow-up appointments, lab tests and prescriptions, which increases spending in the long run. Liability concerns may prompt telehealth physicians to recommend that a patient go in for a face-to-face appointment with a doctor, the researchers note.

The researchers estimated that annual spending for respiratory illnesses increased about $45 per telehealth user, compared with patients who did not take advantage of such virtual consultations.

Jason Gorevic, chief executive officer at Teladoc, the operator that provides telehealth services for CalPERS Blue Shield members, says the new study doesn’t square with Teladoc data showing the cost savings of telemedicine.

According to 2016 data, Gorevic says, only 13 percent of Teladoc visits represent new medical use. He notes that the RAND study uses older data, and that many things have changed since then — including the technology, the rate at which these services are being adopted and patient engagement.

“In fact, other more comprehensive studies — using six times the amount of claims data including the same population as the [RAND] study — have found tremendous value of telehealth, with consistently repeatable results,” Gorevic says. These other studies have shown that telehealth decreases overall health care spending, he says. But Uscher-Pines says the RAND findings are not surprising.

When RAND researchers studied retail clinics last year, they found that making access to healthcare more convenient triggers new use and additional costs. That study found 58 percent of visits to in-store clinics represented new use of medical services rather than a substitute for doctor office visits.

Yet the fact that telehealth services are more affordable per visit than a trip to a physician’s office shows that there is still a pathway to cost savings, Uscher-Pines says.

Target groups:

To achieve cost savings, telehealth services would have to replace costlier visits, the researchers say. Insurers could increase telehealth visit costs for patients to deter unnecessary use. Another way to increase the health system value of virtual doctor visits is to target specific groups — such as those who often use emergency rooms for less severe illnesses. An emergency room visit costs an estimated $1,734.

“You could take these people in the emergency department and offer them this cheaper option. That would be a direct replacement,” Uscher-Pines says.

Gorevic says that a challenge for telehealth is engaging consumers, so the comparatively low fees provide a financial incentive.

“Because a telehealth visit is much cheaper than an in-person visit, the cost sharing should be reflective of that,” he says.

Marcus Thygeson, senior vice president and chief health officer at Blue Shield, which also provides virtual doctor visits through Teladoc, in a statement said that “increased convenience can increase utilization, so overall healthcare costs may increase or stay the same. Blue Shield supports the use of telemedicine to improve access for both primary and specialty healthcare, especially in rural communities.”

The researchers noted several limitations to the RAND study. For example, they examined only one telehealth company and studied only visits for respiratory illnesses. In addition, the individuals whose data were scrutinized had commercial insurance, and it is possible the use of telehealth would differ among people with government insurance, high-deductible plans or no insurance at all, the researchers wrote.

This story was produced by Kaiser Health News, which publishes California Healthline, an editorially independent service of the California Health Care Foundation.

This story originally appeared on Kaiser Health News. It has been slightly modified to reflect Spectrum’s style.