Now that the coronavirus has suddenly made a video visit the best way to see a doctor, the Federal Communications Commission is going to help hospitals pay for the infrastructure to make telemedicine available to more people.

The Federal Communications Commission announced the Covid-19 Telehealth Program this week, which will help hospitals and healthcare organizations launch telemedicine services for patients. The grant program will cover the purchase of telecommunications services, information services, and hardware.

Taqee Khaled, head of strategy at the IT consultancy Nerdery, said that the FCC funding is mostly likely to go to IT capital expenditures such as device and network upgrades to ensure that hospital staff have dedicated devices and adequate network support at scale to deliver telehealth services at a high volume.

“This matters because until now, the typical hospital was not heavily taxing their internet bandwidth with weighty audio+video demands,” he said. “It’s not clear if these funds will cover cloud backup in the event that a health system wants all telemedical encounters to be recorded.”

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According to 2018 research, only about 15% of physicians worked in a practice that offered telemedicine visits for patients. Patients are more open to the idea now than in previous years. A March 2020 survey of 3,000 consumers in Minneapolis, Seattle, and Chicago found that about half the respondents were somewhat open to having a telemedicine visit instead of an in-person appointment with a doctor, according to the consulting firm West Monroe. In Seattle, only 22% of people had used telemedicine services in the past year, with 18% of respondents in the other two cities reporting that they had done so.

Khaled said that hospital IT departments will have to decide how many telehealth workstations they want on-site and if they want mobile enablement for clinicians. That will determine the hardware spend, which is probably the single, most impactful chunk of spend. Adding network strength, redundancy, and security is an incremental budgetary piece of the puzzle.

“But if you need 50 new computers with high-quality external cameras and microphones and 70 tablets, that’s a bigger deal,” he said.

Khaled also predicts that most health systems will pick a packaged third-party solution instead of building the functionality in-house.

“If it’s accessed as a simple web app, you’re not looking at nearly the infrastructure and network investment as if you’re hardwiring the capability into your organization,” he said.

For providers who already offer telemedicine, the FCC funding is an opportunity to maximize its value by quickly scaling up visit volume to a wider geographic area.

“Honestly, a skillful CFO and COO can model this out to offset a great deal of cash flow loss from COVID’s negative impact on elective procedures,” he said.

Physician practices and hospitals that have never offered telemedicine services are now behind the 8-ball on two accounts, Khaled said. The first challenge is the demand from consumers for immediate access to good telehealth care due to COVID-19. The second problem is that there’s no time to optimize how to deliver this care in this format and model the volume-to-value ratio.

“At this point, you just have to get it stood up and figure out as you go how it should be managed to ensure ROI,” he said.

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The $200 million in funding from the FCC comes from the CARES Act, one of the bills Congress passed to help individuals, state and local governments, and businesses survive the coronavirus outbreak. Healthcare providers will apply for the funds, and the winning applications will receive full funding for their telehealth projects. The Commission will award funds on a rolling basis until the funds are exhausted.

In addition to the telehealth funding, the FCC will launch a three-year Connected Care Pilot Program. This project will study how connected care could be a permanent part of the Universal Service Fund by making up to $100 million of universal service support over three years to lower the costs of providing telehealth services with an emphasis on low-income Americans and veterans. Healthcare organizations will apply for funding to cover 85% of the eligible costs of broadband connectivity, network equipment, and information services.

West Monroe surveyed 3,000 consumers in Seattle, Minneapolis, and Chicago and found that about half of all respondents would consider replacing an in-person doctor visit with a video visit. This chart shows responses from Seattle residents.
Image: West Monroe