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. 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. 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. 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. According to a report issued by the Institute of Medicine, only one telemedicine project that started before 1986 has survived. 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. 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). 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 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. 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. 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 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. 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.