Originally published in Crains Detroit Business

By Tony Colarossi

As the country grapples with the cost of health care, telemedicine offers a promising solution.

Remote, technology-based care can lead to improved health outcomes at lower costs, but laws governing it are in serious need of simplification.

“No two states are alike in how telehealth is defined and regulated,” the Center for Connected Health Policy said in its annual report. It notes that this “creates a confusing environment for telehealth participants to navigate, particularly when a health system or practitioner provides health care services in multiple states.”

These differing state regulations cause headaches for physicians offering telehealth services. For example, current rules dictate that providers must be licensed in the state where the patient is located in order to treat them. So if a doctor in Oregon has a video consultation with a regular patient who is visiting California, that time would not be reimbursed.

The lack of standards and uncertain reimbursement policies are partly due to how quickly the technology is developing. Telehealth is enabled by the Internet of Things trend. It is also fueled by computers’ ability to gather and crunch large amounts of data, and employ artificial intelligence to offer advice. Clearly, however, untested technology cannot be deployed when people’s health is at stake.

Even with the industry’s rapid evolution, we can put rules of the road in place. As the health industry consolidates, often across regions straddling adjacent states, the telehealth industry needs standards to ensure uniformity of treatment and quality, as well as a clear path for innovators. That effort would be best led by the American Hospital Association, the American Medical Association and other industry groups, which could draw on the best practices among states and suggest national guidelines for how telehealth can do things such as improve cardiac services or diabetes care.

If we don’t pave the way forward, we will end up getting nowhere. To best use these cost-saving tools to provide health care, we need to see them in action. If we limit use, we cannot develop best practices, which reduces the potential for savings and benefit.

When new laws are passed, such as Michigan’s revised regulations on when health care professionals can remotely prescribe controlled substances, it promotes broader use of telemedicine. After that change, Blue Cross Blue Shield of Michigan and Blue Care Network began working with 23 physician organizations to encourage greater use of telemedicine for such things as primary care visits and behavioral health and specialist consultations. This wider use of telemedicine would allow for studies and trials that statistically and clinically evaluate what works best, helping set national standards.

Telemedicine use is on the rise, from visits to the doctor via Skype to wearing a monitoring device that sends data away for analysis. It’s not hard to imagine that, for example, a monitor on a heart patient could alert a doctor if the patient’s cardiac rhythm was outside the normal range. It can also help people in remote locations consult with mental health professionals who would otherwise be out of reach and allow scarce specialists to service a larger geographic area.

Reducing health care costs is critical, given that Americans spend more than $3.2 trillion annually on health care — an amount that’s equal to 17.8 percent of the U.S. economy.

But investment is essential to support big ideas. Eighty-three percent of health care organizations are highly likely to invest in telemedicine this year to improve operational efficiency and make services more convenient, according to an American Telemedicine Association poll.

Health care systems are already undertaking projects that reduce overhead costs, buying up smaller practices to gain competitive advantages in their region and creating specialized centers. Central to that effort to reduce costs is lowering rates of readmission — a key area of focus in telehealth. Ascension at Home Wisconsin found that patients with chronic health conditions who were monitored remotely under its telemonitoring program had hospital readmission rates of 8 percent, compared with 24 percent nationally.

Spending for home health agencies rose 6.3 percent to $88.8 billion in 2015, accounting for roughly 3 percent of all health care spending, according to the Centers for Medicare and Medicaid Services. Such services are rising most at health systems that are investing heavily in technology. For example, virtual visits are now 52 percent of Kaiser Permanente’s 100 million annual doctor consultations, according to Modern Healthcare. That shift gives patients convenient options and lowers the costs of servicing members, Kaiser Permanente chairman and CEO Bernard Tyson said. Kaiser’s move to telehealth follows significant spending on technology — about one quarter of the company’s $3.8 billion annual capital spending.

Meanwhile, private equity cash is flooding in for telehealth initiatives and a growing number of medical-tech startups. A total of 46 digital health deals topped $1.4 billion in the first quarter of 2017, according to MobiHealthNews. While it remains unclear what the return on investment will be for telehealth, the influx of private equity suggests returns will be strong.

Ultimately, the industry needs to guide and harness these remote medicine capabilities. That means getting ahead of the trend, not dragging behind it.

Tony Colarossi leads Plante Moran’s acute healthcare consulting services.