Telemedicine Market in Embryonic Stage
A promising technology niche anticipates rapid growth, but after the year 2000
Telemedicine-related integration services will not become a significant market until after the year 2000, according to medical market observers, who believe the bulk of information technology spending in the health care industry will continue to focus on administrative and business applications.
According to a recent study released by Medford, Ore.-based Feedback Research Services, the telemedicine segment of the health care infotech market accounted for only $77 million in revenue in 1995 from sales of telepathology/teleradiology and videoconferencing systems. Conservative forecasts in the report suggest that sales of multiple-use telemedicine videoconferencing systems, teleradiology equipment, and telecommunications services combined could result in a market worth $283 million in 2000. Overall infotech spending is expected to reach $100 billion in the next five years.
While the report did not specifically look at the professional services and systems integration components of the telemedicine systems market, other industry observers expect that segment to become an attractive growth market in the first half of the next decade.
"A lot of people would say that a broader look at telemedicine [including systems integration services] would reveal that the United States is pumping $750 million into telemedicine," says Alex Linder, editor of Global Telemedicine Report. "But it does get hazy when you factor in the government subsidies."
For now, telemedicine projects continue to be driven primarily by government initiatives designed to demonstrate the viability of the technology.
"There are still a lot of barriers to implementing telemedicine, not the least of which are questions about its cost-effectiveness," says Fran Fields, the analyst who wrote the Feedback study.
"Right now telemedicine is very effective in areas where there are no questions about operating across state lines. In other words, where state or federal governments can have a major presence," she says.
She points to projects in the Texas state prison system as an example of the former.
"In Texas there has been an ongoing program since 1994 where they are really trying to crunch the numbers to determine the cost-effectiveness of telemedicine, and to work out any bugs in the system," she says.
In the federal government, the Department of Defense is reportedly using telemedicine applications to monitor the health of troops in Bosnia. That effort, says Fields, is being run out of the U.S. Army Medical Research and Materiel Command at Fort Dietrick in Frederick, Md.
As more information about telemedicine's efficacy and cost efficiency comes out of the scores of pilots being funded by a combination of state, federal and private sector sources, she expects to see broader acceptance of telemedicine in the civilian health care community.
This would contribute to necessary changes in insurance and third-party payment policies. Insurance coverage of telemedicine alone would dramatically improve the outlook, if favorable reimbursement is established to allow remote teleconsults to be substituted for face-to-face visits with medical specialists.
Telemedicine projects are currently operational in at least 40 states, with new and expanded networks being developed both nationally and internationally.
Just last week, for instance, Beth Israel Deaconess Medical Center was awarded a $2.8 million contract from the National Library of Medicine of the National Institutes of Health to develop a home-based, two-way videoconferencing computer link for parents whose very premature or sick newborns require round-the-clock intensive care.
The telemedicine computer home stations will help to educate and comfort parents who must leave infants in the neonatal intensive care unit by allowing them to see their babies as they eat, sleep and grow, and to talk to doctors and nurses who monitor their care. It also will allow staff to remotely monitor the progress of their young charges after they leave the hospital for home.
Meanwhile, Florida Hospital recently announced a five-year agreement with Sprint to bring telemedicine and health information network services to patients and health care professionals throughout the Florida Hospital system.
Under the agreement, Sprint will provide telemedicine, teleradiology and networked voice, image, video and data services. In addition to providing telephone and teleconferencing equipment, Sprint will build and operate a self-healing network. The network will use SONET, or Synchronous Optical Network, capable of accurately carrying and processing large amounts of data at high speeds, using asynchronous transfer mode technology.
On the international front, telemedicine is also emerging as an interesting new tool for working with developing countries. Two new telemedicine installations linking Caribbean hospitals to leading medical facilities in the United States may become models for reducing costs and providing better health care in the developing world.
Massachusetts General Hospital and Howard University College of Medicine are using telemedicine applications to establish links with Caribbean island hospitals, eliminating patient travel costs for routine medical care.
The first new installation connects the Centro de Diagnostico y Medicina Avanzada and the adjacent Centro de Conferencia Medicas in Plaza de la Salud, Santo Domingo, Dominican Republic, with the Massachusetts General Hospital, a teaching hospital of Harvard Medical School.
Through its ties with Massachusetts General, the new Plaza de la Salud complex will be the primary acute-care facility for the Dominican Republic, offering diagnostic services and support in radiology and pathology. Additional telemedicine links are also under way to extend the reach of services to other parts of the Dominican Republic.
In the second Caribbean installation, a telemedicine network was established between the Roy L. Schneider Hospital in St. Thomas, U.S. Virgin Islands, and Howard University Hospital and its College of Medicine in Washington.
The network allows physicians at Howard University to provide telediagnosis and medical consultation services to St. Thomas in such areas as pediatrics, cardiology, infectious diseases, pathology and continuing medical education.