United States General Accounting Office

GAO Report to Congressional Requesters

February 1997 TELEMEDICINE

Federal Strategy Is

Needed to Guide

Investments

GAO/NSIAD/HEHS-97-67

GAO United States

General Accounting Office

Washington, D.C. 20548

National Security and

International Affairs Division

B-272523 

February 14, 1997

The Honorable Curt Weldon

Chairman

The Honorable Owen B. Pickett

Ranking Minority Member

Subcommittee on Military Research

 and Development

Committee on National Security

House of Representatives

The Honorable John M. Spratt, Jr.

House of Representatives

This report responds to your request for information about the steps that the federal

government needs to take to realize the full potential of telemedicine and achieve cooperation

with the private sector. Specifically, we address the (1) scope of public and private telemedicine

investments; (2) telemedicine strategies among the Department of Defense, other federal

agencies, and the private sector; (3) potential benefits that the public and private sectors may

yield from telemedicine initiatives; and (4) barriers facing telemedicine implementation. Our

recommendations are designed to help move federal departments and agencies toward the

goals and objectives as stated in the Government Performance and Results Act of 1993.

We are sending copies of this report to the Office of the Vice President; the Secretaries of

Defense, Veterans Affairs, Health and Human Services, the Army, the Navy, and the Air Force;

the Director, Office of Management and Budget; appropriate congressional committees; and

other interested parties. We will provide a copy of this report to the new Ranking Minority

Member when named. We will also make copies available to others on request.

This report was prepared under the direction of Mark E. Gebicke, Director, Military Operations

and Capabilities Issues, who may be reached at (202) 512-5140 if you or your staff have any

questions concerning this report. Other major contributors to this report are listed in 

appendix VI.

Henry L. Hinton, Jr.

Assistant Comptroller General
Executive Summary

Purpose During a deployment in the Western Pacific region, a sailor aboard the

U.S.S. Abraham Lincoln became seriously injured and was seen and

treated by a specialist in San Diego—6,000 miles away. Doctor and patient

were linked by telemedicine, which, in its broadest sense, refers to the use

of communications technology to help deliver medical care without regard

to the distance that separates the participants. In addition to the

Department of Defense (DOD), other federal agencies, state governments,

and private organizations support telemedicine initiatives.

Congress has raised questions about the federal government’s role in

advancing telemedicine. In this regard, the Chairman and Ranking

Minority Member, Subcommittee on Research and Development, House

Committee on National Security, asked GAO to help determine the steps

that DOD and the federal government need to take to realize the full

potential of telemedicine and achieve cooperation with the private sector.

Specifically, this report addresses the (1) scope of public and private

telemedicine investments; (2) telemedicine strategies among DOD, other

federal agencies, and the private sector; (3) potential benefits that the

public and private sectors may gain from telemedicine initiatives; and

(4) barriers facing telemedicine implementation.

Background Depending on how it is defined, telemedicine can involve the use of

imaging and diagnostic equipment to gather data from a patient, computer

hardware and software to record data, communication lines or satellites to

send the data from one location to another, and computer equipment at

the receiving end for a physician or specialist to interpret the data. A

telemedicine system could be as simple as a computer hookup to a

medical reference source or as advanced as robotic surgery. A

comprehensive system would integrate various applications—clinical

health care delivery, management of medical information, education, and

administrative services—within a common infrastructure. This

infrastructure includes the physical facilities and equipment used to

capture, transmit, store, process, and display voice, data, and images.

Telemedicine has existed in some form for almost 40 years. Early

expansion was confined, however, by the cost and limitations of the

technology. Recent technological advances, such as fiber optics, satellite

communications, and compressed video, have eliminated or minimized

many of these problems, fostering a resurgence of private and public

sector interest in telemedicine.

Page 2 GAO/NSIAD/HEHS-97-67 Telemedicine
Executive Summary

GAO’s review focused primarily on DOD to meet the needs of the House

Subcommittee on Research and Development. To provide a broader

perspective, the review also encompassed work at numerous other federal

agencies, state governments, and private organizations that support

telemedicine initiatives. GAO’s overall approach was twofold. First, GAO

conducted a broad data collection and analysis effort at numerous

organizations. Second, GAO performed a cross-cutting case study of public

and private telemedicine projects in one state. Georgia was chosen

because it had state, academic, and private sector funding for telemedicine

efforts as well as collaboration with DOD on telemedicine projects. GAO also

reviewed relevant literature to supplement its analysis.

Results in Brief Collectively, the public and private sectors have funded hundreds of

telemedicine projects that could improve, and perhaps change

significantly, how health care is provided in the future. However, the

amount of the total investment is unknown. GAO identified nine federal

departments and independent agencies that invested at least $646 million

in telemedicine projects from fiscal years 1994 to 1996. DOD is the largest

federal investor with $262 million and considered a leader in developing

this technology. State-supported telemedicine initiatives are growing.

Estimates of private sector involvement are impossible to quantify

because most cost data is proprietary and difficult to separate from health

care delivery costs.

Opportunities exist for federal agencies to share lessons learned and

exchange technology, but no governmentwide strategy exists to ensure

that the maximum benefits are gained from the numerous federal

telemedicine efforts. The Joint Working Group on Telemedicine (JWGT),

created in 1995 under the Vice President’s charge to the Secretary of

Health and Human Services (HHS) to report on telemedicine issues, is the

first mechanism structured to help coordinate federal programs. However,

its efforts to develop a federal inventory—a critical starting point for

coordination—have been hampered by definitional issues and inconsistent

data. In addition, DOD and other federal departments do not have strategic

plans to help guide their telemedicine investments, assess benefits, and

foster partnerships. Some federal officials are beginning to recognize the

need to develop such strategies.

Telemedicine is an area in which public and private benefits converge.

Many anecdotal examples demonstrate how telemedicine could improve

access and quality to medical care and reduce health care costs. However,

Page 3 GAO/NSIAD/HEHS-97-67 Telemedicine
Executive Summary

comprehensive, scientific evaluations have not been completed to

demonstrate the cost benefits of telemedicine. The expansion of

telemedicine is hampered by legal and regulatory, financial, technical, and

cultural barriers facing health care providers. Some barriers, such as

multiple state licenses, privacy, and infrastructure costs, are too broad and

have implications too far-reaching for any single sector to address.

Telemedicine technology today is not only better than it was decades ago;

it is becoming cheaper. Consequently, the questions facing telemedicine

today involve not so much whether it can be done but rather where

investments should be made and who should make them. The solution lies

in the public and private sectors’ ability to jointly devise a means to share

information and overcome barriers. The goal is to ensure that an

affordable telecommunications infrastructure, with interoperable software

and hardware, is in place and that the true merits and cost benefits of

telemedicine are attained in the most appropriate manner.

Principal Findings

Investments Are

Significant, but Total Is

Unknown

Over 35 federal organizations within 9 federal departments or independent

agencies, 10 state governments, and numerous private sector organizations

sponsor hundreds of telemedicine initiatives in over 40 states. The total

investment is unknown because telemedicine costs are often embedded

within health care delivery costs and private sector data is proprietary. Of

the $646 million that federal agencies invested in telemedicine from fiscal

years 1994 to 1996, DOD invested the most—$262 million—followed by the

Departments of Veterans Affairs (VA), HHS, and Commerce, each investing

over $100 million.

Nearly $105 million, or 40 percent, of DOD’s investment is devoted to

unique long-term research and development projects for battlefield

applications that the Defense Advanced Research Projects Agency (DARPA)

has sponsored. The rest of DOD’s investment primarily supports peacetime

applications at its medical treatment facilities, particularly to improve

information management such as digitized radiology or computerized

patient tracking systems. Similarly, the other eight federal departments

and independent agencies devoted 57 percent of their combined

$384 million investment for information management. A large portion of

Page 4 GAO/NSIAD/HEHS-97-67 Telemedicine
Executive Summary

this investment also supported clinical health care delivery and

infrastructure development in rural or remote areas.

State telemedicine investments have been expanding health care in rural

or remote areas. States with the longest track record, such as Georgia,

have taken legislative action to support telemedicine and provide direct

funding. Georgia has also set a reduced rate across the state for medical

communications. Although estimates of the private sector investment in

telemedicine have not been quantified, the Koop Institute estimates that

the U.S. market was in the billions of dollars for telecommunications

infrastructure, computer hardware and software, and biomedical

equipment. Many private organizations also use telemedicine to help

deliver health care.

No Federal Strategy Exists

to Maximize the Value of

Telemedicine Investments

No formal mechanism or overall strategy exists to ensure that

telemedicine development is fully coordinated among federal agencies to

serve a common purpose. Numerous federal, state, and private sector

groups are involved in telemedicine activities. The federal agencies

involved are seeking solutions to more narrowly defined problems that fall

under their purview. For example, DOD has been instrumental in

developing telemedicine technologies that could deliver medical care to

the battlefield or operations other than war. The National Aeronautics and

Space Administration is interested in telemedicine primarily to understand

its application to medical care in space. Agencies within HHS are interested

in ways to deliver health care to a variety of populations, including those

in rural or remote locations.

The technologies that the various agencies are employing or developing

for their own missions can be related. For example, federal projects are

experimenting with teleradiology—radiologic image transmission within

and among health care organizations. These efforts do not necessarily

indicate that unwanted duplications are occurring, but they illustrate the

potential for one agency to be aware of and take advantage of relevant

technologies being developed by another agency.

Although some interagency coordination occurs on an ad hoc or narrow

basis (e.g., through working groups, symposiums, technology

demonstrations, and joint programs), these efforts do not provide a firm

basis for technology exchange. JWGT has tried to fill the information gap

and facilitate coordination among federal departments or agencies. Its

efforts to develop a comprehensive inventory of federally funded

Page 5 GAO/NSIAD/HEHS-97-67 Telemedicine
Executive Summary

telemedicine projects have been hampered by several factors, including

the lack of a consistent definition and incompatible agency data. JWGT was

charged to prepare a report on federal telemedicine projects, the range of

potential telemedicine applications, and public and private actions to

promote telemedicine and remove existing barriers to its use. In addition,

the Telecommunications Act of 1996 (P.L. 104-104) directed the Secretary

of Commerce, in consultation with the Secretary of HHS, to submit a report

to Congress concerning JWGT activities.1

 Even DOD does not know the full

scope of its telemedicine efforts partly because of the lack of agreement

over what constitutes telemedicine. Also, DOD-wide oversight is

exacerbated because numerous diverse organizations generate projects at

low levels.

Without a departmentwide strategy to guide investments, some DOD

programs, such as DARPA’s unique long-term research and development

efforts, may be difficult to justify and therefore may be in jeopardy. Also,

organizational structure and oversight responsibilities are still evolving,

and a comprehensive budget for the telemedicine program has not been

developed. Except for DARPA, DOD has developed only limited partnerships

with the private sector. Moreover, DOD’s experiences may be indicative of

telemedicine activities throughout the federal government. Some federal

agencies are beginning to recognize the need to develop a telemedicine

strategic plan.

Given the wide range of private sector sponsors of telemedicine

(manufacturers, utility companies, managed care organizations, and

professional medical groups), it is understandable that no single private

sector strategy exists for the advancement of this emerging technology.

However, the private sector has acknowledged the need to build public

and private partnerships to facilitate telemedicine development.

Telemedicine Benefits Are

Promising but Largely

Unquantified

By eliminating distance as a factor in medical care, telemedicine has the

potential to address some of the access, quality, and cost problems facing

public and private health care providers. DOD believes it could reduce

battlefield fatalities if a medic were to consult with a more skilled

specialist early in the treatment process. The Navy has begun using

telemedicine to provide access to medical care for the 100,000 to 150,000

personnel routinely deployed at sea. That access proved critical for one

sailor who injured his hand on a gun mount. The injured sailor was

1

The Secretaries of Commerce and HHS issued their final report to Congress and the Vice President on

January 31, 1997.

Page 6 GAO/NSIAD/HEHS-97-67 Telemedicine
Executive Summary

transferred from another ship to the U.S.S. Abraham Lincoln with the gun

mount part still implanted in his hand. X-rays and video of his injury were

transmitted to San Diego, where a specialist consulted with the ship’s

surgeon to treat the injury. The sailor returned to light duty on his ship 

3 days later. Similarly, emergency medical technicians could treat accident

victims more quickly in peacetime by using telemedicine to consult with a

physician.

Although a 1992 private sector study estimated that using video

conferencing for medical consultations and continuing medical education

could reduce health care costs by $200 million annually, the true merits,

limitations, and cost-effectiveness of telemedicine have yet to be

empirically quantified. Many anecdotal examples exist to show how

telemedicine can save money. For example, teleradiology used on a

deployed aircraft carrier eliminated the need for 30 evacuations and saved

about $100,000 over a 4-month period. Over a 2-year period, Texas saved

about $495,000 in transportation costs by using telemedicine to care for its

prison inmates rather than transfer them to another facility.

Large infrastructure start-up costs, high operational costs, and

inappropriate utilization, however, could offset potential cost savings.

Without sharing telecommunication systems with other users, health care

facilities may find that their costs per consultation are prohibitively high.

In managed health care settings, for example, many costs, including

monthly network expenses and physician salaries, are fixed, and potential

users must determine if telemedicine technology is economically feasible.

In fee-for-service settings, in which physician salaries depend on the

services provided, third-party payers, such as Medicare, are concerned

that providers may use complex and costly telemedicine technologies

when less costly techniques may be sufficient. Officials from HHS’ Health

Care Financing Administration are concerned that Medicare expenditures

could increase significantly if telemedicine consultations are reimbursed.

Although various reports have estimated that Medicare expenditures

would increase by billions of dollars, Health Care Financing

Administration officials could not estimate the amount of the potential

increase, preferring to wait until they complete several cost evaluations

currently underway.

Literature notes, however, that past telemedicine projects throughout the

United States have not included an evaluation component. The limited

evaluations that have been performed often did not have a sufficient

sample size. Several comprehensive evaluations are currently underway to

Page 7 GAO/NSIAD/HEHS-97-67 Telemedicine
Executive Summary

address some of these issues, but the results will not be known for several

years.

Barriers Currently Inhibit

Adoption of Telemedicine

Most experts agree that the major barriers to implementing telemedicine

are known but that the solutions are complex and require cooperative

efforts by all sectors involved in health care. Legal and regulatory barriers,

such as physician licensure and malpractice liability, impede private

sector organizations more than they do government providers. Financial

barriers, such as reimbursement for certain medical procedures, affect the

private sector, whereas the lack of an affordable telecommunications

infrastructure impedes all sectors. Some technical barriers, such as

interoperability and design standards, may persist even after an

infrastructure is established. Physician and patient resistance may pose

cultural obstacles.

Partnership efforts are already underway by policymakers and various

groups in the public and private sectors to develop strategies and options

for overcoming many of the barriers to telemedicine applications. Some

groups believe that federal initiatives are needed to resolve more complex

legal issues, such as licensure for an interstate practice of telemedicine.

Recommendations Although there is a need to develop national goals and objectives to guide

federal telemedicine investments, it would be difficult for an individual

department or agency to be the architect of a governmentwide strategy.

JWGT is already performing some interagency coordination associated with

carrying out the Vice President’s charge to the Secretary of HHS to prepare

a comprehensive report on telemedicine issues. Therefore, JWGT is in a

good position to expand its work and take the lead in proposing a

coordinated federal approach for investing in telemedicine. Such efforts

should provide a framework to optimize the value of federal telemedicine

investments with activities sponsored by the states and private sector.

Accordingly, GAO recommends that the Vice President direct JWGT, in

consultation with the heads of federal departments and agencies that

sponsor telemedicine projects, to propose a federal strategy that would

establish near- and long-term national goals and objectives to ensure the

cost-effective development and use of telemedicine. In addition, the

proposed strategy should include approaches and actions needed to

Page 8 GAO/NSIAD/HEHS-97-67 Telemedicine
Executive Summary

• establish a means to formally exchange information or technology among

the federal government, state organizations, and private sector;

• foster collaborative partnerships to take advantage of other investments;

• identify needed technologies that are not being developed by the public or

private sector;

• promote interoperable system designs that would enable telemedicine

technologies to be compatible, regardless of where they are developed;

• encourage adoption of appropriate standardized medical records and data

systems so that information may be exchanged among sectors;

• overcome barriers so that investments can lead to better health care; and

• encourage federal agencies and departments to develop and implement

individual strategic plans to support national goals and objectives.

Further, because DOD is the major federal telemedicine investor and

manages one of the nation’s largest health care systems, it is in a good

position to help forge an overall telemedicine strategy. A first step is to

develop a departmentwide strategy. Therefore, GAO recommends that the

Secretary of Defense develop and submit to Congress by February 14,

1998, an overarching telemedicine research and development and

operational strategy. The strategy should

• clearly define the scope of telemedicine in DOD;

• establish DOD-wide goals and objectives and identify actions and

appropriate milestones for achieving them;

• prioritize and target near- and long-term investments, especially for goals

related to combat casualty care and operations other than war; and

• clarify roles of DOD oversight organizations.

Agency Comments

and GAO’s Evaluation

GAO provided a draft of this report to DOD, VA, HHS, and the Office of the

Vice President. Both DOD and VA concurred with our recommendations.

DOD stated that it “. . . is not alone in finding itself behind the technological

bow wave of telemedicine” (see app. III). DOD said that one of its first

priorities will be the development of a definition and scope of DOD

telemedicine activities. DOD also agreed to establish departmentwide goals

and objectives and prioritize investments as part of its strategic

telemedicine plan. According to DOD, many pieces of this plan are already

in place. VA commented that it would be beneficial for DOD to include VA in

its development of an operational strategy for telemedicine activities (see

app. IV).

Page 9 GAO/NSIAD/HEHS-97-67 Telemedicine
Executive Summary

After subsequent discussions with HHS officials regarding agency

comments, HHS generally agreed with the concept of our recommendation

for JWGT to play a leadership role in proposing national goals and

objectives. HHS was concerned that a governmentwide strategy could be

overly prescriptive, given the evolving state of telemedicine technology

(see app. V). GAO’s recommendation was not intended to imply that JWGT

direct federal agencies’ investments in telemedicine initiatives but rather

that JWGT develop a roadmap for federal agencies to use as a guide for their

investments. HHS also stated that it might be better to require individual

departments to develop their own strategies before an overarching federal

strategy is proposed. GAO believes that individual strategies should be

developed but that these strategies would not ensure an interagency

commitment to national goals and objectives or serve as a guide to prevent

duplicative investment efforts. GAO further believes that some agencies,

such as DOD and VA, might be in a better position than others to move

forward with individual strategies, whereas other agencies would benefit

from an overall federal plan to help develop their individual strategies.

Also, GAO recommended that JWGT membership be expanded to include

private and state representation. HHS expressed concerns about

implementing this portion of the recommendation due to requirements in

the Federal Advisory Committee Act. Among other things, the act would

require reimbursement of any state and private sector representative to

attend the group’s bimonthly meetings. As a result, GAO modified its

recommendation by deleting suggestions to expand JWGT beyond federal

agency membership. GAO believes that the specific vehicle chosen is not

important as long as the interaction among the federal, state, and private

sectors improves. JWGT should have the flexibility to choose the most

effective vehicle for fostering such interaction.

Within the Office of the Vice President, the Chief Domestic Policy Advisor

and Senior Director for the National Economic Council did not provide

GAO with written comments. The Senior Director for the National

Economic Council, however, raised questions regarding the impact of the

Federal Advisory Committee Act on expanding JWGT membership to

include private and state representation. Further, DOD and HHS provided

specific technical clarifications that we incorporated in the report as

appropriate.

Page 10 GAO/NSIAD/HEHS-97-67 Telemedicine
Page 11 GAO/NSIAD/HEHS-97-67 Telemedicine
Contents

Executive Summary 2

Chapter 1 

Introduction

16

What Is Telemedicine? 16

History of Telemedicine 17

Congressional and Executive Interest in Telemedicine 18

Objectives, Scope, and Methodology 19

Chapter 2 

Many Entities Are

Involved in

Telemedicine, but the

Total Investment Is

Unknown

21

Federal Investment Is Significant but Difficult to Determine 21

State Investments Are Growing but Are Not Quantified 26

Private Sector Is Investing Mostly in Infrastructure 29

Chapter 3 

Federal Government

Does Not Have a

Strategy to Maximize

Value of Telemedicine

Investments

31

Overall Federal Telemedicine Effort Is Not Well Coordinated 31

Federal Agencies Recognize the Need for Department Strategies 34

DOD’s Telemedicine Efforts Are Diffused and Weakly Linked 37

Private Sector Telemedicine Strategies Are Evolving 41

Agency Comments and Our Evaluation 44

Chapter 4 

Telemedicine Benefits

Are Promising but

Largely Unquantified

45

Telemedicine Provides Benefits to Various Groups 45

Potential Savings May Be Offset by Infrastructure Costs and

Increased Use

50

Cost-Effectiveness of Telemedicine Has Not Been Analyzed 52

Chapter 5 

Several Barriers Limit

Telemedicine

Activities

58

Barriers Hamper the Private Sector More Than the Federal Sector 58

Legal and Regulatory Barriers 59

Financial Barriers 65

Technical Barriers 68

Cultural Barriers 71

Agency Comments 74

Page 12 GAO/NSIAD/HEHS-97-67 Telemedicine
Contents

Chapter 6 

Conclusions and

Recommendations

75

Conclusions 75

Recommendations 76

Agency Comments and Our Evaluation 77

Appendixes Appendix I: Organizations Visited 80

Appendix II: Telemedicine Initiatives Within the Department of

Defense and Other Federal Agencies

84

Appendix III: Comments From the Department of Defense 93

Appendix IV: Comments From the Department of Veterans

Affairs

95

Appendix V: Comments From the Department of Health and

Human Services

96

Appendix VI: Major Contributors to This Report 103

Tables Table 2.1: Telemedicine Investments by Nine Federal

Departments and Independent Agencies, Fiscal Years 1994-96

22

Table 3.1: Federal Organizations Involved in Telemedicine

Initiatives

32

Table 5.1: Specific Telemedicine Barriers Impacting Government

and Private Sector Entities

59

Table II.1: Telemedicine Investments by DOD Organizations,

Fiscal Years 1994-96

84

Table II.2: Telemedicine Investments for HHS Agencies From

Fiscal Years 1994 to 1996

89

Figures Figure 1.1: Application Components of an Integrated

Telemedicine System

17

Figure 2.1: Distribution of DOD’s Telemedicine Investment by

Functional Application

24

Figure 2.2: Distribution of Non-DOD Federal Investments by

Telemedicine System Application

26

Page 13 GAO/NSIAD/HEHS-97-67 Telemedicine
Contents

Abbreviations

AT&T American Telephone and Telegraph

BOP Bureau of Prisons

DARPA Defense Advanced Research Projects Agency

DOD Department of Defense

FDA Food and Drug Administration

FTCA Federal Tort Claims Act

GAO General Accounting Office

HCFA Health Care Financing Administration

HHS Department of Health and Human Services

IHS Indian Health Service

JWGT Joint Working Group on Telemedicine

MATMO Medical Advanced Technology Management Office

MDIS Medical Diagnostic Imaging Support

MHSS Military Health Services System

NASA National Aeronautics and Space Administration

ORHP Office of Rural Health Policy

VA Department of Veterans Affairs

Page 14 GAO/NSIAD/HEHS-97-67 Telemedicine
Page 15 GAO/NSIAD/HEHS-97-67 Telemedicine
Chapter 1 

Introduction

The influx of recent advanced communications technologies, coupled with

changing incentives in the health care marketplace, has resulted in a

resurgence of interest in the potential of telemedicine. This technology is

expected to affect health care providers, payers, and consumers in both

the public and private sectors. Telemedicine is also expected to impact

how medical care is delivered, who delivers it, and who pays for it.

Although many players throughout the federal government and the private

sector are involved in telemedicine, the Department of Defense (DOD) is

considered a leader in research related to telemedicine efforts. DOD has

devised ways to use this new technology to deliver health care on the

battlefield or during peacetime operations. Currently, DOD has a major

telemedicine effort underway to provide medical support for U.S.

peacekeeping forces in Bosnia.

What Is Telemedicine? As with other emerging technologies, telemedicine has not been precisely

defined. An October 1996 Congressional Research Service report noted

that the definition of telemedicine continues to be debated.1

 The problem

centers on what to include in the concept. The essence of telemedicine is

providing medical information or expertise to patients electronically that

would otherwise be unavailable or would require the physical transport of

people or information.

Telemedicine can be described in many different ways, depending on the

level of technology used, main purpose of its use, and transmission timing.

At the lowest level, telemedicine could be the exchange of health or

medical information via the telephone or facsimile (fax) machine. At the

next level, telemedicine could be the exchange of data and image

information on a delayed basis. A third level could involve interactive

audio-visual consultations between medical provider and patient using

high-resolution monitors, cameras, and electronic stethoscopes. This level

is currently receiving much attention in literature and demonstrations.

A more comprehensive telemedicine system would integrate all

components of technology for clinical, medical education, medical

information management (also called informatics), and administrative

services within a common infrastructure. The relationship of these

components is shown in figure 1.1.

1

Telemedicine/Telehealth Description and Issues, Congressional Research Service, 1996.

Page 16 GAO/NSIAD/HEHS-97-67 Telemedicine
Chapter 1 

Introduction

Figure 1.1: Application Components of

an Integrated Telemedicine System

Administrative

Information

Management

Clinical Education

& Training

Infrastructure

History of

Telemedicine

Under its broadest definition, telemedicine has been practiced in some

form in the United States for almost 40 years. Most projects have

demonstrated that this technology can be used to exchange medical

information between sites in both rural and urban settings. The first

telemedicine project in the United States was established in 1959, when

the University of Nebraska transmitted neurological examinations across

campus. In 1964, the university established a telemedicine link with a state

mental hospital 112 miles away. The National Aeronautics and Space

Administration (NASA) was a telemedicine pioneer in the 1960s with its

satellite support of a telemedicine project, conducted by the National

Library of Medicine, that provided health services to the Appalachian and

Rocky Mountain regions and Alaska. In the 1970s, NASA also sponsored a

project, implemented with the Indian Health Service and the Department

of Health, Education, and Welfare, on an Indian reservation in Arizona.

Page 17 GAO/NSIAD/HEHS-97-67 Telemedicine
Chapter 1 

Introduction

According to a report issued by the Institute of Medicine, only one

telemedicine project that started before 1986 has survived.2

 Evaluations of

these projects indicated that the equipment was reasonably effective and

users were satisfied. However, when external funding sources were

withdrawn, the programs could not be sustained, indicating that the high

cost of complex, technically immature systems was a problem.

Congressional and

Executive Interest in

Telemedicine

In 1993, several members of Congress established the Senate and House

Ad Hoc Steering Committee on Telemedicine to advise legislators on

integrating new technologies into health care reform strategies. In 1994,

the House Committees on Veterans Affairs and Science, Space, and

Technology held hearings to examine economic and legal barriers that

threatened to inhibit the expansion of telemedicine.

In March 1995, the Vice President directed the Secretary of Health and

Human Services (HHS) to lead efforts to develop federal policies that foster

cost-effective health applications using communications technologies,

including telemedicine. HHS was required to prepare a report on current

telemedicine projects, the range of potential telemedicine applications,

and public and private actions to promote telemedicine and remove

existing barriers to its use. The Vice President also directed that this effort

include representatives from several specific departments and agencies.

As a result, HHS organized the Joint Working Group on Telemedicine

(JWGT).3 DOD is providing the funding to carry out JWGT’s taskings related to

constructing a telemedicine database. In addition, other agencies are

providing personnel support. HHS issued a status report on JWGT’s efforts to

the Vice President in March 1996.

In 1996, the Senate and House Ad Hoc Steering Committee on

Telemedicine sponsored a series of discussions by government and private

organizations on telemedicine issues, such as financing, malpractice, and

clinical standards. Also, the Telecommunications Act of 1996 

(P.L. 104-104) directed the Secretary of Commerce, in consultation with

the Secretary of HHS, to submit a report to Congress by January 1997

concerning the activities of JWGT regarding patient safety; the efficacy and

2

Telemedicine: A Guide to Assessing Telecommunications in Health Care, Institute of Medicine, 1996.

3

In addition to HHS, federal departments or agencies represented in JWGT include DOD, Veterans

Affairs, Commerce, and Agriculture; NASA; the Federal Communications Commission; and the Office

of Management and Budget. In addition to federal participation, JWGT also contacts private sector

representatives involved in telemedicine to gain consensus on key issues. Among these groups are the

American Medical Association, the Physicians Insurers Association of America, Arent Fox, RAND, the

American College of Nurse Practitioners, and the American Nurses Association.

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Introduction

quality of the services provided; and other legal, medical, and economic

issues related to the utilization of advanced telecommunications services

for medical purposes. The Secretaries of Commerce and HHS plan to jointly

issue a final report to Congress and the Vice President on January 31,

1997.4

The Telecommunications Act of 1996 also directed the Federal

Communications Commission to explore actions that would provide basic

telecommunications services to all rural users. The act further required

telecommunications companies to provide discounts to health care

providers in rural areas.

Objectives, Scope,

and Methodology

As a result of congressional concerns about the federal government’s role

in advancing telemedicine, the Chairman and Ranking Minority Member,

Subcommittee on Research and Development, House National Security

Committee, asked us to help determine the steps that DOD and the federal

government need to take to realize the full potential of telemedicine and

achieve cooperation with the private sector. Specifically, this report

addresses the (1) scope of public and private telemedicine investments;

(2) telemedicine strategies among DOD, other federal agencies, and the

private sector; (3) potential benefits that the public and private sectors

may yield from telemedicine initiatives; and (4) barriers facing

telemedicine implementation.

Our overall approach was twofold. First, we conducted a broad data

collection and analysis effort across nine federal departments and

agencies and selected private sector entities. Second, we performed a

cross-cutting case study of DOD, other public agencies, and private

telemedicine projects in Georgia that provided us with examples for each

objective. We chose Georgia because it had state, academic, and private

sector funding for telemedicine efforts as well as collaboration with DOD

on telemedicine projects. We used a comprehensive definition of

telemedicine that included all four applications of telemedicine linked

together within a common infrastructure. We excluded the lowest level of

this technology—telephones and fax machines—from our data collection

efforts.

To determine what role DOD and other federal agencies played in the

development of telemedicine, we collected and analyzed data on ongoing

federal projects and applicable funding levels for fiscal years 1994-96. We

4

The final report to Congress and the Vice President has been issued.

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Introduction

also interviewed officials within numerous DOD components and eight

federal departments and agencies. In addition, we reviewed DOD Inspector

General reports, conference reports, and relevant information available

through the Internet.

To determine the efforts of the public and private sectors to advance

telemedicine technology, we compared federal projects and funding levels

and efforts to identify redundancy among projects. We categorized federal

projects by one of the components of telemedicine identified through our

analysis of definitions. We reviewed relevant literature on state and private

sector efforts. We held discussions with state and private sector

representatives involved with telemedicine projects. In addition, we

attended bimonthly JWGT meetings to keep abreast of its ongoing efforts.

To obtain an overview of state programs, we interviewed state officials

and users from Georgia, North Carolina, and Texas who were involved in

their state’s telemedicine network. We also interviewed officials of the

Western Governors Association and George Washington University on

their recent study on state initiatives.

To identify information on private sector involvement in telemedicine, we

interviewed officials and obtained data from many national associations

and organizations. We also talked with representatives from private sector

health care facilities in Georgia and Minnesota and equipment and

telecommunications companies in Georgia and the Washington, D.C., area.

To determine the potential benefits of and barriers facing telemedicine, we

interviewed officials involved with telemedicine in DOD, other federal and

state agencies, and the private sector. Also, we analyzed telemedicine

evaluations and studies of potential barriers. We did not validate potential

cost savings data. Appendix I contains a comprehensive listing of all of the

federal, state, and private organizations we visited.

We conducted our work from January to December 1996 in accordance

with generally accepted government auditing standards.

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Numerous federal, state, and private organizations are sponsoring

hundreds of telemedicine initiatives, but the total investment is unknown.

Even though the federal government’s total investment cannot be

determined, we identified nine federal departments and independent

agencies that invested a minimum of $646 million in telemedicine

initiatives for fiscal years 1994-96. During that time, DOD invested the most,

$262 million, followed by the Departments of Veterans Affairs (VA), HHS,

and Commerce, each investing over $100 million. The focus of the

investments varied depending on the agency’s mission, but most projects

were directed toward medical information systems, such as computerized

patient records or digitized imagery. Other projects were directed toward

infrastructure development, clinical applications for rural or remote areas,

and medical education and training. The Defense Advanced Research

Projects Agency (DARPA), working with some academic and private sector

entities, is doing unique near- and long-term research for battlefield

applications.

Over 40 states have some type of telemedicine initiative underway funded

by federal agencies, the private sector, or the states themselves. Ten of

these states, especially Georgia and Texas, have taken an active role in

sponsoring telemedicine initiatives. Estimates of telemedicine and related

technology investments in the private sector have not been quantified

because telemedicine costs are difficult to separate from health care

delivery costs and most cost data is proprietary. Most private sector

organizations, including telecommunication companies, private hospitals,

and managed care organizations, have focused their telemedicine efforts

on the telecommunications infrastructure. Other private sector efforts

include developing the computer and medical equipment needed for

telemedicine applications and delivering health care directly via

telemedicine.

Federal Investment Is

Significant but

Difficult to Determine

Estimating total costs for telemedicine is difficult because agencies that

deliver health care, such as VA, embed telemedicine costs within their

health care programs. Also, the lack of a consistent definition of

telemedicine may result in an agency not including certain project costs,

whereas another agency would include the same type of projects in its

costs.

We identified over 35 federal organizations within 9 departments and

independent agencies that were investing in telemedicine projects. Most

officials from these departments did not know the amount their

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departments had invested in telemedicine. However, as table 2.1 shows,

the federal government invested at least $646 million for fiscal years

1994-96. Details of federal telemedicine projects appear in appendix II.

Table 2.1: Telemedicine Investments

by Nine Federal Departments and

Independent Agencies, Fiscal Years

1994-96

Dollars in millions

Department or agency FY 94 FY 95 FY 96 Total

DOD $37.1 $106.5 $118.3 $261.9

VA 45.1 56.6 40.2 142.0

HHS 39.5 14.6 55.8 109.9

Commerce 56.1 46.2 3.6 106.0

NASA 1.0 3.3 2.3 6.6

Agriculture 2.9 3.0 3.5 9.3

Justice 0 0 3.2 3.2

National Science Foundation 1.6 3.3 1.9 6.8

Appalachian Regional Commission 0.3 0 0 0.3

Total $183.5 $233.6 $228.8 $646.0

Note: Figures do not add due to rounding.

Source: Our analysis of data from various sources within the federal departments and agencies.

Although some agencies have attempted to develop an inventory of federal

telemedicine projects, a governmentwide inventory has not been

completed. For example, NASA had contracted with the Center for Public

Service Communications in 1993 to develop an inventory of public and

private telemedicine initiatives. Funding was cut in 1994, and the inventory

subsequently became outdated. In 1995, the DOD Inspector General

developed a directory of DOD telemedicine demonstrations and projects.

According to the DOD Inspector General, this effort represented a starting

point to track DOD’s telemedicine initiatives. JWGT expected to complete a

federal inventory in January 1997.

DOD Invests in Battlefield

and Peacetime

Applications

DOD and each of the military services have collectively invested more in

telemedicine initiatives than any other federal department or agency.

However, DOD and the services have not established telemedicine budgets.

They currently initiate projects by reprogramming funds from other

programs and are developing budget estimates for fiscal years 1998-2003.

Nearly half of DOD’s $262 million telemedicine investment was devoted to

unique long-term research and development of battlefield applications of

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telemedicine. For example, DARPA is developing devices to treat wounded

soldiers, such as a hand-held, physiologic monitor that will help a combat

medic locate a wounded soldier and monitor the soldier’s vital signs. The

Army is investing in the development of a “virtual reality” helmet that will

allow combat medics to consult with a physician during the first critical

hour, referred to as the golden hour by DOD, after a soldier is wounded.

The Navy has directed most of its telemedicine investments to establish

telecommunications connectivity between its deployed ships and

U.S.-based medical centers.

The remaining DOD investment focused on peacetime health care. The

Army, for example, is building medical communications networks to link

its medical centers with each other. These networks will support

numerous medical functions, particularly digitized, filmless x-rays or

teleradiology. The most significant Air Force telemedicine effort will

establish communications links between several Army, Navy, and Air

Force medical centers, hospitals, and clinics in TRICARE Region 6.1

DOD’s investment helps provide medical care in several functional

applications within a telemedicine system, including clinical health care

delivery, medical information management, education, and administration.

Figure 2.1 shows DOD’s investment according to functional application.

1

TRICARE is a DOD health care delivery plan that requires the Army, the Navy, and the Air Force

medical systems to pool resources to provide quality health care that is accessible and affordable. The

plan has 12 regions. Region 6 supports Oklahoma, Arkansas, and major portions of Louisiana and

Texas. Within this 4-state region, 19 military health care facilities support nearly 1 million

beneficiaries.

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Figure 2.1: Distribution of DOD’s

Telemedicine Investment by

Functional Application

Combat casualty

Clinical

Education

Informatics

Administrative

Other

$35.7

$35.7

$34.9

$136.4

$6.6

$12.9

13.6%

13.6%

13.3%

52.0%

2.5%

4.9%

Administrative $6.6 2.5%

Other $12.9 4.9%

Note: Dollars are in millions.

Source: Various organizations within DOD.

DOD’s Investment Could

Increase Significantly

DOD’s investment in telemedicine could double or even triple by the year

2003 depending on key budget decisions to be made in fiscal year 1997.

Each service is currently developing its program objective memorandum

for fiscal years 1998-2003. With regard to telemedicine, the services

estimate that $464 million will be needed for the Theater Medical

Information Program. This program is designed to link all the medical

information systems within a battlefield or operational theater, including

medical command and control, medical logistics, medical intelligence,

blood management, and aeromedical evacuation. Such information will be

used to collect and analyze environmental health data, and the analysis

will help battlefield commanders make tactical decisions that may reduce

disease and non-battle-related injuries.

The current deployment of telemedicine to Bosnia, known as 

Primetime III, is an early test of some of the Theater Medical Information

Program’s information management concepts. For example, Primetime III

will use telemedicine to provide medical units access to numerous medical

capabilities at any time during the day or night. These capabilities include

computerized medical records; full-motion remote video consultation

between theater medical units and tertiary care facilities; far forward

delivery of laboratory and radiological results and prescriptions; digital

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diagnostic devices, such as ultrasound and filmless teleradiology; and

medical command and control technologies.

To achieve this access, DOD established an integrated electronic network

between (1) the Landstuhl Regional Medical Center in Germany, (2) field

hospitals in Hungary and Bosnia, (3) smaller brigade operating base

medical units and forward operating base medical support units in Bosnia,

(4) the U.S.S. George Washington in the Adriatic Sea, and (5) nine DOD

medical centers located within the continental United States and Hawaii.

To date, Primetime III expenditures totaled $14.6 million—the Office of

the Assistant Secretary of Defense for Health Affairs funded $12.4 million,

and Army’s 5th Corps in Europe funded $2.2 million. Total costs are

estimated to be $30 million.

Other Federal Agencies

Invest in a Range of

Telemedicine Activities

Eight civilian federal departments or independent agencies with various

roles in providing or supporting health care delivery invested $384 million

in telemedicine from fiscal years 1994 to 1996. In some cases, these

investments represented the estimated total costs of projects for the year

first awarded and not the costs agencies actually incurred during those

years. Most expenditures provided clinical services, telecommunications

infrastructure, and information management resources, as shown in 

figure 2.2. In many instances, the agencies’ investments were directed

toward rural populations or focused on teleradiology.

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Figure 2.2: Distribution of Non-DOD

Federal Investments by Telemedicine

System Application Informatics

Clinical Infrastructure

Administrative

Education

$218

$65.4 $86.3

$8.9

$5.8

56.7%

17.0% 22.5%

2.3%

1.5%

Education $5.8 1.5%

Administrative $8.9 2.3%

Note: Dollars are in millions.

Source: Various sources within the eight federal departments and independent agencies.

State Investments Are

Growing but Are Not

Quantified

In May 1995, the Primary Care Resource Center at George Washington

University completed a comprehensive review and analysis of the states’

telemedicine activities. The report, entitled State Initiatives to Promote

Telemedicine, explores the role that states have played in telemedicine

and identifies their various initiatives, but it does not quantify total

investments.

The study found that overall state involvement in telemedicine has been

expanding, particularly to provide health care to rural or remote areas.

Although over 40 states have some initiatives underway that are funded by

federal agencies, the private sector, or the states themselves, 10 actively

sponsor telemedicine initiatives. Some states focus on the high costs of

providing a telecommunications infrastructure by requiring carriers to

subsidize services to certain educational and health care institutions,

particularly in rural or remote areas.

We reported in 1996 that three states—Iowa, Nebraska, and North

Carolina—worked with the private sector and potential users to encourage

private investment and ensure the availability of services in less densely

populated areas.2

 These states encouraged private investments in

2

Telecommunications: Initiatives Taken by Three States to Promote Increased Access and Investment

(GAO/RCED-96-68, Mar. 12, 1996).

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advanced telecommunications infrastructure by offering to become major

customers of these services from the telephone companies. As a result of

the states’ efforts, the telephone companies made improvements faster

than they would have on their own.

Two states—Georgia and Texas—have well-established telemedicine

programs. Georgia developed a statewide telemedicine network and

passed legislation to support telemedicine. Texas owns and operates some

statewide networks and regulates the installation and costs of its

telecommunications infrastructure to support telemedicine. Another

state—North Carolina—provides funding to a university that is performing

telemedicine consultations to the largest prison in North Carolina and two

rural hospitals

Georgia Georgia’s telemedicine program began when the governor signed the

Georgia Distance Learning and Telemedicine Act of 1992, which

established a telecommunications network to ensure that all residents of

Georgia have access to quality education and health care. The act allowed

the Public Service Commission to set a special flat-rate structure across

the state and allowed one communications company to cross other

companies’ service areas to set up a statewide infrastructure.

The program received about $70 million from the state’s Economic

Development Fund, which was established using fines paid by a

telecommunications company. As of February 1996, approximately

$9 million had been allocated for the telemedicine portion of the network,

and the remaining $60 million was spent on distance education using

telecommunications. The telemedicine money funded the network

infrastructure, equipment for the sites, one-half of the monthly line

charges for the first 2 years of operations, and one-half of the maintenance

costs per site in the second year. The sites pay for personnel,

administration costs, and remaining line charges. In addition, the state’s

Department of Human Resources provides approximately $350,000

annually to advance telemedicine in rural communities.

The Georgia telemedicine network includes 60 sites serving 159 counties.

Seven of the sites are state correctional facilities. Three of these facilities

have permanent telemedicine systems, with the other four serviced by a

mobile telemedicine van. The network is primarily used to provide inmates

with more timely access to specialty care. Before telemedicine,

non-emergency specialty care services took 30 to 90 days to schedule.

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With the implementation of the system, inmates can see a specialist in 7 to

21 days.

Several Georgia departments and agencies are actively involved in the

statewide network. A governing board sets policies and awards funding for

the network. The state’s Department of Administrative Services develops

and administers the infrastructure network. The Medical College of

Georgia plans, coordinates, and implements the daily operations of the

network’s medical system, and the Office of Rural Health and Primary

Care, within the Department of Human Resources, approves proposed

expenditures, ensuring that funding is used entirely to advance

telemedicine in rural communities.

Texas Texas uses state-operated networks to provide telemedicine consultations

and continuing medical education to small rural clinics. For example, the

University of Texas Health Science Center at San Antonio operates the

South Texas Distance Learning and Telehealth infrastructure network. In

addition, the Texas Tech Health Sciences Center and the University of

Texas Medical Branch at Galveston provide all of the medical care to the

130,000 inmates at 104 state prison facilities. These facilities have

physicians and other clinical staff to provide primary care, but patients

who require specialized care are referred to the Galveston and Texas Tech

hospitals. The state has funded a telemedicine project to link specialists in

Galveston with four state prisons and has plans to expand the project to

other locations. Texas officials estimated that telemedicine has greatly

reduced the number of patients transferred from their home facilities to

the hospitals.

The state has arranged with the private owners of the telecommunications

systems to charge a flat rate for usage. Specifically, rural clients and other

low utilization users are charged $425 per month for up to 40 hours of

usage. Commercially, a facility would pay an access charge of $475 plus a

use charge of $60 to $100 per hour.

North Carolina In 1992, the East Carolina University Medical School began providing

telemedicine consultations to the state prison in Raleigh, 100 miles away.

Physicians see and talk to the patients via the telemedicine link and then

diagnose and prescribe medications when necessary. A digital

stethoscope, graphics camera, and miniature hand-held dermatology

camera are used to aid patient examinations. These tools, along with a

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computerized patient record system and a comprehensive scheduling

system, form the basis of an integrated health care information system

being implemented across a wide area network in North Carolina. The

model developed for the prison system is now being expanded to six rural

hospitals within the state and the naval hospital at Camp Lejeune.

Private Sector Is

Investing Mostly in

Infrastructure

Estimates of private sector investments have not been quantified because

telemedicine costs are difficult to separate from health care delivery costs

and most cost data is proprietary. The Koop Institute estimates that the

U.S. telemedicine market totals $20 billion for telecommunications

infrastructure, computer hardware and software, and biomedical

equipment. A breakdown of this funding is unavailable. Further, any

estimate of private sector investments would partially duplicate amounts

reported by the public sector because of contract and grant relationships.

Also, the Koop Foundation, a sister organization to the institute, is

expected to compile an inventory by the year 2000 of private sector

telemedicine projects.3

Dozens of private interests, including telecommunications companies,

equipment manufacturers, private hospitals, and managed care

organizations, have positioned themselves to capture future telemedicine

market shares. For example, telecommunications companies are providing

the infrastructure that allows telemedicine consultations and data

transfers to occur. Private companies built and own the National

Information Infrastructure and lease the lines to telemedicine users and

others.4

 Most telemedicine end users do not own high-technology

telecommunications lines and thus rely on private enterprise to provide

this infrastructure.

Equipment manufacturers use their own funds and federal financial

support to develop data transmission technologies, such as digital coding

and decoding equipment, to facilitate telemedicine consultations. Private

firms also develop medical sensory devices, such as electronic

stethoscopes, specialized cameras, and robotic surgical assistance devices.

3

Former Surgeon General C. Everett Koop, in response to requests from the White House and private

sector, formed a health informatics initiative to foster and facilitate public and private sector

leadership in the health component of national and global information infrastructures.

4

The National Information Infrastructure consists of a physical system of telecommunications

pathways and connections that transmit and receive voice, video, and data. The administration’s goal

for the infrastructure is to interconnect industry, government, research, education, and each home

with advanced telecommunications networks and information resources.

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Until recently, most telemedicine efforts in the health care delivery area

either received some federal or state funds or were limited to

teleradiology. Some providers have now invested in their own

telemedicine networks, seeking to achieve cost and operational

efficiencies. For example, a large managed care organization in Minnesota

established telemedicine networks between its facilities to expand

specialty care to members in rural areas. Another provider established

telemedicine links among its three facilities in Minnesota, Florida, and

Arizona and became one of several health care providers seeking to

expand to international telemedicine linkages.

One manufacturer of medical robotics, Computer Motion, Inc., believes

that improved automation has been fundamental in opening huge new

markets. For example, many surgeons, nurses, and medical assistants all

see the use of robotics for laparoscopic surgery as extremely positive. The

movements of the laparoscope are smooth, and the video image remains

steady throughout the procedure. The physician who, in August 1993,

performed the first laparoscopic surgery using the robotic arm said the

biggest advantage is that surgeons have complete control and do not have

the difficult task of communicating to assistants where to move the

laparoscope. Literature indicates that giving directional instructions can

be a distraction from the procedure itself; most surgeons can be more

efficient if they do not have to keep asking someone to correct the

positioning of the scope.

The manufacturing company has been working closely with Yale

University in support of research and education programs in telesurgery

and robotically assisted laparoscopy. One university official said that the

partnership would allow the university to bring robotics into the education

system and demonstrate how it could be used effectively to reduce costs

and improve the quality of patient care.

Medical robotics continues its rapid expansion into the worldwide

marketplace. European countries and various training centers have begun

to launch collaborative efforts in medical robotics education. According to

the manufacturer, more than 100 robotic arms have been used in

approximately 13,000 minimally invasive surgical procedures. Voice

control will be a feature of the next generation of robotic arms, which will

require clearance by the Food and Drug Administration (FDA).

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Federal Government Does Not Have a

Strategy to Maximize Value of Telemedicine

Investments

No overarching, governmentwide strategy exists to ensure that the most is

gained from numerous federal telemedicine efforts. Until recently, there

was little or no coordination of telemedicine activities among federal

agencies. Although JWGT is a first step toward providing a mechanism to

help coordinate federal support of telemedicine, federal departments have

not developed agencywide strategies to manage their own telemedicine

efforts. Without clear goals and priorities for telemedicine investments,

some programs are difficult to justify and may be in jeopardy.

Federal agencies have recognized the need for a strategic plan to fulfill

their telemedicine visions. Even as the largest single federal investor and

perhaps the main sponsor of long-term telemedicine research, DOD does

not have a plan to ensure it is maximizing the value of its investments. As a

result, DOD’s (1) organizational structure to ensure the infusion of

telemedicine into application is still evolving, (2) telemedicine program

has not been precisely defined, (3) budgets do not reflect a comprehensive

telemedicine program, and (4) partnerships with the private sector have

not been fully explored. DOD’s telemedicine experiences may be indicative

of telemedicine activities throughout the federal government. In addition,

the private sector has recognized that telemedicine technologies have

developed to the point at which telemedicine strategies are needed to

guide investments.

Overall Federal

Telemedicine Effort Is

Not Well Coordinated

No formal mechanism or strategic plan exists to ensure that telemedicine

development is fully coordinated among federal agencies and that

telemedicine efforts have a common purpose. A well-coordinated plan is

important because over 35 federal government organizations directly or

indirectly conduct or sponsor (1) research and development;

(2) demonstrations using telemedicine for health care delivery; or

(3) evaluations of telemedicine’s effects on the quality, accessibility, cost,

and acceptability of health care. Some of the involved federal

organizations are shown in table 3.1.

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Table 3.1: Federal Organizations Involved in Telemedicine Initiatives

Conducts or sponsors

Organization

Research and

development

Health care

delivery Evaluations

Office of the Secretary of Defense for Health Affairs (DOD) X X X

DARPA (DOD) X

Medical Research and Materiel Command/Medical Advanced Technology

Management Office (DOD) X X X

Offices of the Surgeons General (DOD) X X

Army Medical Command (DOD) X X

Military hospitals (DOD) X X

Armed Forces Institute of Pathology (DOD) X

U.S. Transportation Command (DOD) X

Veterans Health Administration (VA) X X

Rural Utilities Service (Agriculture) X

National Telecommunications and Information Administration (Commerce) X

National Institute of Standards and Technology (Commerce) X

FDA (HHS) X

Health Care Financing Administration (HHS) X X

Agency for Health Care Policy and Research (HHS) X X

Indian Health Service (HHS) X

National Library of Medicine (HHS) X X

Office of Rural Health Policy (HHS) X X

Bureau of Prisons (Justice) X

NASA X X

National Science Foundation X

Appalachian Regional Commission X

The organizations involved with telemedicine initiatives are seeking

solutions to narrowly defined problems that fall under their purview. For

example, the Department of Justice, specifically the Federal Bureau of

Prisons (BOP), is responsible for the detention and care of approximately

95,000 prisoners, nearly 4,000 of whom receive medical attention on any

given day. A small but growing percentage of these prisoners must

currently be moved under guard from detention sites to distant medical

facilities for diagnosis and treatment. BOP is interested in telemedicine

because of the opportunity to reduce the significant cost of providing

medical care to prisoners. In addition, telemedicine offers the chance to

reduce the number of times prisoners are taken to outside medical

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facilities, thus reducing the potential for escape and risk to the attending

medical staff and citizens within the local communities.

Other organizations are using telemedicine to meet their mission needs.

For example, NASA is interested in telemedicine primarily to understand its

application to medical care in space for future long-duration platforms,

such as a space station, and minimize the risk of inadequate medical care

for astronauts, which would increase the probability of mission success.

The Department of Commerce has two core programs that promote

private sector development of advanced telecommunications and

information technologies for health-related projects. Within the

Department of Agriculture, the Rural Utilities Service plays a key role in

the rural aspect of the National Information Infrastructure. One grant

awarded in 1996 will help the Rural Utah Telemedicine Associates to

implement a mobile health clinic that will provide primary care and

specialty consultation via telemedicine technology to rural communities

with few or no health care providers.

Some interagency coordination occurs on an ad hoc or narrow basis 

(e.g., through symposiums, technology demonstrations, and joint

programs), but this approach does not necessarily provide a firm basis for

technology exchange. Many agency officials we met with cited the lack of

an established coordination mechanism as an obstacle to determining

information that could help advance telemedicine. Further, some agency

officials were concerned about possible redundant efforts, especially

those related to teleradiology—the most common current application of

telemedicine supported by federal funds. However, the officials lacked

information to determine whether the work was redundant or actually

complemented other’s efforts. Several agency officials said that some

federal telemedicine efforts repeated previous mistakes rather than

benefited from them because information on previous efforts was not

available.

To help fill the information gap, DOD funded JWGT’s project to develop a

database of all federally funded telemedicine projects. JWGT considers such

an inventory a critical first step toward achieving coordination across

federal agencies. The database should allow federal agencies to more

easily learn about the federal investment in various telemedicine projects.

JWGT will make this database available to the public on the Internet to

assist states and communities with their own telemedicine plans.

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Because of the magnitude of the federal government’s involvement in

telemedicine development, JWGT has thus far been unable to develop an

accurate, comprehensive inventory of federal projects. JWGT believes that

its efforts to develop an inventory have demonstrated the weaknesses in

the information maintained by federal agencies and highlighted the need

for greater attention to routine data collection on federally funded

programs. For example, departments or agencies have many different

definitions of telemedicine, making it difficult to collect compatible data.

The inventory, originally scheduled for release in June 1996, was expected

to be released by the end of January 1997. JWGT stated that each

participating agency would be responsible for maintaining the inventory.

However, members of JWGT have expressed concern as to whether each of

the agencies would be supportive of maintaining their inventories.

In addition, JWGT meets approximately twice a month to help coordinate

federal telemedicine activities and share relevant information. JWGT

meetings include over 60 individuals representing executive branch

agencies. However, no representatives from each service’s Surgeon

General’s office or DARPA attend these meetings. Further, private sector

participation was limited mostly to professional medical associations.

Federal Agencies

Recognize the Need

for Department

Strategies

In addition to the lack of an overall federal telemedicine strategy, federal

agencies do not have departmentwide strategies to maximize the value of

their telemedicine investments. If each agency involved in telemedicine

had its own strategy, a governmentwide strategy could be built from it.

The absence of departmentwide strategies has contributed to unclear

definitions of telemedicine and the lack of a comprehensive inventory of

telemedicine projects among all involved federal agencies. DOD, as well as

other federal agencies, are beginning to recognize that an intra-agency

strategy may be the first step to target their investments in telemedicine.

DOD According to the Assistant Secretary of Defense for Health Affairs, who

oversees the Military Health Services System (MHSS), telemedicine will be a

major enabling technology in reengineering health care delivery in DOD and

throughout the United States.1

 The Assistant Secretary believes that a

mature telemedicine infrastructure can reduce health care delivery costs,

1

MHSS is one of the nation’s largest health care systems, offering health benefits to about 8.3 million

people and costing over $15 billion annually. The primary mission of MHSS is to maintain the health of

military personnel so they can carry out their military missions and be prepared to deliver health care

during a time of war. MHSS can also provide health care services in DOD medical treatment facilities

to dependents of active duty servicemembers and retirees and their dependents.

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but mechanisms must be put in place to manage the infusion of

telemedicine into application while still proceeding with appropriate

research and development or prototype efforts. However, no such

mechanisms are currently in place in DOD.

DOD has recognized the need for a strategic plan to fulfill its telemedicine

vision, as stated in the December 1994 testbed plan published by the U.S.

Army Medical Research and Materiel Command. This document also

stated that the Telemedicine Technology Integrating Committee, led by the

Commanding General of the Medical Research and Materiel Command,

would develop a plan that would provide a framework for multispecialty

integration of entrepreneurial efforts and ensure the optimum use of

scarce resources for DOD’s peacetime and wartime medical activities.

However, no milestones were established for accomplishing this plan.

Health Affairs officials told us that they are responsible for developing an

overall strategic plan for telemedicine. As of December 1996, the Assistant

Secretary of Defense for Health Affairs had not approved this plan.

Officials told us that the DOD telemedicine organizational structure

resulting from this plan would be modeled after the one established for

DOD’s information management and information technology systems.

However, no other details were available.

Some defense organizations have begun developing their own strategic

plan. For example, in June 1996, the Center for Total Access, which

includes TRICARE Region 3 and the Army’s Southeast Regional Medical

Command, published a 5-year strategic plan to support both commands.2

The plan recognizes the need for telemedicine projects to adhere to

specific guidelines and provides a framework for ensuring that the

projects and initiatives undertaken conform to an open standards

environment and that new telemedicine initiatives can easily be integrated

with existing systems. However, this regional telemedicine plan could be

fundamentally different than the strategic plans of the other 11 TRICARE

regions.

Many officials expressed concern as to how telemedicine would be

integrated into the continuum of DOD medical care—from the battlefields

overseas to the medical treatment facilities in the United States—with so

many activities underway and no overriding strategy to link them together.

2

Region 3 supports South Carolina, Eastern Florida, and Georgia. It contains 14 triservice medical

treatment facilities and provides benefits to over 1 million beneficiaries. The Southeast Regional

Medical Command consists of the same states plus Alabama, Kentucky, Mississippi, and Tennessee

and an additional four medical treatment centers.

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For example, the Army Medical Department must provide mobile, flexible

support for its own forces across long distances in a variety of wartime

environments. The Army has developed a mission needs statement for

medical communications in combat casualty care and established a

program manager under an Army program executive office for this work.

The Air Force’s medical forces are responsible for most of the air

evacuations from the theater of operations to the United States in wartime,

but the Air Force is not part of the Army’s medical communications

initiative. Army officials acknowledged that this initiative should

eventually be a triservice program. Further, no parallel mission needs

statement ensures the continuum of care from theater to the continental

United States.

Without a formal strategy to define the goals and objectives of DOD’s

telemedicine initiatives, some DOD programs may be difficult to justify and

therefore may be in jeopardy. For example, research and development

efforts led by DARPA are subject to discontinuation due to a change in the

agency administrator’s priorities. DARPA initiated its telemedicine efforts in

fiscal year 1994 with a defined program to find ways to improve medical

care on the battlefield. Even though DARPA’s efforts are starting to mature,

there is no clear plan regarding how individual projects will be infused

into application. DARPA will be looking to the individual services to

continue its research and development function.

Other Federal Agencies NASA, a pioneer in developing telemedicine technologies for almost 

40 years, is developing a strategic plan for its telemedicine initiatives. The

plan will address the use of telemedicine in the human space flight

program and the use of NASA-developed technology in telecommunications,

computers, and sensors to enhance health care delivery for humans in

space. The plan will also incorporate industry input into these areas.

According to 1994 VA testimony, the use of telemedicine is having a major

impact on VA’s approach to health care, but VA does not have a

telemedicine strategic plan. To provide overall leadership to its

telemedicine program, VA recently established the position of Chief of

Telemedicine. This official serves as the principal advisor on telemedicine

to the Offices of the Under Secretary for Health, Patient Care Services, and

Chief Information Officer. VA officials told us that the Chief of

Telemedicine would develop a strategic plan. Other responsibilities of the

Chief include facilitating the coordination of VA facilities undertaking

telemedicine projects; overseeing VA activities regarding selection,

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funding, and evaluation of telemedicine projects; consulting with medical

centers about the application of telemedicine standards; and identifying

needs for telecommunications and infrastructure support.

HHS does not have a strategic plan linking the efforts of its six agencies

investing in telemedicine. HHS officials believe that JWGT effectively

communicates information about telemedicine development to the six

applicable HHS agencies. However, agency officials acknowledged that a

strategic plan may be needed. The officials also stated that such a plan

should strengthen, support, and build on the work of JWGT and not create a

new bureaucracy.

DOD’s Telemedicine

Efforts Are Diffused

and Weakly Linked

Although DOD has a large and growing investment in telemedicine, it has

not yet structured its telemedicine initiatives, which are led by numerous

organizations, to determine if, collectively, their cost is commensurate

with potential benefits DOD stands to gain. Within DOD (1) the roles of

numerous key players are still evolving, (2) the telemedicine domain is

unclear, (3) comprehensive program budgeting has not occurred, and

(4) partnerships with the private sector have not been fully explored.

Further, DOD’s telemedicine activities may be indicative of other federal

agencies’ telemedicine efforts.

Organizational

Responsibilities Are Still

Evolving

Many different DOD organizations generate telemedicine projects, including

the ones shown earlier in table 3.1. The problems of organizational

responsibilities are exacerbated by the large number of organizations

involved in telemedicine activities.

In September 1994, the Assistant Secretary of Defense for Health Affairs

designated the Army Surgeon General as the DOD Executive Agent for

telemedicine and established the “DOD Telemedicine Testbed Project” to

explore and develop new clinical approaches for using telemedicine. The

Commander of the Army’s Medical Research and Materiel Command was

designated as the testbed’s Chief Operating Officer, and the Command’s

Medical Advanced Technology Management Office (MATMO) was

designated the principal manager and administrator for the testbed.

However, the responsibilities for the Executive Agent, Chief Operating

Officer, and MATMO were never approved in a charter.

Air Force, Navy, and other agency officials told us that an office similar to

MATMO is needed to bring focus and coordination to telemedicine within

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DOD. They also said that MATMO has been too focused on mainly supporting

Army deployable telemedicine projects and excluding the other services’

needs. It was difficult for us to distinguish between what MATMO initiates

for the DOD-wide testbed and what it is pursuing for the Army. Most of

MATMO’s accomplishments are associated with the Medical Diagnostic

Imaging Support system, which the Medical Research and Materiel

Command was involved with before the Army became the DOD Executive

Agent for telemedicine.3

Further, many service officials we met with, except from specific Army

programs, were either not familiar with MATMO or were not getting

guidance from them. For example, the Air Force program manager

responsible for initiating a program in TRICARE Region 6, which Health

Affairs expects to be a model for other TRICARE regions, had not received

any assistance from MATMO in designing the program. The official told us

that he relied on officials from the Medical College of Georgia for

assistance. In addition, Navy telemedicine program officials at Camp

Lejeune, North Carolina, were familiar with MATMO but relied on East

Carolina University for advice. Further, this official stated that a group of

TRICARE regions were attempting to develop their own coordinating

mechanism on the Internet.

Other layers of oversight have evolved without clear responsibilities, with

the Army fulfilling many key positions. Executive oversight of the testbed

was vested in a Board of Directors, chaired by the Assistant Secretary of

Defense for Health Affairs. Board members include the Director, Defense

Research and Engineering; the Assistant Secretary of Defense for

Command, Control, Communications, and Intelligence; the Joint Staff

Director for Logistics; the three Surgeons General; and the Director of

DARPA. At one point the Army Surgeon General served as both the

Executive Secretary of the Board and as the Chief Executive Officer of the

testbed. With the retirement of the former Army Surgeon General, the

Navy Surgeon General became the Chief Executive Officer. However, the

Chief Executive Officer’s responsibilities have not been defined.

In addition, the Army Medical Department and MATMO had been

responsible for overseeing evaluations of telemedicine projects, such as

those being demonstrated in Bosnia. Army officials informed us that this

3

The Medical Diagnostic Imaging Support is a filmless radiology system that has been operational at

Madigan Army Medical Center at Fort Lewis, Washington—its first test site—since 1992. The system is

also in operation at Walter Reed Army Medical Center, Washington, D.C.; Wright-Patterson Medical

Center, Dayton, Ohio; Brooke Army Medical Center, San Antonio, Texas; and Tripler Regional Medical

Center, Honolulu, Hawaii.

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responsibility was being transferred to another service; as a result, the

future of some of the Army’s and MATMO’s efforts was undecided. Other

officials told us that the change was being made to prevent any conflict of

interest on the Army’s part, since the Bosnia telemedicine deployment is

primarily an Army effort.

In August 1996, Health Affairs officials told us that its Information

Management Proponent Committee would soon be responsible for

providing oversight of telemedicine initiatives, including those under

MATMO’s purview. However, officials could not provide additional insight at

that time regarding the concept of this structure.

In addition, another organizational change is underway that will impact on

telemedicine, including DOD’s research and development initiatives. In

June 1996, the Deputy Secretary of Defense directed the Army to take the

lead in establishing an Armed Forces Medical Research and Development

Agency. The future impact of this new agency on the organizations

responsible for telemedicine functions and funding is unknown.

Telemedicine Domain Is

Unclear

A 1995 DOD Inspector General report suggested that DOD needed to define

telemedicine more clearly.4

 Without a consistent definition to describe

telemedicine initiatives, responsible officials from the various DOD

organizations participating in telemedicine efforts do not know precisely

what their programs encompass. Although defense officials generally

agree that telemedicine involves the use of communications technology to

deliver health care, they have not agreed on the types of initiatives to

include within the scope of telemedicine oversight. For example, some

Army and DARPA officials consider patient identifiers that allow the

electronic storage of medical information on a card or dog tag-like device

to be the first element in an integrated telemedicine system, but the Navy

does not view these devices in the same manner.

Air Force officials initially classified one of their projects as telemedicine

but later said that the project fell outside of its definition of telemedicine.

The project, called Provider Workstation, is intended to provide medical

personnel with the capability to access medical records on a personal

desktop computer no matter where the patient or the relevant information

is located. Air Force officials now identify this project as one of its many

medical management information systems. However, a 1996 DOD Inspector

4

Telemedicine Demonstrations and Projects Directory, Department of Defense, December 1995.

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General report noted that Provider Workstation was a successful DOD

telemedicine project.5

Although MATMO tried to identify the full scope of telemedicine projects

that might fall within its oversight function, our analysis revealed that its

inventory (1) did not include the services’ actual telemedicine efforts and

DARPA-initiated projects and (2) contained inaccurate information. During

the course of our review, MATMO and Health Affairs provided us

information on six different inventories that included anywhere from 22 to

94 projects. In addition, a Health Affairs official told us that Health Affairs

did not directly fund any telemedicine projects, but several telemedicine

project managers informed us that they received funding from Health

Affairs.

Program Budgeting Has

Not Occurred

DOD has not developed a comprehensive telemedicine budget or program

objective memorandum. In a 1994 memorandum to the Army Chief of

Staff, the Director for Program Analysis and Evaluation noted that the

concept of telemedicine needed to be defined by the Office of the Army

Surgeon General to compete for funding during the budget process.

Funding for telemedicine has been derived from other programs or

congressionally directed.

Some service officials are especially concerned about budgeting for MATMO

projects because MATMO managed about $47 million during fiscal years

1995 and 1996 in telemedicine initiatives that were funded by Health

Affairs or reprogrammed through the Medical Research and Materiel

Command. Service officials have pointed out that MATMO does not have an

approved funding line and therefore can operate outside the normal DOD

development and acquisition process. As a result, none of MATMO’s

telemedicine projects are subject to milestone decisions, cost-benefit

analyses, or life-cycle management decisions, which are all required in the

acquisition process. MATMO officials believe that their approach is

necessary at this time because technology is changing at such a fast pace

that the normal acquisition cycle would prevent DOD from capitalizing on

the newest telemedicine technology.

Partnerships With the

Private Sector Have Not

Been Fully Explored

Other than the telemedicine initiatives led by DARPA, few partnerships

between the private sector and DOD are planned. The Medical Research

and Materiel Command attempted to promote a collaborative working

5

Evaluation Of Areas Of Consideration For A Department Of Defense Clinical Telemedicine Needs

Assessment, Department of Defense, February 1996.

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relationship between the Army and the private sector. The Command was

planning to develop state-of-the-art telemedicine technologies—called the

U.S. Army Federated Laboratory Concept—that are focused on combat

casualty care. In May 1995, the Command issued a broad agency

announcement. Interested parties were required to form consortiums

involving health service providers, industry, and academia. Two parties

whose proposals had not been accepted stated that DOD needed a more

defined plan to which the private sector could respond. However, funding

for the laboratory concept had not been programmed and was therefore

subject to the availability of reprogrammed funding.

Although the Navy is seeking to form partnerships with academia,

industry, and other government agencies, East Carolina University School

of Medicine and Pitt Memorial Hospital, instead of Portsmouth Naval

Medical Center, took the initiative to integrate the Camp Lejeune Naval

Hospital in a telemedicine network. The TRICARE region that

encompasses Camp Lejeune does not have a telemedicine strategy that

identifies goals for pursuing such partnerships.

Also, according to Army Medical Department officials, the Army’s Great

Plains Health Service Support Area, responsible for managing medical

care at Army facilities in 14 states and Panama City, has attempted to

establish cost-sharing agreements with Texas Tech and a VA clinic in the

area, but these attempts have been unsuccessful because of the lack of

clear goals and objectives.

Private Sector

Telemedicine

Strategies Are

Evolving

Given the wide range of private sector players in the implementation of

telemedicine, it is understandable that no single private sector strategy

exists to advance this emerging technology. For example, manufacturers

develop new products, utility companies build the telecommunications

infrastructure, professional organizations develop health care standards,

health providers deliver medical care, and special interest groups promote

the use of new technologies. Each of these groups has its own interests

and strategies for advancing telemedicine.

Nonetheless, the private sector is an important player in furthering the

development and application of telemedicine technologies. Two private

sector health care providers—the Mayo Clinic and Allina Health

Systems—and a major telecommunications company—American

Telephone and Telegraph (AT&T)—illustrate the critical role played by the

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private sector in advancing telemedicine and developing strategies for

greater usage of this emerging technology.

Mayo Clinic Telemedicine at the Mayo Clinic evolved to facilitate integration of group

practices at three separate locations—Jacksonville, Florida; Scottsdale,

Arizona; and Rochester, Minnesota. In 1986, the Mayo Foundation installed

a satellite-based video system that enabled physicians, researchers,

educators, and administrators to communicate with each other. When the

Jacksonville and Scottsdale facilities were not fully staffed, they used

specialists from Rochester via telemedicine for four or five consultations

per week. However, with the addition of specialists at the Jacksonville and

Scottsdale locations, the telemedicine system was increasingly used for

education, research, and administrative purposes. According to Mayo, in

1995, its telemedicine system was used for over 700 telemedicine

consultations in echocardiology between Rochester and the other two

sites.

Mayo is also involved in a project supported by NASA and DARPA to explore

the combination of satellite communication and terrestrial services in an

economic telemedicine model. To conduct the project successfully, Mayo

has assembled a consortium of leaders in the industry (Hewlett-Packard,

General Electric Medical Systems, Sprint, U.S. West, Martin Marietta,

Healthcom, and Good Samaritan Hospital in Arizona), along with Mayo

Foundation entities. The results from this project will help determine a

strategic policy for telemedicine at the Mayo Clinic and provide

knowledge about the use of asynchronous transfer mode technology for

local area and wide area networks. Mayo officials told us that there has to

be a need for which telemedicine is a solution—otherwise telemedicine

applications will not be financially viable. These officials believed that

managed care organizations may ultimately drive the development of

telemedicine.

Allina Health Systems A representative from Allina Health Systems, a managed care organization

and insurer from Minneapolis, Minnesota, stated that the market will

determine the pace and extent to which it expands its telemedicine

services. Along with an alliance of eight rural hospitals, Allina has

operated since 1995 a telemedicine network that links hospital emergency

rooms. Allina believes that emergency medicine in rural areas is the best

application of telemedicine currently available for its operation. As of

October 1996, Allina’s telemedicine network had been used for about 130

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medical consultations and about 450 emergency service consultations.

Allina’s network is a single-state system, which eliminates concerns about

licensure requirements that plague many telemedicine efforts. The use of

Allina’s telemedicine network in urban areas is quite different than its use

in rural areas. For example, in urban areas there is more extensive use of

the system for administrative and educational purposes and virtually no

use for consultative purposes.

Allina recognizes the need for better cost-benefit data to justify major

investments in telemedicine and prove that the applications are worthy.

Toward this goal, the company plans to improve the development of

project evaluations and its marketing strategy.

Allina must decide in the near future whether to view its telemedicine

initiative as a service and thus a cost of business or as a separate business

entity or profit center. One of the complicating issues is that so many

variables in measuring costs are difficult to separate (i.e., normal

operating costs versus special costs associated specifically with

telemedicine).

AT&T AT&T’s strategy for telemedicine development involves developing services

for telecommunication applications, transactions, and networking and

providing telecommunications and some training for computer-based

medical systems. These efforts have accelerated since the creation of the

National Information Infrastructure. AT&T’s involvement in telemedicine

efforts is largely due to the company’s perception, which was confirmed

by clients, of a need for reliable and secure communication lines for health

care.

AT&T is making a substantial investment—both financially and from a

personnel resource perspective—in telemedicine development. For

example, an official told us that by December 1996 AT&T expected to assign

about 100 staff members to servicing or managing one agency’s

telemedicine system.

Even though it has contracts with federal agencies and is assisting many

private sector groups, AT&T plans to seek FDA review of its products and

services. AT&T said that many products involving telemedicine are possible

but that customers may not be willing to pay for them. As a result,

manufacturers must make certain that there is a market for the products

being developed.

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Agency Comments

and Our Evaluation

HHS commented that our report should acknowledge the role that the High

Performance Computing and Communications Program has played in the

coordination of federal telemedicine research and development activities.

During our review, we collected data from the National Library of

Medicine on funding from this program specifically for telemedicine

initiatives. However, agency officials did not highlight to us the role that

this program plays in coordination of telemedicine activities across the

federal government or with JWGT. We believe that the program is one of

several federal initiatives supporting telemedicine initiatives. However, we

did not evaluate the program, since it was beyond the scope of our review.

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Telemedicine offers numerous benefits for the military, other federal and

state government organizations, the private sector, and individual patients

because it eliminates distance as a factor in treating patients. Such

benefits include access to care where it is not otherwise available;

improved quality of care; and, in many instances, reduced costs. However,

costs could increase due to investments in infrastructure and increased

utilization of health care services. No comprehensive studies have been

completed to prove that telemedicine delivers cost-effective, quality care.

Early efforts included few consultations and only provided anecdotal, or

retrospective, observations about the benefits. Several federal agencies

and the private sector are beginning to implement some comprehensive

studies, but results from most of these studies will not be known for

several years.

Telemedicine

Provides Benefits to

Various Groups

By eliminating distance as a factor in treating patients, telemedicine

benefits health care providers and patients, no matter whether the setting

is a military site, rural hospital, or correctional facility. Without

telemedicine, persons who need specialized care could be left untreated;

improperly treated; or, if time and circumstances permitted, transferred to

another facility for the care.

Telemedicine provides benefits to the various groups by allowing access

to care where it is not otherwise available and improving the quality of

care delivered. In addition, telemedicine may, in many instances, reduce

health care delivery costs.

Telemedicine Allows More

Access to Health Care

For the medic on the battlefield, telemedicine provides immediate access

to a clinician with greater skills so that they can work together to save a

soldier’s life. DOD believes telemedicine could reduce the mortality and

morbidity rates on the battlefield by as much as 30 to 50 percent. Quality

trauma care depends on the timely, efficient, and accurate flow of

information at each step of the crisis management process. Telemedicine

can provide the vehicle for this flow of information, which includes patient

information, treatment records, and medical knowledge.

Telemedicine could provide a “bridge” for the 100,000 to 150,000 personnel

deployed on military ships around the world who have limited access to

medical diagnostic and consultant services. For example, during a 6-month

Western Pacific deployment in 1995, sailors aboard the aircraft carrier

U.S.S. Abraham Lincoln had access to enhanced specialist medical care

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from the Naval Medical Center in San Diego, California, 6,000 miles away.

That access proved critical for one sailor who injured his hand on a gun

mount. The injured sailor was transferred from another ship to the

Abraham Lincoln with the gun mount part still implanted in his hand.

X-rays and video of his injury were transmitted to San Diego where a

specialist consulted with the ship’s surgeon to treat the injury. The sailor

returned to light duty on his ship 3 days later. Another case involved a

sailor aboard the U.S.S. Enterprise who sustained a neck injury on the

flight deck. Immediate telemedicine consultation was able to rule out a

cervical fracture.

For peacetime military health care, telemedicine allows remote military

treatment facilities to link up with DOD medical clinics to obtain

specialized health care. Similarly, telemedicine allows rural communities

to communicate with larger medical facilities to obtain specialized care.

For example, a physician in remote Montana can send a trauma victim’s

x-rays to a large hospital in Seattle, where a radiologist can confirm that

the patient has a broken vertebra and needs to be evacuated immediately.

The states and private sector can also benefit from improved access to

health care. For example, an emergency medical technician on an

ambulance call or at a disaster site can use telemedicine to provide

immediate access to an emergency room physician who has greater

knowledge and can provide guidance to the technician to perform skilled

procedures to save an individual’s life or limbs. Improved access to health

care is especially important to patients in remote areas. For example, the

University of Washington’s telemedicine network serves four communities

in remote locations in the states of Washington, Alaska, Montana, and

Idaho. Each site is located in an area with rugged terrain and extreme cold

weather, which can make travel extremely dangerous or impossible.

In addition, the Georgia Statewide Academic and Medical System is

dispersed among 60 health care facilities to ensure that all state residents

have immediate access to quality health care. Many of the state’s large,

poor rural populations may lack adequate access to health care without

traveling long distances. Of the state’s 159 counties, 9 have no physician,

85 have no pediatrician, and 140 have no child psychiatrist.

Finally, telemedicine may allow physicians to provide medical care to

patients in their homes. For example, VA’s Eastern and Western Cardiac

Pacemaker Surveillance Centers routinely use standard telephone lines to

monitor the electrocardiograms of pacemaker patients from their homes.

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A 1996 VA testimony indicated that the surveillance centers save time and

effort, provide pacemaker expertise to remote and underserved areas, and

decrease the need for pacemaker clinic appointments. In addition,

pacemaker monitoring improves health care quality and is convenient for

veterans, since they can be monitored 24 hours a day from any place that

has a telephone. VA estimates it has made over 386,000 “house calls” from

1982 to 1996, or about 2,300 a month, using this system.

In another effort, the Army’s Center for Total Access at Eisenhower Army

Medical Center joined the Medical College of Georgia, the Georgia

Institute of Technology, and a local cable company to develop a

telemedicine home health care network, known as Electronic Housecall.

This program, which became operational in February 1996, links a nursing

home and the homes of 25 chronically ill patients with their health care

providers. Through daily monitoring, the health care practitioners should

be able to detect early changes in the patients’ condition. If practitioners

find changes, they can prescribe a different treatment or request that

patients come in and see their physician. By detecting problems earlier,

hospital stays may be avoided or reduced. Each patient selected for this

project was chronically ill and averaged six or more hospitalizations per

year at an average cost per hospital stay of about $25,000.

Telemedicine Can Improve

Health Care Quality

Telemedicine gives health care providers a chance to enhance their skills

and expand their professional knowledge by linking providers with

experts. In remote locations, health care is provided by general

practitioners. When the practitioner believes a patient needs specialized

care, the practitioner frequently has to refer the patient to a specialist in a

different location and may not be present in the consultation between the

patient and the specialist. With telemedicine, the general practitioner is

present during the consultation and can learn from the specialist.

Telemedicine advocates expect that such experiences will increase a

practitioner’s medical knowledge, which in the future may help the

practitioner to diagnose and treat illnesses earlier or determine that the

patient needs to see a specialist right away.

Enhanced knowledge would have been helpful to general practitioners and

medics during the Vietnam War. According to an Army dermatologist, if

telemedicine had been used during the war, the number of

hospitalizations, evacuations, and days lost due to skin diseases could

have been reduced by about one-third. Skin disease was the primary

reason for outpatient visits to Army medical facilities during the war.

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Between 1968 and 1969, skin diseases accounted for 47 percent of total

days lost for the U.S. 9th Infantry Division. According to the dermatologist,

if the general practitioners and the medics at the forward facilities had

been able to consult with skin specialists via telemedicine, they would

have learned to recognize and treat skin diseases earlier.

Telemedicine also has the ability to deliver continuing medical education

to deployed medical units and remote health care practitioners so that

they have the opportunity to enhance their professional knowledge

without having to travel. For example, medical units in Bosnia received

weekly continuing education classes via telemedicine from a DOD medical

center in the United States. Two of the classes covered acute care of burn

victims. One week after the classes, two soldiers in Bosnia were severely

burned in an explosion. The medical unit used what it had learned in the

classes to stabilize and treat the soldiers until they could be transferred to

a facility with more skilled care. According to medical unit personnel,

without the classes the soldiers would not have received the same quality

of care at the site.

The Medical College of Georgia offers one continuing professional

education credit for the referring health care practitioner participating in

telemedicine consultations. The University of Washington’s School of

Medicine is the only medical school directly serving the states of

Washington, Alaska, Montana, Idaho, and Wyoming. The medical school

operates a medical education program via a telecommunications network

to affiliate teaching facilities in these states. In California, a health

maintenance organization provides continuing medical education over its

telecommunications networks. One of the organization’s programs

delivers monthly lunch-hour medical education classes that reach about

1,000 of its 3,500 physicians.

Many Examples Identify

Cost Savings

An Arthur D. Little Foundation study published in 1992 on the U.S. health

care crisis said that just the video conferencing component of

telemedicine used for remote medical consultations and professional

training could reduce health care costs annually by over $200 million. For

example, video consultations can shorten diagnostic time, reduce

treatment time, and decrease hospital stays. Telemedicine can also reduce

evacuation or travel costs incurred when patients and specialists have to

travel for consultations.

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Several service officials believe that telemedicine’s biggest cost benefit to

DOD will be its application to the reengineering of health care delivery

during peacetime. In fiscal year 1997, MHSS’ budget is over $15 billion and

includes 115 hospitals and 471 medical and dental clinics operating

worldwide.

In a case involving 12 patients over a 4-month trial period, Eisenhower

Army Medical Center’s critical care telemedicine project with Fort

Stewart’s hospital saved DOD at least $54,000 in transportation costs and

expenses associated with the Civilian Health and Medical Program of the

Uniformed Services. Two patients did not need to be transferred to

Eisenhower or the local hospital, and one patient’s stay at a non-DOD

hospital was shortened. Teleradiology used on a 4-month deployment of

the U.S.S. George Washington in the Mediterranean Sea and Indian Ocean

eliminated the need for 30 evacuations and saved about $100,000.

Telemedicine also saved DOD $63,000 in evacuation costs during its

deployment to Somalia.

Telemedicine can provide cost savings to states in prison health care

transportation costs. For example, since Georgia began using telemedicine

in its prisons in 1993, only about 25 percent of the prisoners seen via

telemedicine had to be transferred to another facility for further treatment.

In the first 10 months of 1995, 218 consultations were done, saving

between $82,000 and $246,000 in transportation costs for those

consultations that did not result in a transfer to another facility. In Texas,

the Department of Criminal Justice contracts with the University of Texas

Medical Branch at Galveston and Texas Tech Health Sciences Center to

provide health care to its inmates in correctional facilities. In the first 20

months of operation, 2,607 telemedicine consultations were conducted

with high patient satisfaction. An evaluation showed that about 96 percent

of the consultations saved at least one trip to the Galveston Medical

Center at an estimated cost of about $190 per trip, or about $495,000.

Telemedicine can also provide savings in hospital costs. Initial data from

the Medical College of Georgia showed that over 80 percent of patients

seen via telemedicine did not need to be transferred from their primary

medical facility to a specialized care facility. Given the cost difference of

between $500 and $740 per day per bed between rural hospitals and the

Medical College of Georgia, cost savings resulting from telemedicine may

be significant. In Minnesota, a managed health care company and a rural

health care company formed a partnership to develop a rural telemedicine

network. As part of this network, eight rural hospitals were connected to a

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larger community hospital for emergency room consultations. Early

indications have pointed to overall cost savings for the participating

facilities. For example, one referring rural hospital was able to decrease its

emergency room operating costs by $47,500 a year, even after paying an

additional $50,000 fee to the community hospital for consultations. Due to

the increased referrals from the eight rural hospitals and the yearly fees,

the community hospital was able to eliminate its yearly $300,000

emergency room operating deficit.

In addition, because telemedicine brings specialized health care to the

patient, the patient does not need to take as much time away from work or

duty to receive care. This results in increased productivity for the worker

and the employer and fewer lost wages. In DOD’s case, reducing the time

away from work results in increased readiness of its military forces. For

example, Tingay Dental Clinic at Fort Gordon, Georgia, used telemedicine

to provide specialized dental consultations to active duty personnel at

Forts McPherson and Benning, Georgia; Fort McClellen, Alabama; Soto

Cano Air Force Base, Honduras; Gorgas Army Hospital, Panama; and the

Naval Dental Detachment, Key West, Florida. Without these consultations,

the soldiers would have to take time away from duty and travel for

specialized dental care. A study done by the clinic showed that soldiers at

Fort McPherson saved at least one-half day away from duty for each

consultation.

A telemedicine project at Fort Jackson, South Carolina, decreased the

amount of time a soldier missed basic training. Typically, a soldier on sick

call would lose a whole day of training because of the time to drive to the

clinic, wait to see the physician, get a prescription filled, and return to the

field. Of 101 soldiers seen via telemedicine, about 20 percent returned to

training without going to the clinic. DOD officials believe that as the

practitioners get more familiar with the equipment and the medical

procedures are streamlined, more than 50 percent of the soldiers will be

able to return to training without going to the clinic.

Potential Savings May

Be Offset by

Infrastructure Costs

and Increased Use

Although some data show that telemedicine can save costs, other data

indicate that there is a high cost for using telemedicine both in total

dollars and per consultation. Main factors include infrastructure start-up

costs and operational costs of the systems and equipment. For example,

the infrastructure start-up, equipment, and operational costs for DOD’s

telemedicine deployment to Bosnia are estimated to total about

$30 million, and only about 60 consultations, excluding teleradiology

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cases, have been performed to date. Also, recurring basic telemedicine line

charges in rural communities can run about $1,500 a month. Various

officials expressed concern whether the volume of rural telemedicine

consultations can ever be high enough to pay the recurring line charges as

well as initial equipment expenditures.

Another factor that will affect the cost of telemedicine is increased

utilization by persons who previously did not have access to such care.

According to the Institute of Medicine’s report on telemedicine, home

monitoring via telemedicine may result in earlier identification and

treatment of problems that would be more costly to treat if not caught

early, but it may also identify more borderline problems that would

generate more home or office visits.1

The potential cost impact of inappropriate utilization of health services via

telemedicine is a concern for many third-party payers, such a Medicare.

These concerns are not as apparent in managed health care settings,

including DOD and VA, where many costs are fixed, including physician

salaries. On the other hand, fee-for-service providers receive their income

from the volume and type of services provided. In such settings, some

providers may use complex and costly medical technologies when less

costly techniques may suffice.

Without a payment support mechanism, infrastructure or health care

providers may not consider telemedicine alone to be capable of delivering

a sufficient return to justify their investment. However, if multiple

applications are available to use the infrastructure, such as those related

to business, education, or entertainment, the infrastructure cost can be

shared among the various users.

Officials at the Health Care Financing Administration (HCFA) are also

concerned that Medicare expenditures could significantly increase if

Medicare were to begin reimbursing for telemedicine consultations.

Various reports have cited an estimate that telemedicine consultations

could increase the total Medicare budget by $30 billion to $40 billion

annually by the year 2000. Our review found no evidence to support this

increase. HCFA officials indicated that the agency could not estimate what

the impact would be to the Medicare budget if the federal government

began reimbursing for telemedicine consultations, but the amount should

be much less than the $30 billion to $40 billion increase cited by various

reports.

1

Telemedicine: A Guide to Assessing Telecommunications in Health Care, Institute of Medicine, 1996.

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Cost-Effectiveness of

Telemedicine Has Not

Been Analyzed

Although many individuals strongly believe that telemedicine is a good

value, no one has quantified the benefits through a comprehensive

cost-benefit analysis. Evidence supporting these beliefs is mainly based on

anecdotal examples, small retrospective reviews, or personal opinions. In

fact, the lack of comprehensive evaluations was a major theme throughout

the 1996 American Telemedicine Association Conference. In the past, such

studies have not been done because adequate sample sizes were not

available or the financial resources for conducting the evaluations were

lacking. However, several agencies are now funding or conducting

comprehensive studies.

Early Studies Focused

Primarily on Technical

Feasibility

Early telemedicine programs concentrated on demonstrating that the

technology would enable the health care practitioner to diagnose and treat

patients at remote sites. The primary focus was on whether the technology

worked, and cost-benefit analyses were not built into these early projects.

Despite 12 telemedicine deployments since 1993, DOD’s only documented

studies appear in three articles in professional journals. DOD has compiled

some lessons learned from Army deployments, the Advanced Warfighter

Experiments, and Joint Warfighter Interoperability Demonstrations. These

studies, however, had a limited scope and raised additional questions.

A 1996 Army study on telemedicine deployments showed that

telemedicine significantly changed the diagnosis in 30 percent of the cases

seen and the treatment in 32 percent of the cases. However, the study

noted that because of limitations, such as lack of follow-up and outcome

data, response time, and user satisfaction, the data may provide limited

results. Additionally, the exclusion of incomplete records may have also

skewed the results. For example, the use of telemedicine may have

precluded air evacuations, but there was little or no information on

whether the patient had a worse outcome or needed evacuation after the

consultation. Because of the lack of a central records system, it was

impossible to follow individual cases to determine case outcomes.

This study also noted that the types of patients seen in operations other

than war differ from those seen in active combat, suggesting that the

results may not be indicative of the benefits of battlefield telemedicine.

For example, combat support hospitals are staffed to treat previously

healthy young soldiers suffering from trauma and are not configured for

pediatric patients and chronic infectious disease cases. The study

concluded that further analysis may help determine if a combat support

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hospital in an operation other than war needs modification. It also

suggested that the large number of dermatology consultations may

indicate that dermatologists should routinely deploy with combat support

hospitals.

During its Advanced Warfighter Experiments in 1994 and 1996, the Army

Medical Department demonstrated that medics using lightweight,

hands-free, two-way radios were able to communicate with medical

officers at battalion aid stations to provide lifesaving medical treatment.

This communication impacted the number of soldiers who may have never

been evacuated off the battlefield. However, few trends become apparent

from analyzing the data from the different experiments. Some data showed

that medics utilized the consultations more if the number of casualties was

small. As the number of casualties increased, consultations went down.

Because the time required to treat each casualty increased, other wounded

could die while the medic was in a consultation. The Joint Warfighter

Interoperability Demonstrations showed that the different services’

medical communication systems were incompatible with each other and

the warfighter.

Early rural health demonstrations have also provided some lessons

learned about network structure, personnel, funding, and equipment

considerations when establishing telemedicine networks. For example,

HHS’ Office of Rural Health Policy (ORHP) compiled results and preliminary

lessons learned from 1995—the first year of experience of 11 of its 25

telemedicine grantees—but it is too early to know whether these projects

will be successful in improving access to care for rural residents. It is also

unclear how the projects will affect the multispecialty hospitals, rural

hospitals, and clinics that are part of these networks. Further, an ORHP

internal study reported that developing a telemedicine network is

complex, requiring coordination and cooperation from multiple players

both within and outside the health care arena.

DOD Telemedicine

Evaluations Are Not

Coordinated Among

Services or Facilities

A number of DOD organizations are planning and implementing

telemedicine evaluations. However, there is little coordination among the

sites in developing these evaluations. In addition, the evaluations may not

be used outside each organization to develop a DOD-wide database or

collective evaluation to provide DOD policymakers with data they can use

to establish a DOD strategic plan or prioritize funding.

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Some TRICARE regions are planning to evaluate telemedicine costs and

benefits. Tripler Regional Medical Center in Hawaii allocated $700,000 to

fund an evaluation of its telemedicine initiatives. The evaluation will

address (1) clinical outcomes, (2) patient and provider satisfaction,

(3) costs and benefits, (4) human behavior factors such as personnel and

training, and (5) organizational impact. According to officials, the

telemedicine protocols and evaluation tool were developed without

coordination with other TRICARE regions, although they were shared

among DOD agencies during an August 1995 workshop in Hawaii on

telemedicine evaluation methodologies.

Two separate evaluations are planned for Madigan Army Medical Center’s

teleradiology and telemedicine systems. The teleradiology evaluation,

being developed and conducted by a Department of Energy contractor,

will address the impact of the Medical Diagnostic Imaging

Support/teleradiology on radiology operations, procedures, costs, and

patient satisfaction.

The evaluation of other telemedicine systems will identify (1) the impact

of telemedicine procedures on the costs of collecting clinical information

for consultations conducted at the military treatment facilities and VA’s

Puget Sound Healthcare System and (2) the correlations of user and

service characteristics to clinical information acquisition costs of

telemedicine procedures. The study will result in lessons learned and a

proposed methodology for future projects. VA’s medical center in Seattle is

developing the study, which will be tested at all DOD and VA facilities in the

Puget Sound area. The VA official responsible for developing the evaluation

said that she has not received any input or assistance from DOD personnel,

except for Madigan Army Medical officials.

The Center for Total Access plans to evaluate its telecardiology program

once it is operational. Center personnel are working with a MATMO

contractor that is developing software, including cardiac protocols or

standardized procedures. The Center’s director was unaware that a project

at Tripler Regional Medical Center had already developed cardiac

protocols.

Wilford Hall Air Force Medical Center in San Antonio is planning to

conduct a cost-benefit analysis of some of its telemedicine efforts. A goal

of the analysis is to compare average costs per consultation for certain

specialties with and without telemedicine. The project will gather

information on referral patterns to the specialties and sites. This

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information will then be used to calculate an average cost to the

government per consultation by site and specialty. The study will examine

both active and non-active duty patients. Officials have not developed an

approach to coordinate the evaluation with other TRICARE regions.

Civilian Agencies Are

Conducting Wide-Reaching

Evaluations

Other federal agencies that are now funding or conducting large-scale,

comprehensive evaluations of telemedicine include VA, the National

Library of Medicine, HCFA, ORHP, and the Agency for Health Care Policy and

Research. However, these evaluations are in the early stages and

frequently have not been coordinated among or within agencies.

Several civilian agencies have recently required their grantees and

contractors to perform evaluations as part of their projects. Because most

of these projects have not reached completion, evaluation results have not

been reported. Some of these evaluations examine broad issues, and some

will have a limited focus. For example, each HCFA telemedicine payment

demonstration grantee in Iowa, Georgia, North Carolina, and West Virginia

is evaluating the costs and benefits of reimbursing specialists for providing

medical services via telemedicine to Medicare patients.

Eleven of ORHP’s 25 telemedicine grantees will evaluate the relative

effectiveness of their telemedicine project in a rural environment and

identify barriers to effective implementation. Similarly, one project

involving six rural Texas communities, funded by the Agency for Health

Care Policy and Research, includes an analysis of the factors that facilitate

or hinder the long-range commitment to telemedicine use for interactive

video and continuing education.

Each of the 22 contractors involved in the National Library of Medicine’s

High Performance Computing and Communications Program will evaluate

the impact telemedicine can have on health care access, quality, and cost.

For example, a hospital in Boston will use telemedicine to provide

educational and emotional support to families of high-risk newborns both

during their hospitalization and following discharge. The program will

examine the potential of telemedicine to decrease the cost of care for

infants with very low birth weights by increasing the efficiency of care.

A number of federal civilian agencies are working with the private sector

to conduct comprehensive evaluations of telemedicine. For example, in

fiscal year 1996, ORHP awarded $200,000 for the Telemedicine Research

Center of Portland, Oregon, to develop a standard data set for

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telemedicine evaluation and conduct an objective and scientific evaluation

of telemedicine programs. The project will last 2 years and cost $330,000.

The purpose of the project is to collect basic information about the

operations, utilization, costs, benefits, and sustainability of the rural

telemedicine projects that ORHP funds. This report is expected to be issued

in 1998.

The evaluations will also develop an evaluation methodology rather than

assess the success of a specific telemedicine project. For example, an

Institute of Medicine study, titled “A Guide to Assessing

Telecommunications in Health Care,” develops a framework for evaluating

telemedicine’s effects on the quality, accessibility, costs, and acceptability

of health care compared with alternative health services. The framework

includes strategies or questions that could be used by anyone planning to

perform an evaluation. One question is whether a teledermatology

consultation provides the same quality of patient care and therefore the

same outcome as a face-to-face consultation. Another question is whether

the teleconsultation result provides more timely access to the

dermatologist than a scheduled face-to-face consultation. Officials hope

that this framework will standardize evaluations enough to promote

comparability so that the results from individual studies can be combined

to provide the evidence needed to quantify the benefits of telemedicine.

JWGT also developed a discussion paper outlining a broad evaluation

framework for telemedicine. The goal of this paper was to provide a

document for an entity to design its own evaluation to meet its needs but

at the same time be comparable to other studies. The Puget Sound VA

evaluation will closely follow JWGT’s evaluation framework paper.

Other evaluations will be follow-up or more comprehensive views of

specific grants that had required their own evaluations. For example, ORHP

sponsored a study by Abt Associates to estimate the use of telemedicine in

rural hospitals and identify and describe those rural hospitals that are

actively involved in telemedicine. The initial screening survey generated

valuable information about the extent of telemedicine use in rural

communities, but it also raised many new questions that must be

addressed through a detailed follow-up survey. The final report, which

included an in-depth follow-up survey, was issued in December 1996.

Among other issues, the report addressed utilization, technologies

employed, infrastructure costs, and accessibility.

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In another case, HCFA has signed a cooperative agreement with the Center

for Health Policy Research at the University of Colorado to evaluate the

effects of teleconsultation payments on access to services and quality of

care for the five telemedicine projects HCFA supports. Under these projects

HCFA will experiment with alternate payment schemes, including separate

payments to providers at each end of the network as well as a single

“bundled” payment to cover both providers. The center will collect

information about diagnoses, health service utilization, patient and

provider satisfaction, quality of care, and patient outcomes. This report is

expected to be issued in early 2000.

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Several barriers, in addition to the lack of project evaluation, prevent

patients and providers from realizing widespread benefits of telemedicine.

Experts in telemedicine generally agree that these barriers can be

primarily categorized as legal and regulatory, financial, technical, and

cultural.1

 Legal and regulatory barriers involve such issues as interstate

licensing, malpractice liability, privacy and security, and regulation of

medical devices. Financial barriers relate to reimbursement of providers

and high infrastructure costs. Technical barriers are created by lack of

standards and equipment incompatibility. Cultural barriers involve

physician and patient acceptance. Most U.S. telemedicine networks that

are not limited to teleradiology enjoy some financial support from federal

grants and contracts for limited periods. Unless these networks can

overcome telemedicine barriers, their sustainability is jeopardized once

federal support lapses.

Barriers Hamper the

Private Sector More

Than the Federal

Sector

The private sector, particularly fee-for-service providers, is generally

affected by all barriers—legal and regulatory, financial, technical, and

cultural. Federal sector agencies that directly deliver health care services,

such as VA and DOD, are less affected than the private sector by legal and

regulatory barriers, but cultural (particularly physician acceptance) and

technical barriers hinder both sectors’ development of telemedicine.

However, VA has an extensive telecommunications system that is available

for health care applications. As a result, DOD, the Indian Health Service

(IHS), BOP, and VA may be better positioned to advance the development of

telemedicine. Figure 5.1 shows the segments that are affected by each of

the barriers we have identified. Many groups and organizations in the

public and private sectors are working individually and as partners to

develop strategies and options for overcoming barriers to telemedicine.

1

Telemedicine literature, reports, interviews with selected federal agencies, national medical specialty

groups, and other organizations provided an in-depth review of the key barriers and validated their

impact on the implementation of telemedicine.

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Table 5.1: Specific Telemedicine Barriers Impacting Government and Private Sector Entities

Government Private sector

Barrier DOD VA IHS BOP Managed care Fee for service

Legal and regulatory

Licensure X X

Malpractice liability Xa X

Privacy and security X X X X X X

Regulation of medical devices X X X X X X

Financial

Lack of reimbursement X

High infrastructure costs X X X X X

Technical

Lack of standards X X X X X X

Technology performance and equipment

compatibility X X X X X X

Cultural

Physician acceptance X X X X X X

Patient acceptance b b b b b b

aA managed care organization may be exposed to additional malpractice liability suits when its

patients or health care providers consult via telemedicine with physicians outside the

organization.

bThe extent of the problems presented by this barrier is unknown.

Legal and Regulatory

Barriers

Legal and regulatory barriers to implementing telemedicine activities are

licensure issues, malpractice liability, privacy and security, and regulation

of medical devices. These barriers will require federal, state, and private

efforts to solve them. Federal and state health policymakers and working

groups representing federal and private sector interests (including

national organizations and companies) are working individually and

collectively on approaches for overcoming these barriers. As a focal point,

JWGT is conducting an in-depth review of legal and regulatory barriers,

among others, to gain a clearer understanding of the impediments that

hinder the advancement of telemedicine.

Requirements for Multiple

Medical Licenses

According to individuals we contacted and literature we reviewed, one of

the major legal barriers encompasses the licensure of health care

professionals providing telemedicine services in multiple states. In the

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United States, physicians must be licensed in each state in which they

practice medicine to protect the health, safety, and welfare of the public.

One issue facing many states is whether a physician who provides medical

advice to someone in another state via telemedicine is in effect practicing

medicine in the patient’s state. Another issue is that obtaining and

maintaining licenses in other states can be a time-consuming and

expensive effort.

For physicians who regularly or frequently engage in the practice of

medicine across state lines, the Federation of State Medical Boards of the

United States, a private organization, developed a model act in April 1996

that would create a special license for physicians to practice telemedicine

in a state where they are not currently licensed. If the model act is adopted

by states, this special license could remove the need for physicians to

obtain a full license in each state where they practice telemedicine.

Physicians who merely consult with other physicians in certain states

concerning medical diagnosis and treatment, however, are less likely to

encounter licensing barriers than physicians having direct and frequent

contact with patients in other states. In opposition to the model act,

various national associations, such as the American Medical Association,

recommended full and unrestricted licensure by individual states for

physicians who wish to practice telemedicine across state lines. In

contrast, the National State Board of Nursing has recommended one

national license instead of numerous state special licenses.

Our review of literature and other reports revealed that some states are

beginning to restrict medical practice through telemedicine. At least 12

states have taken specific action regarding licensure of out-of-state

physicians. Of the 12 states, 10 require out-of-state physicians to be

licensed in their states. In the 11th state, Florida, out-of-state physicians

who conduct telemedicine services do not need a Florida license as long

as the physician who ordered medical services is authorized to practice

medicine in Florida. In the 12th state, California, the state’s medical board

is authorized to establish a registration program that would permit a

practitioner located outside the state to practice in the state upon

registration with the board.

Licensing is generally not a barrier for federal agencies. Federally

employed physicians who treat patients in government facilities are

required to be licensed in only one state, which does not have to be the

one in which they are practicing. However, if a federal physician treats a

patient not eligible for federal benefits, the physician is required to have a

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license in the patient’s state. Similarly, licensing would apply if, for

example, a VA hospital joined a telemedicine network that included private

hospitals and VA physicians were required to see private patients. This

licensing requirement would generally apply to all federal physicians.

Malpractice Liability Malpractice exposure is always present in a doctor-patient relationship.

The risk of additional malpractice liability constitutes another barrier to

the practice of telemedicine in the private sector, particularly in networks

that cross state lines. There is uncertainty whether a physician who uses

telemedicine to “see” a patient in another state will be subjected to the

jurisdiction of the courts in the patient’s state.

Fundamental issues regarding telemedicine encounters remain vague. In

its March 1996 report, the Council on Competitiveness noted that the issue

of malpractice is perhaps the greatest unknown barrier.2

 The Council

believes that a key question is whether a distant physician who performs a

telemedicine consultation will be held subject to the jurisdiction of the

courts in the patient’s judicial district. It is unclear under what

circumstances a remote encounter via telemedicine could subject a

practitioner to malpractice litigation in the remote state. For example, one

report suggests that the risk of malpractice is heightened when the

practitioner is in one location and the patient, in another location, is in the

presence of only a nurse or physician’s assistant. Even when physicians

are at both ends of the telemedicine transmission, the specialist who

guides or supervises the less skilled physician performing the procedure

could be sued in a distant court for malpractice.

Given this uncertainty and the relatively little guidance that the small

number of lawsuits throughout the country can offer, the malpractice

insurance industry is still considering whether the expansion of

telemedicine requires a change in coverage to specifically include

telemedicine in rating bases. Thus, if an individual physician believed his

or her malpractice coverage was not sufficiently comprehensive to include

the many facets of telemedicine, that practitioner’s willingness to engage

in telemedicine could pose a barrier.

These concerns are also expressed by the American Medical Association,

which believes that the law is currently unclear where liability falls when

two or more practitioners cooperate on a medical problem using

2

Highway to Health: Transforming U.S. Health Care in the Information Age, Council on

Competitiveness, March 1996.

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telemedicine. One representative of an association of physician-owned

malpractice insurance companies told us that she was aware of only four

malpractice suits concerning telemedicine (all of which were settled out of

court), but she believed that others might reach the courts soon because

of the length of time for a case to come to trial.

Medical malpractice issues in the federal sector differ from the private

sector. In the federal sector, the controlling law is the Federal Tort Claims

Act (FTCA),3

 which for more than 40 years “has been the legal mechanism

for compensating persons injured by negligent or wrongful acts of Federal

employees committed within the scope of their employment.”4 FTCA

provides that a suit against the United States for a wrongful act or

omission by a federal employee or officer shall be the exclusive remedy

permitted to a claimant and that no federal employee can be sued.

Additionally, parallel provisions pertaining to VA, DOD, and HHS expressly

state that malpractice and negligence suits against medical personnel of

those agencies are barred and that the exclusive remedy is an action

against the United States. Therefore, even though telemedicine is a

potential cost to the government, the threat of malpractice suits against

individual federal physicians is not a barrier.

The protections of FTCA generally extend only to federal employees and

officers acting within the scope of their employment and authority. The

protections generally do not apply to a contractor of the United States. To

date, no suits have been filed against the federal government involving

telemedicine. Such suits, which are decided according to the law of the

jurisdiction where the act or omission occurred, may help determine the

scope of liability of the federal government for the practice of medicine.

In the private sector, medical malpractice suits may be vulnerable to

“venue shopping,” under which a patient can elect to bring suit against a

practitioner in any state where that practitioner does business, regardless

of where the act or omission occurred. A physician or institution that

practices medicine in multiple states could be sued, therefore, in the state

where jury awards are most favorable, even if the particular telemedicine

consult being sued upon occurred elsewhere.

3

28 U.S.C. Sections 2671 and 2679.

4

28 U.S.C. Section 2671 note.

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Privacy and Security of

Medical Data

Another barrier to widespread deployment of telemedicine applications

and computer-based patient record systems is the public’s concern that

the privacy and security of personally identifiable medical data will be

jeopardized. One example that underscores concerns over the handling of

medical records involved the leak of a confidential list of Pinellas County,

Florida, residents with AIDS (Acquired Immune Deficiency Syndrome).

The release of this list, which was on computer disc and had close to 

4,000 names, revived concern about the proper handling of sensitive

medical records.

Among many federal agencies, there is strong interest in the development

and use of computer-based patient record systems and other transmission

of medical data via telecommunications networks in support of patient

care, clinical research, health services research, and public health. An

integrated information system (1) allows medical providers to have access

to a patient’s medical record, even if the paper record is not available, and

quickly assembles patient information from multiple sources (x-rays,

pharmacy, and lab). Once this information is assembled, provider

organizations, practitioners, payers, and the public sector would be able to

move critical information among themselves. Such exchanges may

enhance the ability of providers to render services across the continuum

of care, reduce duplication, and improve the quality of care.

The benefits of an integrated information system come with risks. A 1995

report from the Physicians Payment Review Commission acknowledged

that the benefits of data integration capabilities offered by telemedicine

systems are accompanied by risks of violating a patient’s right to privacy.5

The report stated that patients’ data privacy rights should be protected by

obtaining a patient’s permission before participating in teleconsultations,

including written agreement for recording of sessions and storage of tapes

as part of medical records. Further, using data protection techniques

during transmission could prevent disclosure. Even when patients are

properly informed about the transmission or electronic storage of medical

records, concern remains about the protection of such records by

telemedicine providers, including security for the computer systems and

other media on which they are stored.

Several reports indicate an absence of state-to-state uniformity in

confidentiality and privacy laws that could have an adverse impact on the

transfer of medical data for use in telemedicine encounters. One study by

the Office of Technology Assessment expressed concern that a videotaped

5

Annual Report to Congress, Physicians Payment Review Commission, 1995.

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consultation that becomes part of a patient’s medical record would be

treated as the state treats other videotaped information on the patient.6

Because state laws governing the transmission and retrieval of patient

medical records vary, officials are concerned about user verification,

access, authentication, security, and data integrity.

Efforts are underway to (1) identify the privacy-related issues that arise

particularly from the electronic environment of computerized records and

network information systems and (2) recommend policies to address

those issues. In March 1995, the Vice President asked HHS to lead efforts to

develop model institutional privacy policies and model state laws for

health information in the context of the National Information

Infrastructure. An interdepartmental working group on privacy is currently

identifying privacy issues related to transmission of health information

and other issues involving electronic communications technology and

integrated data systems. The group will make policy recommendation to

address these issues. The results of their efforts are being discussed at

JWGT meetings.

Safety and the Need for

Policy on Medical Devices

FDA has responsibility for ensuring that medical devices are safe and

effective and minimizing exposure from radiation-emitting electronic

products. However, FDA has not clarified which telemedicine components

fall within its definition of medical devices. Further, some of FDA’s policies

are out-of-date, particularly for computer software used in diagnosing

patient conditions. Some manufacturers and others believe that these FDA

policies and procedures have limited marketing of new products.

FDA’s role has generated controversy in the telemedicine community. Some

believe that telemedicine systems are medical devices in need of FDA

review. Others believe that (1) these systems require FDA review no more

than a telephone or fax machine used to communicate information used in

patient diagnosis/treatment and (2) FDA regulation of telemedicine

equipment may be unwarranted. In some instances, FDA’s review process

for medical devices is complicated and lengthy.

FDA’s basis for regulating certain software as medical devices is contained

in its 1987 draft guidance and a 1989 update. According to the Council on

Competitiveness’ March 1996 report, the review process for medical

devices—which would also guide review of certain types of

6

Bringing Health Care Online: The Role of Information Technologies, Office of Technology

Assessment, 1995.

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software—imposes an unworkable burden on software developers. In its

July 1996 report to JWGT, FDA stated that major efforts are underway to

define and develop software policy. The policy is expected to clarify the

factors that determine which types of software are medical devices and

the degree of regulatory scrutiny required.

As a first step in developing a policy, FDA conducted a forum in

September 1996 to address its role in regulating software for clinical

decision-making and proposed future directions related to software

distribution issues, risk categories, and notification requirements. Further

FDA efforts will be subject to comment by relevant public and private

sector interests to ensure broad input into future decisions. As of

November 1996, FDA had not yet revised its policy.

Financial Barriers The lack of reimbursement for consulting physicians’ services and the

prohibitive high cost of telecommunication transmission services have

deterred the expansion of telemedicine. Without good management plans

to ensure future sources of funds, some telemedicine networks may not be

sustained after federal funding subsidies lapse.

No Medicare

Reimbursement of

Providers

Currently, HCFA does not reimburse for telemedicine consultations for

Medicare patients. One report indicated that HCFA’s current position is one

of the major obstacles to telemedicine’s current use and future

development.7

 Fee-for-service providers who treat Medicare patients are

affected by this obstacle, as well as those providers who are paid by

insurers that follow HCFA’s lead when deciding what costs to reimburse.

HCFA is concerned that reimbursing consultant services via telemedicine

could significantly increase expenditures from Medicare trust funds,

which are already facing threats to their solvency.

A HCFA official stated that Medicare does not pay for telemedicine because

it believes the standard practice of medicine requires an “in-person,

face-to-face consultation” between the patient and practitioner for most

medical specialties. In contrast, HCFA pays for telemedicine involving

radiology and pathology because these specialties do not typically require

face-to-face contact with the patient. HCFA also notes that with the

exception of the American College of Radiology, the medical community

has not developed practice guidelines for telemedicine.

7

Rashid Bashshur, Dena Puskin, and John Silva. “Telemedicine and the National Information

Infrastructure.” Telemedicine Journal, Vol. 1, No. 4 (1995), p. 359.

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In the area of Medicaid, a recent JWGT report indicates that at least 

12 states now cover some aspect of telemedicine under Medicaid, and

other Medicaid programs are pursuing coverage. Since Medicaid does not

mandate a face-to-face encounter, a waiver is not needed for states to add

telemedicine as an optional covered service.

In October 1996, HCFA announced that it will begin limited Medicare

payments for telemedicine consultations in four states under a

demonstration project. HCFA will evaluate those ongoing projects to

(1) demonstrate the effectiveness of rural telemedicine systems and

(2) develop, test, and evaluate payment methodologies for telemedicine

consultations. Project evaluations are focused on the effects of

telemedicine systems on accessibility, quality, and cost of health care.

However, HCFA reports that until the analyses of the demonstration

projects are completed, Medicare will not reimburse for video consults

beyond the demonstration projects. Without proper research results and

guidelines, HCFA, as well as other insurers, are concerned that

reimbursement for these services will further increase the cost of medical

services.

An official from a managed care organization agrees with HCFA’s concern

that increased access may result in increased utilization and thus

increased cost. However, that official believes that expanded use of

capitated managed care systems will enhance the appeal of telemedicine

and reduce the need for HCFA reimbursement.

High Infrastructure Costs Another frequently cited barrier to implementing telemedicine is lack of

infrastructure in rural areas due to the prohibitive cost of running fiber

optics or providing satellite, T-1, or Integrated Services Digital Network

transmission service to a small end-user population. According to a 1995

HHS report, supporting the high fixed costs of maintaining a

telecommunications infrastructure is clearly beyond the capability of small

hospitals, particularly without subsidies or cost-sharing arrangements

among multiple users.8

 Small disparate rural telemedicine networks and

other users do not have sufficient market power to negotiate favorable

rates and service from telecommunications providers.

Some states, including Texas, have intervened and directed utility

companies to limit charges to nonprofit health and education

8

D.S. Puskin. “Opportunities and Challenges to Telemedicine in Rural America.” Journal of Medical

Systems, Vol. 19, No. 3, (1995), p. 59.

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organizations. An official of one network told us that, after state

intervention, the long distance carrier reduced its monthly charge for T-1

lines from $2,500 to $250 a month.

Our Georgia case study revealed that officials were concerned about the

high costs of recurring line charges. VA, DOD, state, and private sector

officials told us their recurring line charges ranged from $1,100 to $1,500 a

month. In Georgia, the state temporarily subsidized line charges for

remote sites on the state network. Some public officials, as well as private

organizations within the state, worry that some smaller rural communities

might have to close their centers once state funding is exhausted because

they may not be able to afford the recurring monthly communication

charge.

Universal service and advanced telecommunications service provisions of

the Telecommunications Act of 1996 are intended to reduce costs in two

ways. First, it will promote competition among local access and

long-distance providers to make the National Information Infrastructure

affordable and widespread. Therefore, a larger array of services may be

available to select from at competitive prices. Second, the act will require

utility companies to equalize rates between urban and rural users.

Strategic partnerships between the health care industry and infrastructure

providers may also speed the development of advanced telemedicine

systems. The Federal Communications Commission is implementing these

provisions of the act but has not made official recommendations in this

area.

Local end users need a continuing source of revenue to support

telemedicine programs once demonstration grant funds have lapsed, and

some supporting programs have addressed that need. For example, the

Department of Agriculture’s Distance Learning and Medical Link Grant

Program requires applicants to demonstrate local financial support by

providing evidence that their projects will be self-sustaining. The Institute

of Medicine’s 1996 report acknowledges that few projects appeared to be

guided by a business plan or the project features and results necessary for

a sustainable program.9

 In contrast, federal agencies are not required to

earn a profit on their telemedicine networks, but substantial usage is

necessary to achieve their goals of access to quality care.

9

Telemedicine: A Guide to Assessing Telecommunications in Health Care, Institute of Medicine,

National Academy of Sciences, 1996.

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The Council on Competitiveness’ March 1996 report points out that those

who do not have access or have limited access to quality care may stand to

benefit the most from telemedicine, but they also may be the least able to

pay for these services. Without some payment support mechanism,

infrastructure or health care providers may not consider telemedicine

alone to be capable of delivering a sufficient return to justify their

investment. However, if multiple applications are available to use the

infrastructure, such as those related to education or entertainment, the

infrastructure costs can be shared, and the overall return on investment

can be increased.

Technical Barriers The lack of clinical and technical standards for transmitting data is a major

inhibitor to networking information systems. Many agencies and

organizations will need to work together to resolve this problem.

Radiology is the only medical specialty to develop technical standards,

which are still being revised. Also, federal and other users experienced

another barrier—difficulties with telemedicine equipment compatibility.

Many challenges will be encountered in overcoming this obstacle.

Slow Development of

Standards

Another issue complicating telemedicine is the general lack of standards.

These standards relate to data definitions, coding or content, and

transmission of diagnostic images (e.g., speed, resolution, and image size).

The general lack of documented record formatting standards has been a

major inhibitor to networking information systems within and across

managed care organizations and for other players in the health care

system. Today, much of the data content exchanged, such as the patient’s

relationship to the member, is left to the interpretation of individual

managed care organizations; providers must make assumptions when

coding claim data elements and frequently use coding standards employed

by the provider’s system. According to our 1993 and 1994 reports, these

distinctions are very important to the payor and provider, since they can

affect which insurance company will be liable for a claim.10 Also, the

Council on Competitiveness’ March 1996 report states that data

requirements should be clearly articulated by health care entities,

including (1) definitions of the data they need, (2) the format in which they

expect to receive such data, (3) the way in which data should be submitted

(e.g., electronically), and (4) the frequency with which data should be

submitted.

10Health Care: Benefits and Barriers to Automated Medical Records (GAO/T-AIMD-94-117, May 6,

1994) and Automated Medical Records: Leadership Needed to Expedite Standards Development

(GAO/IMTEC-93-17, Apr. 30, 1993).

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The standard that allows formatting and exchanging of images and

associated information is known as the Digital Imaging and

Communications in Medicine. This standard was developed by the

American College of Radiology, the first to publish standards for any

application for telemedicine, and the National Electrical Manufacturers

Association, which represents companies that manufacture medical

equipment. Numerous government agencies and other national

organizations are involved in the health care information standards

process.11 A number of other medical specialty organizations are working

on standards for clinical practice for their profession, such as the

American Academy of Dermatology and American College of Cardiology.

Technology and Equipment

Incompatibility

Technology limitations, as well as equipment incompatibility, present

challenges for both the public and private sectors. To successfully

implement telemedicine within the framework of the National Information

Infrastructure, interconnectivity and interoperability of multiple systems

need to be ensured.12 For example, after purchasing one manufacturer’s

telecommunication system, an Alabama VA hospital learned that its

equipment could not fully interface with another manufacturer’s

equipment purchased by another VA hospital. Worried that this

incompatibility problem could surface again, one of the VA’s Veteran’s

Integrated Service Network offices appointed a special committee to

handle the procurement needs for all facilities in Alabama. As health care

providers increase use of telemedicine, they will face increased challenges

to coordinate equipment, hardware, and software components.

The military has also experienced equipment incompatibility problems. In

1994 and 1995, the battle lab at Fort Gordon, Georgia, sponsored a Joint

Warfighter Interoperability Demonstration in which industry, academia,

and others were given an opportunity to demonstrate medical

communication products with war-fighter applicability. Several officials

associated with the demonstration told us that, during the exercises, some

demonstrations were less than successful due to equipment

incompatibility. In one demonstration, the Army found that its

telemedicine equipment was not compatible with other Army command,

control, and communication systems. In another exercise, a joint service

11The Council on Competitiveness’ March 1996 report lists 31 agencies or organizations involved in the

process of setting standards.

12Interoperability refers to the ability of different components within a single as well as different

telemedicine systems to interact with each other without having to overcome considerable

technological barriers.

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demonstration failed because one service’s medical communications

equipment could not “talk” to the others. From the perspective of the

Army Signal Corps community, these sorts of impediments could pose

serious problems on the battlefield. The Director of Combat Developments

at Fort Gordon stated that, during an armed conflict, the Signal Corps

assumes command and control over all communication systems, including

medical communications. The Signal Corps worries that telemedicine

equipment brought to the front will not be able to successfully integrate

with the established battlefield communication infrastructures and

therefore not be functional during a conflict.

Also, the emphasis placed on high-technology systems without sufficient

consideration of the specific clinical and health care requirements and

infrastructure capabilities in each setting has created a poor fit between

telemedicine system design and end-user needs. Given the constraints on

financial resources in most communities in need of telemedicine services,

every effort should be made to design scaleable systems that can serve the

immediate and essential clinical and health care needs at minimal cost.

Upgrading can follow as further needs are identified and the financial

capabilities of communities increase. As the technology expands and the

cost of equipment becomes more competitive, telemedicine systems will

be able to increase their technical capabilities.13

DOD’s Unique

Telemedicine Challenges

In discussing telemedicine and deployed scenarios with service officials,

we learned of circumstances that present unique challenges for the

military. Traditionally, communications within the military have been used

to enable command and control. Telemedicine requires communications

that are provided in a functional manner and cross lines of command. In

addition to new linkages, more sophisticated telemedicine technologies

require the transmission of image data, which places considerable

demands on bandwidth communications.

DOD does not have a dedicated medical communications network.

Therefore, telemedicine communications transmissions have to compete

with other critical transmissions. In time of war, these requests could be

for enemy coordinates or attack and defend commands. An Army official

stated that if a medical facility used a secure military satellite to transmit

medical information to and from the battlefield during an armed conflict,

that facility would lose its neutral zone classification. Under the Geneva

13Rashid Bashshur, Dena Puskin, and John Silva. “Telemedicine and the National Information

Infrastructure.” Telemedicine Journal, Vol. 1, No. 4 (1995), p. 349.

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Rules of Conduct for Warfare, the enemy can engage any facility

transmitting communication data over secured lines. This rule makes

medical facilities in theater, normally protected from attack, open to

enemy assault.

Today, the combat medic does not have adequate means for video

communication, and military medical treatment facilities have limited

bandwidth available for telemedicine communications, both within the

theater of operations and with connections to the sustaining base. Further,

the Navy has an extremely challenging problem, since all data used must

be transmitted and received using data links that are already used to

capacity on most ships. Navy ships are deployed every day, regardless of

national security posture.

Our study revealed that military personnel are concerned about technical

limitations associated with size and weight in relation to deploying

telemedicine to the battlefield. For example, the Army’s prototype

battlefield telemedicine unit in Bosnia, the Deployable Telepresence Unit,

weighs about 3 tons and takes up about 400 square feet of space. Until the

unit’s size and weight constraints can be overcome, advancing

telemedicine to the front, where the majority of casualties occur, is not

feasible.

The Army is currently using data communications provided by the Defense

Information Systems Agency for both Primetime III deployment to

Hungary and Bosnia as well as peacetime regional telemedicine in 

Region 6 (Fort Hood, Brooke Army Medical Center, and Wilford Hall Air

Force Medical Center). This agency is leasing commercial circuits. Future

telemedicine requirements supported by this agency will be provided to

the services as part of the agency’s Global Combat Service Support

System, which is the unclassified part of the Global Command and Control

System. According to Army Medical Command officials, the Warfighter

Information Network, which embraces developing technologies, such as

asynchronous transfer mode, fiber optic connectivity, and personal

communications system cell phones, is expected to satisfy telemedicine

bandwidth requirements on the battlefield and provide the needed link to

the combat medic serving the combat arms.

Cultural Barriers Cultural barriers must be overcome to sustain telemedicine networks with

little usage after government subsidies lapse. These barriers fall into two

categories: physician acceptance (which includes their discomfort with

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using high-technology equipment and their skepticism about diagnosing

and treating patients at a distance) and patient satisfaction with using

telemedicine.

Physician Acceptance of

Telemedicine

One way to increase utilization of telemedicine networks is to foster

higher physician acceptance. Some telemedicine projects that experienced

high usage have factors that may help other users. For example, officials

from the Texas Department of Corrections believe they have alleviated

physician acceptance concerns through the following actions:

(1) caregivers from referring facilities visit the consulting physicians to

discuss how consultations should be conducted; (2) technicians at both

ends of the consultation operate the telecommunications equipment, thus

freeing caregivers to perform clinical procedures; and (3) consultants seek

clinicians’ advice on how to provide better care to patients. The findings of

the Texas study are supported by the 1995 annual report to Congress by

the Physicians’ Payment Review Commission, which concluded that

physician acceptance issues may become less important as physicians gain

experience and familiarity with telemedicine services.

However, physician acceptance continues to be an issue, according to

expert opinion and our data. According to an American Medical News

article, among the many obstacles facing telemedicine, proponents say

“people issues” worry them the most.14 Literature reveals that the

reluctance of physicians to use telemedicine services may be influenced by

their attitudes about quality, control of patient care and referral

relationships, convenience, and fear that urban medical centers would

steal rural patients. For example, some uninterested doctors reported

scheduling difficulties, inability to actually examine patients, and

unfamiliarity with the technology as reasons that have deterred them from

participating in telemedicine activities.

During our Georgia case study, various telemedicine officials often spoke

about resistance to change. In one instance, medical personnel at a

military clinic stated they were reluctant to use the teleradiology system

primarily because they preferred having a radiologist on hand that they

knew, trusted, and could rely on. In addition, the radiologists at the

consulting facility were occasionally slow to respond to requests for

consultations. Some physician resistance is due in part to the relative

complexity of the systems currently in use. The equipment is not

14“Telemedicine Coming of Age: Friend or Foe? Rural Doctors Unsure.” American Medical News,

April 1995.

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user-friendly; therefore, additional training is required to learn how to

operate the equipment. Some VA telemedicine projects have also

experienced low utilization because of physician reluctance.

A 1995 journal article by HHS and the Telemedicine Center, Medical College

of Georgia, states that the designs of current systems are driven more by

technology than by the needs of physicians.15 To be successful, the article

noted that telemedicine technologies may need to adapt to the needs of

physicians and patients, not vice versa. Training was cited as a key

component of any successful telemedicine system to help physicians with

limited experience and comfort with computers. A June 1994 report of the

Council on Medical Service, part of the American Medical Association,

cited a need for physician education as it relates to instruction covering

the spectrum from basic computer literacy to familiarity with expert

diagnostic systems and knowledge databases. The association’s policy

recommends that designers of clinical information systems involve

physicians in all phases of system design and select technologies that are

easily mastered, flexible, and acceptable to physician users.

Patient Acceptance of

Telemedicine

Patient acceptance with using telemedicine for consultations may be less

of a barrier than physician acceptance, particularly in rural settings. A few

limited patient satisfaction surveys found that the convenience of not

needing to drive hundreds of miles to an appointment with a specialist

outweighs any uneasiness of not seeing that specialist face to face.

According to one researcher, patients in South Dakota and Florida have

uniformly shown acceptance to telemedicine. An evaluation of the Texas

criminal justice telemedicine project found that about 70 percent of the

patients preferred telemedicine consultations to transportation to the

tertiary care hospital and another 14 percent were neutral.

A project sponsored by the University of Kansas found that patients were

happy not to have to drive 300 or 400 miles just to see their physician.

They also appreciated receiving a videotape of their visits. On the negative

side, the Kansas patients found being candid on video to be difficult and

were not eager to repeat their experiences.

15Dena Puskin and Jay Sanders. “Telemedicine Infrastructure Development.” Journal of Medical

Systems, Vol. 19, No. 2 (1995), p. 127.

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Agency Comments In commenting on a draft of this report, HHS said that a clearer depiction of

the role of FDA in telemedicine was needed. Accordingly, we clarified this

information.

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Conclusions and Recommendations

Conclusions Telemedicine has the potential to revolutionize the way health care is

delivered. The recent increased interest in telemedicine technology has

resulted in widespread applications throughout the United States.

Collectively, DOD, other federal agencies, state governments, and the

private sector have already invested hundreds of millions of dollars on

numerous telemedicine projects, sometimes in collaboration with each

other. However, it is impossible to determine the full scope of these

initiatives. They range from long-term research efforts exploring robotic or

telepresence surgery to pilot programs at medical facilities where some

clinical application, such as teledentistry, is actually practiced. The most

common current clinical application is teleradiology.

DOD and other federal agencies are actively sponsoring telemedicine

projects that individually seem justifiable and fall under the purview of the

sponsoring agency’s mission. However, not enough comprehensive,

accurate information exists to determine the collective value of these

projects. For example, it is difficult to tell whether DOD’s investment is

commensurate with the potential benefits it stands to gain. DOD is

currently the largest federal investor with $262 million. On a case-by-case

basis, many projects seem justifiable, but the collective value of the DOD

telemedicine program cannot be easily assessed. In fact, DOD’s

telemedicine program is actually the sum of many individual parts and not

an interrelated group of projects prioritized to accomplish specific goals.

Some agencies, including DOD and VA, have recognized the need for a

telemedicine strategy to define their programs but have not moved beyond

the conceptual stage. Private sector organizations are reluctant to share

their market observations and data for fear of revealing helpful

information to their competition. Further, because priorities differ among

the public and private sectors, working together is even more difficult

without clear and common goals.

Successful expansion and sustainment of telemedicine will require

resolution of many legal and regulatory, financial, technical, and cultural

barriers. Some of the more critical barriers, such as licensure, privacy, and

infrastructure costs, are too broad and have implications too far-reaching

for any single sector to address. On the other hand, some barriers, such as

physician acceptance, can be overcome at the local level with proper

planning and management. Because federal agencies that directly deliver

health care, such as DOD, VA, IHS, and BOP, are less affected by licensure and

reimbursement barriers, they are better placed to provide comprehensive

information to help determine the course of telemedicine.

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Conclusions and Recommendations

The numerous telemedicine initiatives funded by the public and private

sectors could be more productive if they were linked by common goals,

such as interdependent utilization of the information superhighway to

provide cost-effective and quality health care. Such a goal should

complement, not supplant, individual missions, such as improving rural or

remote health care delivery, by serving as a vehicle for sharing technical

progress and avoiding duplication. The challenge is how to find such a link

without impeding progress of an emerging technology so difficult to

define.

Recommendations By nature, telemedicine issues cut across public and private sectors and

across agencies within the federal sector. Although there is a need to

develop national goals and objectives to guide federal telemedicine

investments, it would be difficult for an individual department or agency

to be the architect of a governmentwide strategy. JWGT is already

performing some interagency coordination associated with carrying out

the Vice President’s charge to the Secretary of HHS to prepare a

comprehensive report on telemedicine issues. Therefore, JWGT is in a good

position to expand its work and take the lead in proposing a coordinated

federal approach for investing in telemedicine. Such efforts should provide

a framework to optimize the value of federal telemedicine investments

with activities sponsored by the states and private sector.

Accordingly, we recommend that the Vice President direct JWGT, in

consultation with the heads of federal departments and agencies that

sponsor telemedicine projects, to propose a federal strategy that would

establish near- and long-term national goals and objectives to ensure the

cost-effective development and use of telemedicine. In addition, the

proposed strategy should include approaches and actions needed to

• establish a means to formally exchange information or technology among

the federal government, state organizations, and private sector;

• foster collaborative partnerships to take advantage of other telemedicine

investments;

• identify needed technologies that are not being developed by the public or

private sector;

• promote interoperable system designs that would enable telemedicine

technologies to be compatible, regardless of where they are developed;

• encourage adoption of appropriate standardized medical records and data

systems so that information may be exchanged among sectors;

• overcome barriers so that investments can lead to better health care; and

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• encourage federal agencies and departments to develop and implement

individual strategic plans to support national goals and objectives.

Further, because DOD is the major federal telemedicine investor and

manages one of the nation’s largest health care systems, it is in a good

position to help forge an overall telemedicine strategy. A first step is to

develop a departmentwide strategy. Therefore, we recommend that the

Secretary of Defense develop and submit to the Congress by February 14,

1998, an overarching telemedicine research and development and

operational strategy. The strategy should

• clearly define the scope of telemedicine in DOD;

• establish DOD-wide goals and objectives and identify actions and

appropriate milestones for achieving them;

• prioritize and target near- and long-term investments, especially for goals

related to combat casualty care and operations other than war; and

• clarify roles of DOD oversight organizations.

Agency Comments

and Our Evaluation

We provided a draft of this report to DOD, VA, HHS, and the Office of the Vice

President. Both DOD and VA concurred with our recommendations. DOD

stated that it “. . . is not alone in finding itself behind the technological bow

wave of telemedicine” (see app. III). DOD said that one of its first priorities

will be the development of a definition and scope of DOD telemedicine

activities. DOD also agreed to establish departmentwide goals and

objectives and prioritize investments as part of its strategic telemedicine

plan. According to DOD, many pieces of this plan are already in place. VA

commented that it would be beneficial for DOD to include VA in its

development of an operational strategy for telemedicine activities (see

app. IV).

After subsequent discussions with HHS officials regarding agency

comments, HHS generally agreed with the concept of our recommendation

for JWGT to play a leadership role in proposing national goals and

objectives (see app. V). HHS was concerned that a governmentwide

strategy could be overly prescriptive. Our recommendation was not

intended to imply that JWGT direct federal agencies investments in

telemedicine initiatives but rather that JWGT develop a roadmap for federal

agencies to use as a guide for their investments. HHS also stated that it

might be better to require individual departments to develop their own

strategies before an overarching federal strategy is proposed. We believe

that individual strategies should be developed but that these strategies

Page 77 GAO/NSIAD/HEHS-97-67 Telemedicine
Chapter 6 

Conclusions and Recommendations

would not ensure an interagency commitment to common goals and

objectives or serve as a guide to prevent duplicative investment efforts. We

further believe that some agencies, such as DOD and VA, might be in a better

position than others to move forward with individual strategies, whereas

other agencies would benefit from an overall federal plan to help develop

their individual strategies.

HHS commented that JWGT had accomplished much of what we were

recommending. We believe that JWGT should be commended for its efforts

toward fulfilling the reporting requirements to the Vice President and the

Congress. Many indirect benefits toward informal coordination of federal

telemedicine activities are occurring. However, drafts of JWGT reports to

the Vice President and the Congress provided to us do not reflect a

proposal for the type of governmentwide strategy we are recommending

for agencies to maximize their telemedicine investments. Rather, these

draft reports mostly reflect information on issues to be pursued related to

barriers, such as physician licensure, that may prevent the widespread

application of telemedicine.

Our draft report recommended that JWGT membership be expanded to

include private and state representation. HHS expressed concerns about

implementing this portion of the recommendation due to requirements in

the Federal Advisory Committee Act.1

 According to HHS, the act would

require reimbursement for expenses of any state or private sector

representative to attend the group’s bimonthly meetings and could

otherwise impair JWGT’s operations. As an alternative, HHS suggested the

addition of an annual telemedicine summit with state and private

participation to JWGT’s activities. We believe the specific vehicle chosen is

not important as long as it improves the interaction of federal, state, and

private sectors along the lines noted in our recommendations.

Accordingly, we modified our recommendation by deleting suggestions to

expand JWGT beyond federal agency membership. For the same reasons,

the merits of HHS’ proposal for an annual summit—certainly a constructive

step—would have to be judged against the summit’s ability to foster the

actions sought by our recommendation. We believe that JWGT should have

the flexibility to make this determination.

Within the Office of the Vice President, the Chief Domestic Policy Advisor

and the Senior Director for the National Economic Council did not provide

us with written comments. The Senior Director for the National Economic

Council, however, raised questions regarding the impact of the Federal

1

5 USCA App. 2 Section 1 et seq.

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Chapter 6 

Conclusions and Recommendations

Advisory Committee Act on expanding the membership of JWGT to include

state and private membership. Further, DOD and HHS provided specific

technical clarifications that we incorporated in the report as appropriate.

Page 79 GAO/NSIAD/HEHS-97-67 Telemedicine
Appendix I 

Organizations Visited

Federal Departments

and Independent

Agencies

Appalachian Regional

Commission

Department of Agriculture Rural Utilities Service

Department of Commerce National Telecommunications and Information Administration

 National Institute of Standards and Technology, Advanced Technology

 Program

Department of Defense Office of the Assistant Secretary for Health Affairs

 Air Force Surgeon General

 Army Surgeon General

 Navy Surgeon General

 Army Medical Department

 Medical Advanced Technology Management Office

 Portsmouth Naval Medical Center

 Wilford Hall Air Force Medical Center

 Madigan Army Medical Center

 Tripler Regional Medical Center

 Brooke Army Medical Center

 Walter Reed Army Medical Center

 National Naval Medical Center Bethesda

 Naval Hospital Camp Lejeune

 Armed Forces Institute of Pathology

 Defense Advanced Research Projects Agency

Department of Health and

Human Services

 Food and Drug Administration

 Health Care Financing Administration

 Agency for Health Care Policy and Research

 Indian Health Service

Page 80 GAO/NSIAD/HEHS-97-67 Telemedicine
Appendix I 

Organizations Visited

 National Institutes of Health, National Library of Medicine

 Health Resources and Services Administration, Office of Rural

 Health Policy

Department of Justice Bureau of Prisons

Department of Veterans

Affairs

 Veterans Health Administration

National Aeronautics and

Space Administration

National Science

Foundation

State Governments Georgia

Texas

U.S. Health Care

Organizations

American Academy of Dermatology

American Academy of Family Physicians

American Medical Association

Federation of State Medical Boards

American College of Cardiology

American College of Emergency Physicians

American College of Pathologists

American College of Radiology

American College of Surgeons

National Council of State Boards of Nursing

American Dental Association

Other Private U.S.

Organizations

Council on Competitiveness

National Electrical Manufacturers Association

National Academy of Sciences, Institute of Medicine

American Telephone and Telegraph

The Koop Foundation

Center for Public Service Communications

Computer Motion, Inc.

Page 81 GAO/NSIAD/HEHS-97-67 Telemedicine
Appendix I 

Organizations Visited

Western Governors Association

Allina Health Systems

Mayo Clinic

Academia George Washington University, Intergovernmental Health Policy Project

University of Washington School of Medicine

East Carolina University

Organizations Within

Georgia

Department of Defense Dwight David Eisenhower Army Medical Center, Fort Gordon

Center for Total Access, Southeast Telemedicine Testbed, Fort Gordon

Tingay Dental Clinic, Fort Gordon

U.S. Army Signal Center, Fort Gordon

U.S. Army Health Clinic, Fort McPherson

U.S. Army Dental Clinic Command, Fort McPherson

Department of Veterans

Affairs

Decatur Medical Center

Augusta Medical Center

State Agencies Department of Administrative Services

Department of Human Resources

 Office of Rural Health and Primary Care

 Child and Adolescent Health Unit, Division of Public Health

Department of Corrections

Academia Center for Telemedicine, Medical College of Georgia

Robert W. Woodruff Health Sciences Center, Emory University

Biomedical Interactive Technology Center, Georgia Institute of

 Technology

Page 82 GAO/NSIAD/HEHS-97-67 Telemedicine
Appendix I 

Organizations Visited

Private Organizations Georgia Baptist Hospital

The Marcus Center at Emory University

Egelston Hospital for Children, The Children’s Heart Center

Scottish Rite Children’s Medical Center

American Telephone and Telegraph

Panasonic

Bell South Foundation

The Georgia Power Foundation

Medasys Digital Systems

Page 83 GAO/NSIAD/HEHS-97-67 Telemedicine
Appendix II 

Telemedicine Initiatives Within the

Department of Defense and Other Federal

Agencies

Federal departments and agencies have invested in a range of telemedicine

projects. This appendix describes some of the key projects funded during

fiscal years 1994-96 by the Department of Defense (DOD) and the following

eight federal civilian agencies: the Departments of Veterans Affairs (VA),

Health and Human Services (HHS), Commerce, Agriculture, and Justice;

National Aeronautics and Space Administration (NASA); National Science

Foundation, and Appalachian Regional Commission.

DOD Is the Largest

Single Federal

Investor

DOD has invested $262 million in telemedicine initiatives over the last 3

fiscal years. As table II.1 shows, DARPA has invested the most in

telemedicine projects in fiscal years 1994-96, followed by the Army (after

excluding amounts spent on congressionally directed programs). These

investments cover both battlefield and peacetime health care.

Table II.1: Telemedicine Investments

by DOD Organizations, Fiscal Years

1994-96

Dollars in millions

Organization FY 94 FY 95 FY 96 Total

DARPA $20.3 $43.3 $41.0 $104.6

Army 15.2 51.0 60.0 126.2a

Navy 0.1 8.5 10.5 19.1

Air Force 1.5 3.7 6.8 12.0

Total $37.1 $106.5 $118.3 $261.9a

Note: Funds provided by Health Affairs are included in the services’ investments.

aThese amounts include $58.4 million in congressionally directed programs.

DARPA Focuses on Unique

Battlefield Applications

Since 1994, DARPA has invested $104.6 million in 24 telemedicine research

and development projects. DARPA’s objective is to provide medical care as

far forward on the battlefield as possible. Although DARPA attempts to

obtain private sector cost-sharing arrangements when feasible, it can be

difficult to obtain such arrangements early in the research and

development stage, since industry has a short-term immediate payoff

perspective. According to DARPA officials, its 24 projects have resulted in

86 contract awards or partnership agreements with industry and academia

participants. Some examples of DARPA’s key projects follow.

• In partnership with the Applied Physics Laboratory at the University of

Washington and Bothwell’s Advanced Technology Laboratories, DARPA is

developing a hand-held ultrasound device for medics to use on the

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Appendix II 

Telemedicine Initiatives Within the

Department of Defense and Other Federal

Agencies

battlefield. The device, weighing from 2 to 4 pounds, will transmit

real-time radiology images over communication lines to a mobile Army

surgical hospital unit.

• DARPA’s soldier physiologic monitor is a hand-held device that will help the

combat medic locate a wounded soldier and monitor the soldier’s vital

signs (i.e., body temperature, heart rate, breathing rate, and blood

pressure). Prototypes of the physiologic monitor are currently being tested

and evaluated by the Army ranger school.

• DARPA’s Life Support for Trauma and Transport, or “Smart Litters,” will

provide built-in patient monitoring and telemetry as well as life support

enhancements. This project is an intensive care cocoon, which will

provide monitoring, environmental control, oxygen generation, data

logging and access, and ventilator support in a sealed environment. The

goal is to lengthen the golden hour (the first hour after a soldier is

wounded) of medical care by providing critical care stabilization. The

survivability of a wounded soldier is greatly enhanced when treated and

stabilized within the golden hour.

• DARPA also has a joint project with the Georgia Institute of Technology and

the Medical College of Georgia to develop a tactile sensing glove. The goal

is to develop a system for allowing the specialist to palpate a patient at a

remote site. For example, the consulting physician should be able to feel a

mass in the remote patient’s abdomen.

Army Has Battlefield and

Peacetime Telemedicine

Initiatives

The Army has invested $126.2 million in telemedicine since fiscal year

1994. These investments include approximately $46.7 million that the

Medical Advanced Technology Management Office (MATMO) oversees,

$58.4 million for specific projects directed by Congress, and $21.1 million

for other peacetime health care initiatives.

MATMO, part of the Army Medical Research and Materiel Command, has

sponsored 21 telemedicine projects, some of which focus on battlefield

health care. For example, MediTag is a wearable dog tag-like device that

allows the electronic storage of medical information on the battlefield.

Other Army organizations sponsor projects to build medical networks in

various medical treatment facilities. These projects are mostly related to

telemedicine initiatives at U.S. Army medical centers. For example, Walter

Reed Army Medical Center in Washington, D.C., initiated medical

information networks at its various medical treatment facilities to provide

telemedicine conferencing capability for dermatology and orthopedic

consultations, distance learning, and imaging support for dental activities.

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Appendix II 

Telemedicine Initiatives Within the

Department of Defense and Other Federal

Agencies

Brooke Army Medical Center in Texas established a telemedicine

connection with Darnall Army Community Hospital that allows specialists

at the center to interact with hospital patients in clinical specialties of

obstetrics and gynecology, radiology, cardiology, pediatrics, internal

medicine, psychiatry, and nursing education. Also, collaborative efforts

between Brooke Army Medical Center and the Air Force’s Wilford Hall

Medical Center in San Antonio, Texas, are supporting clinical

consultations for TRICARE Region 6 and the Bosnia deployment.

In addition, Congress has mandated several telemedicine projects targeted

to improve management of medical information in Army military

treatment facilities in Hawaii, Washington, and North Carolina. These

projects are funded outside DOD’s budget request and during fiscal years

1994-96 totaled $58.4 million.

Two projects—Akamai and the Pacific Medical Network—are based at

Tripler Regional Medical Center in Honolulu, Hawaii. The projects are

designed to provide health care throughout the Pacific Basin by using

various telemedicine technologies. Akamai is designed to expand access

of the Medical Digital Imaging Support (MDIS) system and other

telemedicine applications. Akamai funding for fiscal years 1994-96 was

$31 million.1

 Of these funds, about $18 million was spent on telemedicine

projects (about $13 million for MDIS and the remaining funds for clinical

diagnosis and consultations, administrative, and evaluations) at Tripler. Of

the remainder, Georgetown University received about $9 million, DARPA

received about $1.7 million for the soldier physiologic monitor, and Health

Affairs and MATMO used almost $2 million.

The Pacific Medical Network is a prototype effort designed to create a

computer-based patient record that can be transmitted across great

distances and multiple time zones. Several projects, when combined, are

expected to provide the capability to move critical patient data, such as

digital x-rays and medical history (including hospital stays, outpatient

visits, laboratory results, and immunizations), between treatment facilities

as patients are transferred from one facility to another.

Another congressional project, known as Seahawk, is based at Madigan

Army Medical Center in Tacoma, Washington, and designed to implement

MDIS and teleradiology and other telemedicine applications within the

Puget Sound urban environment. The network will include all Army, Navy,

1

A March 1996 audit report by Booz-Allen and Hamilton, Inc., Akamai Financial Rebaseline Analysis

Report, was issued at the request of Tripler officials on these appropriated funds.

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Appendix II 

Telemedicine Initiatives Within the

Department of Defense and Other Federal

Agencies

Air Force, and VA medical facilities in the area. Congressional funding was

$6.9 million for fiscal years 1995 and 1996. In fiscal year 1996, Health

Affairs provided additional funding of $4.8 million.

The Walter Reed Army Medical Center is completing a 3-year

congressionally appropriated project with the Carolina Medical Center in

Charlotte, North Carolina. The two institutions received almost $3 million

to evaluate desktop telemedicine. Walter Reed’s expenditures included

about $40,000 for computers and associated hardware to be used at Fort

Bragg, North Carolina; Fort Belvoir, Virginia; and the National Naval

Medical Center, Bethesda, Maryland.

Navy Has Focused on

Connectivity With Ships

For fiscal years 1994 through 1996, the Navy funded 21 pilot projects by

reprogramming efforts at a cost of $19.1 million. The Navy’s strategy has

been directed mostly at establishing connectivity on deployed ships with

naval medical facilities based in the continental United States. For

example, telemedicine has been used during training exercises on selected

medical facilities afloat (i.e., the U.S.S. George Washington and the U.S.S.

Abraham Lincoln). The Navy expects to integrate lessons learned from

these experiences into ships that have not yet received communications

connectivity.

The Navy Bureau of Medicine and Surgery has identified about

$900 million for future telemedicine initiatives that involve

communications connectivity between deployed ships and naval medical

facilities and connections between shore-based tertiary medical facilities

and outlying clinics. Although the Navy requested funds for these

initiatives in the fiscal year 1997 Program Objective Memorandum, DOD

officials said that the climate of funding constraints precluded further

consideration of the requests.

Air Force Efforts Focus on

Peacetime Care

Air Force officials stated that, because both peacetime and contingency

operations use the same telemedicine applications, experience gained

from day-to-day peacetime initiatives can later be applied to contingency

operations. During fiscal years 1994-96, the Air Force had three ongoing

telemedicine demonstrations. These projects were funded at a cost of

$10.5 million from then-year operation and maintenance funds.

The most significant Air Force telemedicine effort is taking place at

Wilford Hall Medical Center. This pilot project, in which the Air Force is

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Appendix II 

Telemedicine Initiatives Within the

Department of Defense and Other Federal

Agencies

acting as DOD’s TRICARE lead agent, is expected to introduce telemedicine

into the daily practice and training for health care providers in TRICARE

Region 6. This region includes one Army medical center and three

hospitals; one Air Force medical center, eight hospitals, and five clinics;

and one Navy hospital and three branch clinics. According to the Office of

the Air Force Surgeon General, the project strategies developed in 

Region 6 will act as a model for future regions in which the lead agent is

an Air Force medical center.

As of May 1996, the pilot project was in its early operational stage. The

project is expected to be phased in over 1 to 2 years to help ensure the

transition from current medical practices to clinical telemedicine

applications. The initial stage will be a demonstration testbed for

teleconsultation and teleradiology on a small scale. According to the

telemedicine project director, this demonstration will provide the

opportunity to evaluate administrative procedures and technological

applications and make any necessary improvements before full

implementation of the project throughout the region.

Non-DOD Federal

Investments Include a

Wide Range of

Projects

Eight other federal departments and independent agencies have invested

in telemedicine initiatives that are consistent with their overall agency

responsibilities. From fiscal years 1994 to 1996, these agencies invested

$384 million to deliver health care, sponsor telecommunications

development, and evaluate the effectiveness of telemedicine systems.

VA Focuses on

Telemedicine

Infrastructure

VA’s 159 medical centers use several forms of telemedicine to help deliver

health care to its beneficiaries. VA officials estimate their cost to acquire

the equipment and telecommunications lines was $142 million for fiscal

years 1994 through 1996. Many of these activities were initiated at the

center level, although VA conducts some national projects. For example,

the Baltimore Medical Center has fully digitized its x-rays and magnetic

resonance images. Storing all such images on computer produces better

images, allows several users to view them simultaneously, and eliminates

cost and disposal problems associated with camera film.

Two VA medical centers, Washington and San Francisco, routinely review

the status of cardiac pacemakers worn by VA patients. By reviewing

electronic signals via telephone lines, VA staff can determine if a

pacemaker needs to be replaced. This review reduces the number of

unnecessary operations to replace pacemakers. The VA medical center

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Appendix II 

Telemedicine Initiatives Within the

Department of Defense and Other Federal

Agencies

near Atlanta uses its telemedicine system for continuing medical

education and training residents. The center receives weekly epidemiology

classes from the Centers for Disease Control and Prevention.

HHS Invests in a Wide

Array of Telemedicine

Initiatives

HHS spent an estimated $110 million for telemedicine in fiscal years 1994-96

on a variety of telemedicine activities that reflect the missions of five of its

agencies, as table II.2 shows. Many of these grants focused on rural or

remote health care delivery.

Table II.2: Telemedicine Investments

for HHS Agencies From Fiscal Years

1994 to 1996

Agency within

HHS

Primary

mission FY 94 FY 95 FY 96 Total

National Library

of Medicine

Research

$27.7 $0.9 $40.0 $68.7

Office of Rural

Health Policy

Clinical health

care 6.9 7.6 10.1 24.7

Agency for

Health Care

Policy and

Research

Research

0.7 5.5 1.9 8.2

Health Care

Financing

Administration

Evaluation

4.0 0.5 3.5 8.1

Indian Health

Service

Clinical

0.1 0.1 0.2 0.3

Total $39.5 $14.6 $55.8 $109.9

Note: Figures do not add due to rounding.

The National Library of Medicine was the largest HHS investor

($68.7 million) for fiscal years 1994 through 1996. Most of this agency’s

investments support research into biomedical applications of

high-performance computing and communications that could evaluate the

impact of telemedicine on health care access, quality, and cost for a wide

variety of patients. For example, one contract with a private firm and the

University of Maryland at Baltimore will investigate the feasibility of

transmitting real-time vital sign data and video images of ambulance

patients to hospital emergency room staff.

As the second largest investor, the Office of Rural Health Policy provided

$24.7 million in grants to private organizations to facilitate development of

rural health care telemedicine networks. One grant to the Eastern

Montana Telemedicine Network links a tertiary care hospital in Billings to

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Appendix II 

Telemedicine Initiatives Within the

Department of Defense and Other Federal

Agencies

eight community health centers in isolated rural areas to provide mental

health consultations. A contract with Abt Associates funded a survey of

rural hospitals to determine how hospitals were using telemedicine. The

study concluded that teleradiology was used most frequently but that

usage was very low.

The Agency for Health Care Policy and Research ($8.2 million) supports

research and evaluation or cost-effectiveness studies into improving the

collection, storage, and dissemination of health information, such as

patient records and clinical decision support systems. For example, the

agency contracted with the University of Washington to develop health

care information and communication systems policy options for state

governments to increase access and effectiveness of basic health services.

The Health Care Financing Administration awarded $8.1 million to

demonstrate and evaluate the cost-effectiveness of telemedicine systems,

especially regarding payment methodology for telemedicine consultations.

These funds support contractors who are evaluating the costs and benefits

of telemedicine networks located in remote areas of Georgia, Iowa, 

North Carolina, and West Virginia.

The Indian Health Service spent about $0.3 million for telemedicine

equipment and infrastructure for its clients on remote reservations and

small communities in Alaska, Arizona, New Mexico, and Oregon. For

example, the agency’s largest project placed radiographic readers in 

10 hospitals and clinics on the Navajo Reservation. X-rays are scanned and

transmitted to other Navajo area hospitals or the University of 

New Mexico Medical Center where consulting radiologists can provide a

diagnostic report.

Although the Food and Drug Administration (FDA) does not invest directly

in telemedicine, it conducts in-house research into emerging technologies

to evaluate their potential public health impact. It also conducts research

into problems with existing products and technologies that may affect

public health. FDA ensures that medical devices are safe and effective by

establishing safety standards and approving the manufacture and

distribution of medical devices. It does not fund efforts for device

development. Examples of medical devices used in telemedicine that fall

under FDA’s authority include radiological imaging, transmission

equipment that utilizes data compression, and software for

computer-assisted medical diagnosis.

Page 90 GAO/NSIAD/HEHS-97-67 Telemedicine
Appendix II 

Telemedicine Initiatives Within the

Department of Defense and Other Federal

Agencies

Commerce Assists Private

Sector Development of

Advanced Technology

For fiscal years 1994 through 1996, the Department of Commerce spent

about $106 million on two programs that include telemedicine among the

developing technologies they support. The National Institute of Standards

and Technology operates the Advanced Technology Program ($93 million),

which supports research into improvements in health information

management. For example, one 1995 cooperative agreement with a private

firm will develop a voice-activated computer system to periodically

monitor homebound patients and automatically notify a physician if

problems are detected.

The National Telecommunications and Information Administration

operates a program ($12.9 million) that grants funds to acquire personnel,

training, equipment, and services to demonstrate the use of advanced

telecommunications in health. One award in 1995 was to Hays Medical

Center in Kansas, which is using cable television facilities to provide home

health care to remote elderly patients. Home health care aides in a rural

area use the system to make interactive video “house calls” to homebound

patients. Each day, a home health aide and a patient meet for an

interactive videoconference. The aide talks with the patient, observes the

patient’s condition, and has the patient transmit medical data, such as

blood pressure or glucose level, over the cable system. By saving the

significant travel time associated with driving from one home to another,

the project allows home health aides to see more patients, enabling more

people to stay at home instead of being transferred to nursing homes.

Agriculture The Rural Utilities Service within the Department of Agriculture

administers the Distant Learning and Telemedicine Grant Program. This

program is designed to encourage, improve, and make affordable the use

of telecommunications, computer systems, and related technology for

rural communities to improve access to education or medical services.

During fiscal years 1994 through 1996, this program awarded $9.3 million

for telemedicine-related projects. Entities benefiting from the program

included consortiums or partnerships of rural hospitals, health care

clinics, or other rural health care facilities; major urban facilities also

participated in networks to extend their expertise to rural areas using

advanced telecommunications. One grant will help support a telemedicine

link between a remote hospital in New Mexico to a medical center and

university in Albuquerque to provide teleradiology, specialist

consultations, and continuing medical education.

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Appendix II 

Telemedicine Initiatives Within the

Department of Defense and Other Federal

Agencies

Justice In 1996, a $3.2 million telemedicine project involving the Federal Bureau of

Prisons and VA was initiated. The Lexington, Kentucky, VA Medical Center

will be linked to four federal correctional facilities, including one with a

hospital, to provide medical consulting services to inmate patients. A

subcontractor will evaluate the project’s results to analyze the cost

benefits of the application of telemedicine to a correctional environment.

NASA Since it was founded in 1959, NASA has been developing telemedicine

technology to monitor and diagnose the condition of its astronauts in

space. It has recently used satellites to link medical conferences between

the United States and Russia. It also provides some support to private

sector research and development. NASA expenditures for telemedicine

totaled $6.6 million for fiscal years 1994-96.

National Science

Foundation

The National Science Foundation awards grants to advance research in all

fields of science. Foundation officials identified projects related to

telemedicine in two program areas: (1) biomedical engineering and

(2) information, robotics, and intelligence systems. The first program area

includes awards of about $1.4 million to improve the transmission of

health information, such as teleradiology. The second program area

awarded grants totaling $5.4 million to advance robotics performance in

medical and surgical operations.

Appalachian Regional

Commission

The Appalachian Regional Commission supports economic development

in the rural areas of 12 states. It has awarded grants that sponsor

development of telecommunication applications that benefit the public

and private sectors. Two projects, operating in western New York and

South Carolina, have telemedicine as their major component and received

$0.3 million from the Commission. For example, the New York project

supports a consortium of seven hospitals that provides specialty care,

emergency medical services, and continuing educational services to

member hospitals.

Page 92 GAO/NSIAD/HEHS-97-67 Telemedicine
Appendix III 

Comments From the Department of Defense

Page 93 GAO/NSIAD/HEHS-97-67 Telemedicine
Appendix III 

Comments From the Department of Defense

Now on pp. 9 and 77.

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Appendix IV 

Comments From the Department of

Veterans Affairs

Page 95 GAO/NSIAD/HEHS-97-67 Telemedicine
Appendix V 

Comments From the Department of Health

and Human Services

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Appendix V 

Comments From the Department of Health

and Human Services

Page 97 GAO/NSIAD/HEHS-97-67 Telemedicine
Appendix V 

Comments From the Department of Health

and Human Services

Now on p. 16.

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Appendix V 

Comments From the Department of Health

and Human Services

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Appendix V 

Comments From the Department of Health

and Human Services

Page 100 GAO/NSIAD/HEHS-97-67 Telemedicine
Appendix V 

Comments From the Department of Health

and Human Services

Page 101 GAO/NSIAD/HEHS-97-67 Telemedicine
Appendix V 

Comments From the Department of Health

and Human Services

Now on p. 32.

Page 102 GAO/NSIAD/HEHS-97-67 Telemedicine
Appendix VI 

Major Contributors to This Report

National Security and

International Affairs

Division, Washington,

D.C.

Sharon A. Cekala

Valeria G. Gist

Paul L. Francis

Brenda S. Farrell

Raymond G. Bickert

Karen S. Blum

Health, Education,

and Human Services

Division, Washington,

D.C.

Stephen P. Backhus

George F. Poindexter

Jacquelyn T. Clinton

Lawrence L. Moore

Office of the General

Counsel

Dayna K. Shah

Stefanie G. Weldon

Atlanta Field Office Cherie’ M. Starck

Gerald L. Winterlin

Pamela A. Scott

(703120) Page 103 GAO/NSIAD/HEHS-97-67 Telemedicine
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