Telehealth has been widely praised in recent years for its potential to transform the health care industry by reducing patient costs and minimizing the need for in-person care. A 2021 McKinsey & Company study projected it could cut U.S. health care costs by $250 billion a year.

However, a new study from Texas McCombs reveals that telehealth’s promise for lowering costs and decreasing future health care resource utilization is not as straightforward as it may appear. Its effectiveness depends greatly on the type of disease being treated.

“People believed that telehealth would be the next big thing, the future of health care,” says study author Indranil Bardhan, professor of information, risk, and operations management. “But our research shows that its impact is not as straightforward as people might think. It’s more nuanced.”

Bardhan and his co-authors, Sezgin Ayabakan of Temple University and Zhiqiang (Eric) Zheng of The University of Texas at Dallas, examined telehealth through the theory of process virtualization: replacing physical interactions with virtual ones.

Based on a study of patient visits across all hospital-based outpatient clinics in Maryland from 2012 to 2021, they found that virtual telehealth visits reduced the overall number of future outpatient visits within 30 days of a telehealth encounter by 14%, saving $239 in total outpatient costs per patient. Further, telehealth use was associated with significant reduction in future emergency room visits and visits to specialists.

But they also found that treatment of some diseases can be virtualized more easily than others. Behavioral health, metabolic disorders, dermatology, and musculoskeletal disorders saw the greatest positive impacts from telehealth.

For those conditions, Bardhan says, patients can effectively communicate symptoms, and doctors can observe them over a video link. Telehealth can also make it easier for primary care physicians to monitor a patient’s condition over time, leading to fewer outpatient visits to specialists.

By contrast, several diseases had low virtualization potential, being harder to observe over video. For circulatory, respiratory, and infectious diseases, telehealth did not significantly reduce the number of future visits or costs.

Bardhan hopes his research can help enable more efficient use of health care resources by helping health care professionals to focus telehealth use to treat specific disease types and conditions where it can do the most good. His findings have practical implications for fostering telehealth use in a value-based health care environment, especially for diseases with high virtualization potential where health care providers should promote telehealth use to bend the cost curve. He says, “The effectiveness of telehealth is really a function of the type of disease that it is used to treat.”

“Impact of Telehealth and Process Virtualization on Healthcare Utilization” is forthcoming, online in advance in Information Systems Research.