oversight

Telemedicine: Federal Strategy Is Needed to Guide Investments

Published by the Government Accountability Office on 1997-02-14.

Below is a raw (and likely hideous) rendition of the original report. (PDF)

                       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
      United States
GAO   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


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


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


                   Collectively, the public and private sectors have funded hundreds of
Results in Brief   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             Over 35 federal organizations within 9 federal departments or independent
Significant, but Total Is   agencies, 10 state governments, and numerous private sector organizations
Unknown                     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   No formal mechanism or overall strategy exists to ensure that
to Maximize the Value of     telemedicine development is fully coordinated among federal agencies to
Telemedicine Investments     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   By eliminating distance as a factor in medical care, telemedicine has the
Promising but Largely       potential to address some of the access, quality, and cost problems facing
Unquantified                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   Most experts agree that the major barriers to implementing telemedicine
Adoption of 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.


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


                           GAO  provided a draft of this report to DOD, VA, HHS, and the Office of the
Agency Comments            Vice President. Both DOD and VA concurred with our recommendations.
and GAO’s Evaluation       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                                                                                          16
                         What Is Telemedicine?                                                     16
Introduction             History of Telemedicine                                                   17
                         Congressional and Executive Interest in Telemedicine                      18
                         Objectives, Scope, and Methodology                                        19

Chapter 2                                                                                          21
                         Federal Investment Is Significant but Difficult to Determine              21
Many Entities Are        State Investments Are Growing but Are Not Quantified                      26
Involved in              Private Sector Is Investing Mostly in Infrastructure                      29
Telemedicine, but the
Total Investment Is
Unknown
Chapter 3                                                                                          31
                         Overall Federal Telemedicine Effort Is Not Well Coordinated               31
Federal Government       Federal Agencies Recognize the Need for Department Strategies             34
Does Not Have a          DOD’s Telemedicine Efforts Are Diffused and Weakly Linked                 37
                         Private Sector Telemedicine Strategies Are Evolving                       41
Strategy to Maximize     Agency Comments and Our Evaluation                                        44
Value of Telemedicine
Investments
Chapter 4                                                                                          45
                         Telemedicine Provides Benefits to Various Groups                          45
Telemedicine Benefits    Potential Savings May Be Offset by Infrastructure Costs and               50
Are Promising but          Increased Use
                         Cost-Effectiveness of Telemedicine Has Not Been Analyzed                  52
Largely Unquantified
Chapter 5                                                                                          58
                         Barriers Hamper the Private Sector More Than the Federal Sector           58
Several Barriers Limit   Legal and Regulatory Barriers                                             59
Telemedicine             Financial Barriers                                                        65
                         Technical Barriers                                                        68
Activities               Cultural Barriers                                                         71
                         Agency Comments                                                           74




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




Chapter 6                                                                                 75
                  Conclusions                                                             75
Conclusions and   Recommendations                                                         76
Recommendations   Agency Comments and Our Evaluation                                      77

Appendixes        Appendix I: Organizations Visited                                       80
                  Appendix II: Telemedicine Initiatives Within the Department of          84
                    Defense and Other Federal Agencies
                  Appendix III: Comments From the Department of Defense                   93
                  Appendix IV: Comments From the Department of Veterans                   95
                    Affairs
                  Appendix V: Comments From the Department of Health and                  96
                    Human Services
                  Appendix VI: Major Contributors to This Report                         103

Tables            Table 2.1: Telemedicine Investments by Nine Federal                     22
                    Departments and Independent Agencies, Fiscal Years 1994-96
                  Table 3.1: Federal Organizations Involved in Telemedicine               32
                    Initiatives
                  Table 5.1: Specific Telemedicine Barriers Impacting Government          59
                    and Private Sector Entities
                  Table II.1: Telemedicine Investments by DOD Organizations,              84
                    Fiscal Years 1994-96
                  Table II.2: Telemedicine Investments for HHS Agencies From              89
                    Fiscal Years 1994 to 1996

Figures           Figure 1.1: Application Components of an Integrated                     17
                    Telemedicine System
                  Figure 2.1: Distribution of DOD’s Telemedicine Investment by            24
                    Functional Application
                  Figure 2.2: Distribution of Non-DOD Federal Investments by              26
                    Telemedicine System Application




                  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.


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




                                                                          Information
                                                                          Management




                                                           Education
                                                                                              Clinical
                                                           & Training




                                                                        Administrative




                                                       Infrastructure




                                        Under its broadest definition, telemedicine has been practiced in some
History of                              form in the United States for almost 40 years. Most projects have
Telemedicine                            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.



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                        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.


                        In 1993, several members of Congress established the Senate and House
Congressional and       Ad Hoc Steering Committee on Telemedicine to advise legislators on
Executive Interest in   integrating new technologies into health care reform strategies. In 1994,
Telemedicine            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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                     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.


                     As a result of congressional concerns about the federal government’s role
Objectives, Scope,   in advancing telemedicine, the Chairman and Ranking Minority Member,
and Methodology      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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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.


                         Estimating total costs for telemedicine is difficult because agencies that
Federal Investment Is    deliver health care, such as VA, embed telemedicine costs within their
Significant but          health care programs. Also, the lack of a consistent definition of
Difficult to Determine   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       Dollars in millions
Independent Agencies, Fiscal Years    Department or agency                           FY 94          FY 95          FY 96          Total
1994-96
                                      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            DOD and each of the military services have collectively invested more in
and Peacetime                         telemedicine initiatives than any other federal department or agency.
Applications                          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                                                            Clinical $35.7   13.6%
                                     Education    $34.9    13.3%



                                                                                                       Combat casualty       $35.7    13.6%



                                                                                                           Other   $12.9 4.9%

                                                                                                           Administrative   $6.6 2.5%
                                                                                                           Other   $12.9     4.9%

                                                                                                       Administrative       $6.6    2.5%



                                    Informatics   $136.4   52.0%



                                    Note: Dollars are in millions.

                                    Source: Various organizations within DOD.




DOD’s Investment Could              DOD’s  investment in telemedicine could double or even triple by the year
Increase Significantly              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    Eight civilian federal departments or independent agencies with various
Invest in a Range of      roles in providing or supporting health care delivery invested $384 million
Telemedicine Activities   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   $218    56.7%




                                                                                                                  Education $5.8    1.5%
                                                                                                                  Administrative $8.9   2.3%

                                                                                                                  Education $5.8 1.5%
                                                                                                                  Administrative $8.9 2.3%




                                      Clinical   $65.4   17.0%                                   Infrastructure     $86.3   22.5%


                                      Note: Dollars are in millions.

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



                                      In May 1995, the Primary Care Resource Center at George Washington
State Investments Are                 University completed a comprehensive review and analysis of the states’
Growing but Are Not                   telemedicine activities. The report, entitled State Initiatives to Promote
Quantified                            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.


                      Estimates of private sector investments have not been quantified because
Private Sector Is     telemedicine costs are difficult to separate from health care delivery costs
Investing Mostly in   and most cost data is proprietary. The Koop Institute estimates that the
Infrastructure        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.


                         No formal mechanism or strategic plan exists to ensure that telemedicine
Overall Federal          development is fully coordinated among federal agencies and that
Telemedicine Effort Is   telemedicine efforts have a common purpose. A well-coordinated plan is
Not Well Coordinated     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
                                                                                 Research and        Health care
Organization                                                                      development           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.


                     In addition to the lack of an overall federal telemedicine strategy, federal
Federal Agencies     agencies do not have departmentwide strategies to maximize the value of
Recognize the Need   their telemedicine investments. If each agency involved in telemedicine
for Department       had its own strategy, a governmentwide strategy could be built from it.
                     The absence of departmentwide strategies has contributed to unclear
Strategies           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.


                             Although DOD has a large and growing investment in telemedicine, it has
DOD’s Telemedicine           not yet structured its telemedicine initiatives, which are led by numerous
Efforts Are Diffused         organizations, to determine if, collectively, their cost is commensurate
and Weakly Linked            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               Many different DOD organizations generate telemedicine projects, including
Responsibilities Are Still   the ones shown earlier in table 3.1. The problems of organizational
Evolving                     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   A 1995 DOD Inspector General report suggested that DOD needed to define
Unclear                  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     DOD has not developed a comprehensive telemedicine budget or program
Not Occurred              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     Other than the telemedicine initiatives led by DARPA, few partnerships
Private Sector Have Not   between the private sector and DOD are planned. The Medical Research
Been Fully Explored       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.


                 Given the wide range of private sector players in the implementation of
Private Sector   telemedicine, it is understandable that no single private sector strategy
Telemedicine     exists to advance this emerging technology. For example, manufacturers
Strategies Are   develop new products, utility companies build the telecommunications
                 infrastructure, professional organizations develop health care standards,
Evolving         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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                     HHS  commented that our report should acknowledge the role that the High
Agency Comments      Performance Computing and Communications Program has played in the
and Our Evaluation   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 Benefits Are Promising but
Largely Unquantified

                           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.


                           By eliminating distance as a factor in treating patients, telemedicine
Telemedicine               benefits health care providers and patients, no matter whether the setting
Provides Benefits to       is a military site, rural hospital, or correctional facility. Without
Various Groups             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   For the medic on the battlefield, telemedicine provides immediate access
Access to Health Care      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   Telemedicine gives health care providers a chance to enhance their skills
Health Care Quality        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   An Arthur D. Little Foundation study published in 1992 on the U.S. health
Cost Savings             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.


                        Although some data show that telemedicine can save costs, other data
Potential Savings May   indicate that there is a high cost for using telemedicine both in total
Be Offset by            dollars and per consultation. Main factors include infrastructure start-up
Infrastructure Costs    costs and operational costs of the systems and equipment. For example,
                        the infrastructure start-up, equipment, and operational costs for DOD’s
and Increased Use       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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                         Although many individuals strongly believe that telemedicine is a good
Cost-Effectiveness of    value, no one has quantified the benefits through a comprehensive
Telemedicine Has Not     cost-benefit analysis. Evidence supporting these beliefs is mainly based on
Been Analyzed            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    Early telemedicine programs concentrated on demonstrating that the
Primarily on Technical   technology would enable the health care practitioner to diagnose and treat
Feasibility              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         A number of DOD organizations are planning and implementing
Evaluations Are Not      telemedicine evaluations. However, there is little coordination among the
Coordinated Among        sites in developing these evaluations. In addition, the evaluations may not
                         be used outside each organization to develop a DOD-wide database or
Services or Facilities   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      Other federal agencies that are now funding or conducting large-scale,
Conducting Wide-Reaching   comprehensive evaluations of telemedicine include VA, the National
Evaluations                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.


                      The private sector, particularly fee-for-service providers, is generally
Barriers Hamper the   affected by all barriers—legal and regulatory, financial, technical, and
Private Sector More   cultural. Federal sector agencies that directly deliver health care services,
Than the Federal      such as VA and DOD, are less affected than the private sector by legal and
                      regulatory barriers, but cultural (particularly physician acceptance) and
Sector                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
                                                              b            b             b            b                   b                 b
  Patient acceptance
                                          a
                                            A 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.
                                          b
                                           The extent of the problems presented by this barrier is unknown.




                                          Legal and regulatory barriers to implementing telemedicine activities are
Legal and Regulatory                      licensure issues, malpractice liability, privacy and security, and regulation
Barriers                                  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                 According to individuals we contacted and literature we reviewed, one of
Medical Licenses                          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   Another barrier to widespread deployment of telemedicine applications
Medical Data              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     FDA  has responsibility for ensuring that medical devices are safe and
Policy on Medical Devices   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.


                     The lack of reimbursement for consulting physicians’ services and the
Financial Barriers   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          Currently, HCFA does not reimburse for telemedicine consultations for
Reimbursement of     Medicare patients. One report indicated that HCFA’s current position is one
Providers            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.


                      The lack of clinical and technical standards for transmitting data is a major
Technical Barriers    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   Another issue complicating telemedicine is the general lack of standards.
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.

                      10
                       Health 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   Technology limitations, as well as equipment incompatibility, present
Incompatibility            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


                           11
                            The Council on Competitiveness’ March 1996 report lists 31 agencies or organizations involved in the
                           process of setting standards.
                           12
                             Interoperability 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              In discussing telemedicine and deployed scenarios with service officials,
Telemedicine Challenges   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

                          13
                            Rashid 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 must be overcome to sustain telemedicine networks with
Cultural Barriers   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   One way to increase utilization of telemedicine networks is to foster
Telemedicine              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   Patient acceptance with using telemedicine for consultations may be less
Telemedicine            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.




                        15
                         Dena Puskin and Jay Sanders. “Telemedicine Infrastructure Development.” Journal of Medical
                        Systems, Vol. 19, No. 2 (1995), p. 127.



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                  In commenting on a draft of this report, HHS said that a clearer depiction of
Agency Comments   the role of FDA in telemedicine was needed. Accordingly, we clarified this
                  information.




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Conclusions and Recommendations


              Telemedicine has the potential to revolutionize the way health care is
Conclusions   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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                      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.


                      By nature, telemedicine issues cut across public and private sectors and
Recommendations       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.


                         We provided a draft of this report to DOD, VA, HHS, and the Office of the Vice
Agency Comments          President. Both DOD and VA concurred with our recommendations. DOD
and Our Evaluation       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



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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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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      Food and Drug Administration
Human Services                Health Care Financing Administration
                              Agency for Health Care Policy and Research
                              Indian Health Service




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                           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       Veterans Health Administration
Affairs
National Aeronautics and
Space Administration

National Science
Foundation

                           Georgia
State Governments          Texas


                           American Academy of Dermatology
U.S. Health Care           American Academy of Family Physicians
Organizations              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


                           Council on Competitiveness
Other Private U.S.         National Electrical Manufacturers Association
Organizations              National Academy of Sciences, Institute of Medicine
                           American Telephone and Telegraph
                           The Koop Foundation
                           Center for Public Service Communications
                           Computer Motion, Inc.




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                         Appendix I
                         Organizations Visited




                         Western Governors Association
                         Allina Health Systems
                         Mayo Clinic


                         George Washington University, Intergovernmental Health Policy Project
Academia                 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   Decatur Medical Center
Affairs                  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




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                        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  has invested $262 million in telemedicine initiatives over the last 3
DOD Is the Largest                         fiscal years. As table II.1 shows, DARPA has invested the most in
Single Federal                             telemedicine projects in fiscal years 1994-96, followed by the Army (after
Investor                                   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         Dollars in millions
1994-96                                    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.
                                           a
                                               These amounts include $58.4 million in congressionally directed programs.




DARPA Focuses on Unique                    Since 1994, DARPA has invested $104.6 million in 24 telemedicine research
Battlefield Applications                   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       The Army has invested $126.2 million in telemedicine since fiscal year
Peacetime Telemedicine         1994. These investments include approximately $46.7 million that the
Initiatives                    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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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          For fiscal years 1994 through 1996, the Navy funded 21 pilot projects by
Connectivity With Ships      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   Air Force officials stated that, because both peacetime and contingency
Peacetime Care               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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                        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.


                        Eight other federal departments and independent agencies have invested
Non-DOD Federal         in telemedicine initiatives that are consistent with their overall agency
Investments Include a   responsibilities. From fiscal years 1994 to 1996, these agencies invested
Wide Range of           $384 million to deliver health care, sponsor telecommunications
                        development, and evaluate the effectiveness of telemedicine systems.
Projects
VA Focuses on           VA’s159 medical centers use several forms of telemedicine to help deliver
Telemedicine            health care to its beneficiaries. VA officials estimate their cost to acquire
Infrastructure          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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                                       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                  HHS spent an estimated $110 million for telemedicine in fiscal years 1994-96
Array of Telemedicine                  on a variety of telemedicine activities that reflect the missions of five of its
Initiatives                            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     Agency within        Primary
1994 to 1996                           HHS                  mission                FY 94       FY 95      FY 96        Total
                                       National Library     Research
                                       of Medicine                                 $27.7        $0.9       $40.0       $68.7
                                       Office of Rural      Clinical health
                                       Health Policy        care                     6.9         7.6        10.1        24.7
                                       Agency for           Research
                                       Health Care
                                       Policy and
                                       Research                                      0.7         5.5         1.9         8.2
                                       Health Care          Evaluation
                                       Financing
                                       Administration                                4.0         0.5         3.5         8.1
                                       Indian Health        Clinical
                                       Service                                       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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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.




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                           Telemedicine Initiatives Within the
                           Department of Defense and Other Federal
                           Agencies




Commerce Assists Private   For fiscal years 1994 through 1996, the Department of Commerce spent
Sector Development of      about $106 million on two programs that include telemedicine among the
Advanced Technology        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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                       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       The National Science Foundation awards grants to advance research in all
Foundation             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   The Appalachian Regional Commission supports economic development
Commission             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.




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Appendix III

Comments From the Department of Defense




               Page 93       GAO/NSIAD/HEHS-97-67 Telemedicine
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                       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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Comments From the Department of Health
and Human Services




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                Comments From the Department of Health
                and Human Services




Now on p. 16.




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Comments From the Department of Health
and Human Services




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Comments From the Department of Health
and Human Services




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Comments From the Department of Health
and Human Services




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                Comments From the Department of Health
                and Human Services




Now on p. 32.




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Appendix VI

Major Contributors to This Report


                        Sharon A. Cekala
National Security and   Valeria G. Gist
International Affairs   Paul L. Francis
Division, Washington,   Brenda S. Farrell
                        Raymond G. Bickert
D.C.                    Karen S. Blum


                        Stephen P. Backhus
Health, Education,      George F. Poindexter
and Human Services      Jacquelyn T. Clinton
Division, Washington,   Lawrence L. Moore

D.C.
                        Dayna K. Shah
Office of the General   Stefanie G. Weldon
Counsel
                        Cherie’ M. Starck
Atlanta Field Office    Gerald L. Winterlin
                        Pamela A. Scott




(703120)                Page 103               GAO/NSIAD/HEHS-97-67 Telemedicine
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