Governments are already tired of how much telehealth costs
Telehealth had reached a critical mass in Sweden with providers able to generate decent sales from an established reimbursement model. However, spiralling costs have now tipped its payors over the edge with many refusing to pay the tariff. It’s not the first time that authorities have taken a stand against telehealth’s costs and it could have far-reaching policy implications.
Sweden’s second-largest region, Västra Götaland, was the first to say that it wants to stop paying for so-called ‘digital doctors’ with another four quickly following suit. They say that the costs are draining a large part of their own healthcare budget for primary care and innovation. Västra Götaland projects that it will send €20m to telehealth suppliers in 2020: it has an annual healthcare budget of about €4.4bn.
Spending less than a per cent of an annual healthcare budget on telehealth might seem reasonable considering vast sums spent on things like medicines but it’s clearly been a crossed line for some policymakers. The bid to stop paying for the telehealth tariff, unless replaced by some other system, could cut off a large revenue stream for market players like Kry, Min Doktor and Doctor.se
A similar policy move happened in the UK, where one of Babylon’s payors struggled with excess demand even pre-COVID. Policymakers internationally will be increasingly aware that a tariff system without a ceiling has the potential to be very costly. A reimbursement system that drains other budgets could soon leave them without cash.
We’re a few years into the telehealth market and nobody has yet cracked a perfect reimbursement model that allows the free market to thrive while protecting public sector funds. There is a precarious equilibrium between the amount that telehealth providers need to earn in order to innovate and how much policymakers are willing to pay.
Telehealth, despite record utilisation through the pandemic when it has proved unquestionably useful, remains a difficult business model with only a handful of providers generating significant sales. Now policymakers across the world are likely to look at Sweden as an example of how that model of reimbursement can lead to spiralling costs and potentially damage public sector budgets.
Many might even reconsider introducing a tariff at all, instead choosing to spend the money on initiatives within the public sector. That is what the Swedish regions have said they’ll do.
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