Texas Telemedicine Project: A Viability Study

Abstract

The purpose of this research was to investigate viability factors in the implementation of telemedicine systems. The Texas Telemedicine Project examined the viability of a rural network where multiple facilities shared a switchable long-distance network rather than using fixed point-to-point connections. During Phase I, conducted in 1989, staff at participating institutions analyzed applications for the proposed network and developed methodologies for data collection. The capital costs and potential savings of a telemedicine network linking institutions in Austin and Giddings, Texas, were estimated. In April of 1991, Phase II of the system was implemented, and the first year's actual capital expenditures and savings (e.g., trips avoided, salaries of traveling specialists saved, reduced mileage and patient transport expenses, redundant tests avoided, reduced long distance telephone charges) attributed to the network were calculated. On the basis of the data collected in Phase I, it was projected that each $1.00 applied toward installation and operation of the network should yield $1.50 in benefits, with return on investment (break-even) within 1 year. In practice, there was a net deficit during the first year, although linear extrapolation predicted return on investment in 2.7 years. Linking multiple users over a shared infrastructure has the benefit of distributing cost among the participants and achieving an economy of scale for telecommunications services. The chief barriers to greater savings were the failure of five of the six network sites to design mission-oriented telemedicine policies and the absence of Medicare reimbursement.