The R&D Tax Credit Aspects of Telemedicine
Telemedicine
Telemedicine will revolutionize the way
healthcare is delivered to patients in the United
States. With an aging population, increasing healthcare
costs, and an active healthcare consumer movement, more
efficient ways of delivering healthcare services are being
developed across the industry by innovative healthcare
technology companies.
Antiquated ways of
delivering healthcare are overburdening the health care system
nationwide. In 2014, total spend on U.S. healthcare
increased 5.3% totaling over $3 trillion dollars.
That $3 trillion amounted to 17.5% of the nation’s total
GDP. In 1960, healthcare spending was only about 6% of
national GDP. The 17.5% is also unusually high when
compared to other developed nations such as Germany, France,
and Japan with an estimated national healthcare cost of 10-11%
of GDP, according to data from the World
Bank. Most other countries’ healthcare costs
are even lower.
The rising national
healthcare costs are being exacerbated by the following
trends:
- The U.S. pays for nearly any
healthcare technology without regard to economic value or
efficiency.
- People are demanding more health
services than they did in previous years.
- The demand for physician services
is growing faster than the supply.
By 2025, there is
expected to be a shortage of between 46,100 and 90,400
physicians in the U.S. Along with the increasing demand
for healthcare services, providing the necessary healthcare
services to an aging population in the coming years is going
to be quite challenging.
Some hopeful solutions
to this challenge include virtual licensed doctors, distant
specialists, and high tech patient monitoring which could
dramatically increase efficiency and lower operating costs
throughout the industry. Modern doctors are
incorporating tablets, Skype chats, and mobile robotic
solutions to diagnose more patients in a shorter amount of
time across geographical boundaries.
In addition, the
Internet of Things (IoT) connects monitoring devices to cloud
servers that communicate with hospital central databases and
healthcare facilities. These cloud servers store data and
facilitate electronic patient monitoring.
The development and integration of these and similar
technologies are being increasingly encouraged by federal and
state governments with R&D Tax Credits.
The R&D Tax Credit
Enacted in 1981, the Federal Research and
Development (R&D) Tax Credit allows a credit of up to 13
percent of eligible spending for new and improved products and
processes. Qualified research must meet the following four
criteria:
- New or improved products,
processes, or software
- Technological in nature
- Elimination of uncertainty
- Process of experimentation
Eligible costs include
employee wages, cost of supplies, cost of testing, contract
research expenses, and costs associated with developing a
patent. On December 18, 2015, President Obama signed the
bill making the R&D Tax Credit permanent. Beginning
in 2016, the R&D credit can be used to offset Alternative
Minimum tax and startup businesses can utilize the credit
against payroll taxes.
Telemedicine
Integration
Telemedicine is the use of technology to
gather and exchange medical information in order to increase
economic efficiency. The industry includes a growing
variety of applications/services such as two-way video, email,
smartphones, sensors, and wireless tools.
A 2011 Center for
Disease Control study showed that 80% of adults who received
non-necessary emergency room treatment did so because they did
not have access to a primary care provider. The ER is
the most expensive way to provide non-urgent care, being that
a typical ER visit costs an average of $1,500 to $3,000
dollars. Many of the diagnoses and treatments that
occur in the ER can be accomplished using the more cost and
time efficient methods of telemedicine.
Researchers at the
University of Rochester found that 28% of the visits at a
pediatric ER involved ailments such as ear infections or sore
throats. These and similar ailments can easily be
diagnosed using telemedicine technology.
In contrast to the
$1,500 to $3,000 ER visit costs, a telemedicine visit can cost
as little as $40 to $50 per consultation. Many patients
prefer this method and are often more satisfied because they
can consult with doctors more frequently and without leaving
their home. A parent with a sick child in the middle of
the night can access a provider via webcam and avoid an
unnecessary, expensive trip to the ER.
In addition to patient
benefits and direct cost savings, there are indirect
economical benefits as well. Traditionally, a trip to
the doctor’s office means time out of the work day, however,
with telemedicine, employees can now communicate with health
care providers during work hours, at lunch time, or by taking
a short break. According to a recent study by the
Affiliated Workers Association, as many as 70% of doctor
visits can be handled without an office visit using
telemedicine. Instead of leaving work for medical
evaluations, diagnosis, and treatment, patients can stay
working and retain lost income that would otherwise be
foregone.
LifeDojo, Inc., a
telemedicine start-up based in San Francisco, recognizes the
opportunity to provide health services for employees at the
workplace and targets employers who want to keep their
employees happy and healthy by offering specific services to
boost overall health.
Mobile Technologies
Mobile technologies in telemedicine involve
the use of smartphones, tablets, and other electronic devices
to provide interactions for patients and healthcare
providers. According to a Healthcare Information and
Management Systems (HIMSS) survey, 83% of physicians now use
some sort of mobile technology to provide health care
services.
Nuance’s PowerShare
imaging app connects over 2,000 different healthcare
organizations who share over 3 million images of patient
MRI’s, X-rays, and other relevant data. Users can
also zoom, pan, scroll and handle multiple frame data sets at
once. Medical images can be uploaded to the cloud for
access by both doctors and patients across different
networks. The cloud network eliminates the need for
outdated technologies such as CDs or expensive infrastructure
such as databases at hospitals.
There are numerous other
mobile healthcare apps available for healthcare providers as
well. As of 2012 there were at least 13,000 medical and
healthcare apps on the market. In that same year, 55% of
physicians were using them. That number has likely
increased significantly since that time.
Software Development
Viewing medical images and other data on
mobile devices often involves the use of special software
applications that display, enhance and possibly manipulate
image data. Telemedicine software needs to be easy to
use for both patients and physicians. The best
telemedicine software, for example, incorporates creative
user-interface design that is both simple and detailed.
SnapMD, Inc. in
Glendale, CA created a virtual platform for secure one-on-one
live video, audio, and text message consultations between
ambulatory patients and their primary and specialty care
physicians. The SnapMD cloud based platform enables healthcare
providers to directly engage patients in a “virtual care”
environment and is HIPAA and HITECH compliant.
Software programs, such
as eVisit, can communicate with pharmacies via ePrescribe and
allow physicians to submit a prescription electronically
without picking up the phone.
Internet of Things
The Internet of Things (IoT) provides
several great opportunities for technology developers in the
telemedicine industry. The ability to connect
physical objects to each other, in addition to the internet
itself, allows for automated remote monitoring of patients,
many of whom have chronic illnesses and need 24-hour care.
Mobile devices connecting physicians with patients can
significantly increase the identification of patient
conditions early on.
By 2020, IoT is
expected to support 212 billion connected devices representing
an $8.9 trillion market. Goldman Sachs recently reported that
this digital health revolution could result in nearly $305
billion in medical industry savings each year.
Wearables Devices
The use of wearables devices may be the
largest breakthrough in the telemedicine industry.
Clothing and accessories incorporated with sensors can provide
both continuous monitoring of patients and automated treatment
for health conditions. Innovative wrist watches, for example,
can monitor heart rates, take blood pressure and test glucose
levels for diabetics.
Siemens, the large
global technology and automation company recently introduced
the syngo.via WebViewer which allows users to view images
quickly on a tablet or other smart device. In the case
of a stroke or trauma, physicians need to see images as soon
as they are available and the ability to display images
directly on a tablet means patients do not have to be brought
to a reading room to explain a diagnosis.
Other mobile devices are
giving rise to a new class of clip-on diagnostics that allow
patients to monitor and diagnose themselves.
AliveCor, Inc., based in San Francisco, sells a heart monitor
that connects to an iPhone and allows patients to record their
own ECG. The app records accurate ECGs and heart rates in
about 30 seconds at a very reasonable cost.
Data Analytics
Data analytics will allow doctors to make
more informed, faster, and overall more intelligent decisions
about a patient’s health. For example, the use of
big data analytics is helping to improve research and
treatment for Parkinson’s disease by detecting patterns in
patient data collected from wearable technologies used to
monitor symptoms. This effort is an important step in enabling
researchers and physicians to measure the progression of the
disease and to accelerate breakthroughs in drug development.
Data analytics can also
give patients tailored advice on what to do in any given
medical situation from a vast database of human experience. In
addition, patients can enter inputs such as their smoking
history, their athletic ability, and their DNA profile and
compare the effects of their lifestyle with other similar
users in the database.
Thanks to large data
sets made available with big data analytics, we now have the
ability to search for trends and associations that we would
have missed only a decade ago. A recent study, mining
electronic medical records (EMRs), showed that women with
ovarian cancer who were on certain blood-pressure drugs
actually lived longer.
Data Security
As the ability to transfer information
electronically and view medical files with internet connected
devices develops, data security becomes an increasingly
practical concern. Storing medical data on
cloud servers and other internet connected devices raises
concerns among some patients and doctors that data could
potentially be accessed by unauthorized users.
The CDC recently
estimated that each year there are 35 million hospital
discharges, 100 million hospital outpatient visits, 900
million physician office visits, and billions of prescriptions
all containing confidential patient information.
Technology developers need to create products that are 100%
secure and HIPPA compliant as well.
Online Therapy
Perhaps one of the most obvious uses for
telemedicine involves virtual therapy. Breakthrough
Behavioral, Inc., based in Redwood, CA offers online therapy
in an attempt to make it easier for patients to get access to
mental health providers. The site offers some impressive
stats, with 86% of patients returning after their first
session. Studies have shown that online counseling is
just as beneficial as in-person.
More Convenient Access
Perhaps the largest benefit of telemedicine
is that it allows people in rural areas and undeveloped
countries to access healthcare markets for the first
time. In-home telemedicine solutions can be tailored for
use in remote locations like villages in Africa, India, and
even rural America. Advances in satellite communications
technology now allows people in these remote areas to bypass
decades of infrastructure development and connect easily to
the internet. Many of these people would have access to real
doctors for the first time.
Pager, Inc., a NYC based
start-up, provides on-demand home doctor visits within 2 hours
through the use of their app. So far Pager, Inc. offers
services in New York and San Francisco but plans to reach more
cities throughout the U.S. in the near future.
Electronic Medical
Records (EMRs)
An electronic medical record (EMR) is a
digital version of a patient’s paper medical history
chart. Real-time, patient centered records make
information available instantaneously to patients, doctors and
other authorized users. Advanced EMR systems go beyond
standard clinical data and offers detailed e-files containing
a patient’s medical history, diagnoses, medications, treatment
plans, allergies, immunization dates, radiology images, and
laboratory and test results.
This digital format is
particularly useful because it allows doctors to share
information across organizations. Many times patients do not
know what type of health information is relevant to share with
doctors and often forget important medical information that
should be disclosed to healthcare professionals.
Electronic databases, however ensure that all relevant patient
health history is disclosed to doctors even if a patient fails
to mention it.
Conclusion
The use of telemedicine technology to
evaluate, diagnose, monitor and treat patients across
geographical boundaries could potentially revolutionize
healthcare services throughout the world. Federal and
state R&D Tax Credits are available to help support and
stimulate those who developing technology in the telemedicine
sector.
