An economic evaluation of a telehealth network in British Columbia

Abstract

We carried out an economic evaluation of the northernmost five sites of the British Columbia telehealth network. The videoconferencing network links health-care facilities in 12 communities with Vancouver, for clinical consultations, administrative meetings and educational sessions. The economic evaluation was based on the netcost criterion (i.e. cost of telehealth minus travel costs avoided). Cost and utilization data were obtained from client interviews and log data compiled between September 2001 and January 2003. The results showed that the subnetwork of five sites was not only cost reducing, but also cost-effective. Travel costs for administrative meetings were reduced by $724,457/annum and were greater than the annual fixed and variable costs of all the telehealth sessions ($553,740). A sensitivity analysis was conducted on six parameters: amortization period, opportunity cost of capital, operating cost of a telehealth session (by type of session), number of telehealth sessions, travel time and the opportunity cost of travel time. The study suggests that the cost-effectiveness of telehealth to remote areas will increase over time as the cost of equipment continues to fall, as network connections become cheaper and as utilization rates rise.