Cost analysis in telemedicine:: Empirical evidence from sites in Arizona

Context: Support of telemedicine for largely rural and ethnically diverse populations is premised on expectations that it increases opportunities for appropriate and timely medical services, and that it improves cost-effective service delivery. Purpose: To understand the cost-effectiveness of telemedicine in 8 small and/or rural sites in Arizona. Methods: A cost analysis framework was used to measure the efficacy of telemedicine in the selected sites from May 1, 2000, to April 30, 2001. Findings: The costs for telemedicine services in half the study sites were more than the costs for conventional face-to-face diagnosis when the volume of telemedicine services used at a site was relatively low. This result persisted even when the opportunity cost for the patients in accessing more traditional types of care was included in the cost estimates. Conclusions: These preliminary findings suggest that telemedicine in some instances may not be cost-effective for providing medical specialists for underserved communities, particularly id these networks are underutilized by the patient population. Further analyses are needed to access factors influencing utilizing patterns of telemedicine servies by underserved and ethnic communities before implementing these programs at clinical sites.