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Telemedicine Can Reduce Hospitalizations of Nursing Home Residents and Generate Savings for Medicare

Nursing homes that used telemedicine to provide after-hours care significantly reduced hospitalization rates for their residents, compared with facilities not using this service. Savings from the reduction in hospitalizations, however, generally accrued to Medicare, rather than to nursing homes. Different payment models, such as those used in accountable care organizations or managed care, are needed to encourage telemedicine use among nursing home facilities.

The Issue

Nursing home residents in need of medical care after regular hours or on weekends are often sent to the hospital, where they have a greater chance of experiencing health complications or even death. These hospitalizations cost Medicare more than a billion dollars a year. Evidence shows that a lack of physicians on call during off hours can result in inappropriate hospitalizations of residents. Commonwealth Fund–supported researchers assessed the potential of telemedicine, which enables patients to visit with physicians “virtually” by way of two-way video or other telecommunications technologies, to lower rates of hospitalization and achieve savings. Their study compared nursing facilities that used telemedicine for after-hours care to homes that did not.

Key Findings

  • After the introduction of the telemedicine service, hospitalization rates declined 9.7 percent among the intervention facilities and 5.3 percent among the comparison facilities, which did not receive the service. This difference was not found to be statistically significant.

  • There was a significant decline in hospitalization rates at facilities that were deemed “more engaged” with the telemedicine service; hospitalization rates for this group declined 11.3 percent.

  • Based on the reduced hospitalization rates of the more-engaged facilities, Medicare could expect an average of about $151,000 in savings per nursing home per year. The annual cost of the telemedicine service was $30,000 per nursing home, suggesting that there could be $120,000 in net savings per year


Telemedicine may be a cost-effective way to help keep nursing home residents out of the hospital and reduce costs. But additional steps are likely needed to create a business case for nursing homes and other providers to invest in this service.