Economic Evaluations of the Effects of Longevity on Telemedicine and Conventional Healthcare Provision

Abstract

Objective: Providing healthcare for the elderly is one of the expectations of a telemedicine system to reduce the isolation of the aging and enhance the quality of long-term care for the elderly. Based on the experiences in Taiwan, this research aimed at investigating the influences of longevity on the demand for health services through telecommunications and conventional face-to-face methods and to note the relationship between telemedicine and conventional health services. Materials and Methods: Multiple regression analysis was undertaken. The sample covers the period from 1995 to 2004. Our results indicate that a 1% increase in the proportion of elderly relative to the population significantly increases the quantity demanded of telehealth by 305.73 and the quantity demanded of face-to-face health services by 1.99×10⁷. On the relationship between longevity and telemedicine, the society begins to request telehealth when the elderly proportion is >2.06%. With current 9.5% elderly proportion, there is a potential to provide 2,274.86 telemedicine health services that are currently provided at only 954.9 and underprovided by 1.38 times. On the relationship between longevity and conventional health services, when the elderly proportion is >0.56%, the needs for face-to-face health services increase in the elderly percentage. With 9.5% elderly proportion, the estimated volume of health services via conventional medical care system is 1.54×10⁸. The current quantity of such services is 1.11×10⁸ and underprovided by 38%. Estimation results reveal that online and conventional health services are complementary for enhancing health status in an aging society.

Introduction

The changing demographics of our societies have increasingly focused public and government attentions on the problems of the elderly. Under the Older Americans Act, the elderly population in the United States may be eligible for various kinds of supportive services either at home or in the community.¹ When family support is not enough, the elderly population appears to rely on other sources of health services. Increases in the demand for healthcare provision are inevitable, and the technical progress in medicine is requested in higher age.^2,3 Similar concerns about the medical care security system was perceived in Taiwan as enhancing quality of life for the elderly, especially those in the rural areas.

Improvements in healthcare, nutrition, and the overall standard of living for most people, life expectancy for the population in Taiwan, approximately 28 years in 1900, has increased over the past century to about 78. The percentage of the elderly in Taiwan is 4% in 1985, 5.4% in 1995, 9.7% in 2005, and expected to be 37%in 2050.⁴

The National Health Insurance System was established in 1995, and telemedicine services were introduced in the same year for the facilities available for physicians at remote sites to provide healthcare in rural areas, continuing medical education for physicians in these areas, and special medical services for the elderly, the handicapped, and terminal ill patients at home.⁵ Providing healthcare for the elderly is one of the properties inherited in the telemedicine system, leading to reduce a sense of isolation and enhance the quality of long-term care for the aging.^6,7

Based on Taiwan's experiences, this research aims to investigate the influences of longevity on the demand for health services through telecommunications and conventional face-to-face methods and to find the relationship between telemedicine and conventional health services in an aging society.

Methods and Specifications

This study used multiple regressions to examine the utilization of telemedicine and conventional medicine health services.

Economists define a demand function as the relationship between quantities of specific goods or services demanded by consumers and the prices with constant all other relevant economic variables. There is no United Nations standard numerical criterion to define the elderly or older persons. Most developed countries have accepted the chronological age of 65 years to refer to the older population. When the proportion of the elderly in the population exceeds 7 (14)%, the economy is an aging (aged) society.⁸ This research used the cutoff of 65+ years to refer to the elderly and aimed to analyze the linkage between longevity and healthcare provision through telemedicine and conventional face-to-face systems.

Applications of telemedicine for patients in Taiwan include prehospital ambulance care, medical consultation, video house calls and distance learning. Telecommunications have considerable potential for improving healthcare provision for rural areas and under-served populations.⁹ Conventional health services are those not provided through the telecommunications system and composed of services on outpatients, inpatients, medicine and healthcare appliances.

According to demographic forecasts of national statistics in Taiwan, the elderly percentage is expected to be >20% in Taiwan in 2050 to equal that in Italy, German, Japan, and Spain.¹⁰ Because the absolute and relative numbers of older adults have been and are expected to continue increasing, the consumption of healthcare resources by the elderly stimulated this research on the health services utilization of older adults. This study aimed to examine (i) how longevity influences the demand for health services through conventional face-to-face and telemedicine systems, (ii) what the relationship between conventional healthcare and telemedicine in an aging society, and (iii) whether the healthcare provision meets the aging society's demand currently.

The data sets of dependent and explanatory variables are observed in each of 10 years over the period from 1995 to 2004. The data of the dependent variables, telemedicine services (T) and conventional health services (C) are respectively collected and published by five individual teleconsulation medical centers as well as Department of Health in Taiwan in various years. The units of health services are times of healthcare provision. The times of telemedicine are composed of prehospital ambulance care, medical consultation, and video house calls; those of conventional medicine are composed of health services on outpatients, inpatients, medicine, and healthcare appliances. Through the initial survey, five teleconsultation medical centers, funded by the Department of Health, including those of the National Taiwan University Hospital, Veterans General Hospital-Taipei, National Cheng Kung University Hospital, Tri-Service General Hospital, and the Buddhist Tsu-Chi General Hospital are considered. The selection of the explanatory variables used in this study has been determined by the respective demand function, as shown in equations (1) and (2). Three explanatory variables are considered. As the demand function demonstrated, the quantity demanded for telehealth and conventional medicine services is the number of times patients plan to access healthcare during a given time period at a particular price. The first variable is the price (cost) of telemedicine per health service (P_T ). The second variable is the price of medical care through conventional means (P_C ), which is the expenditure of per visit by both inpatients and outpatients and on the utilization of hospitals on an annual basis. The above-mentioned variables are collected from and published by the Bureau of Nursing and Healthcare Services, Department of Health, Taiwan. The third variable is longevity, which is represented by the proportion of the elderly relative to the whole population (E) yearly data published by National Statistics, Taiwan. This study hypothesized that longevity attributes the increases in the demands for health services. The empirical test is then to examine whether longevity plays a key role in determining the volume of the patients that are served by the telemedicine and conventional medicine systems. Table 1 presents the summary statistics.

Table 1.

Summary Statistics

VARIABLES	AVERAGE	STD. DEVIATION	MINIMUM	MAXIMUM
Telemedicine health services	954.90	437.07	426	1,611
Price (cost) per telehealth service in NT$ (32NT$=1US$)	725.32	345.64	296.72	1,368.05
Conventional health services	1.11×110⁸	9,403,386	9.23×10⁷	1.22×10⁸
Price (cost) per conventional health service in NT$	107,309	14,837	81,426	133,506
Elderly percentage (%)	8.53	0.6	7.6	9.5

Research Method

This research uses the method of multiple regression analysis to provide its statistical rigor for investigating the influences of longevity on the health services demanded. Ruling out trivial cases and focusing on the investigation of influences of longevity on health services, the demands for telemedicine and conventional health services are investigated by the following regression equations, according to the above discussions. \documentclass{aastex}\usepackage{amsbsy}\usepackage{amsfonts}\usepackage{amssymb}\usepackage{bm}\usepackage{mathrsfs}\usepackage{pifont}\usepackage{stmaryrd}\usepackage{textcomp}\usepackage{portland,xspace}\usepackage{amsmath,amsxtra}\pagestyle{empty}\DeclareMathSizes{10}{9}{7}{6} \begin{document} \begin{align*} T = \beta_1 P_T + \beta_2 E + \varepsilon \tag{1} \end{align*} \end{document} \documentclass{aastex}\usepackage{amsbsy}\usepackage{amsfonts}\usepackage{amssymb}\usepackage{bm}\usepackage{mathrsfs}\usepackage{pifont}\usepackage{stmaryrd}\usepackage{textcomp}\usepackage{portland,xspace}\usepackage{amsmath,amsxtra}\pagestyle{empty}\DeclareMathSizes{10}{9}{7}{6} \begin{document} \begin{align*} C = \beta_3 P_C + \beta_4 E + \varepsilon \tag{2} \end{align*} \end{document}

Where T and C are the health services demanded via telecommunications and conventional medical care, P_T and P_C are the unit prices (costs) of telemedicine and conventional health services, E is the elderly percentage, and ɛ is the error term. If the estimated results are consistent with the hypothesis that the demands for telecommunications and conventional health services increase in the proportion of the elderly relative to the whole population, this research would expect \documentclass{aastex}\usepackage{amsbsy}\usepackage{amsfonts}\usepackage{amssymb}\usepackage{bm}\usepackage{mathrsfs}\usepackage{pifont}\usepackage{stmaryrd}\usepackage{textcomp}\usepackage{portland,xspace}\usepackage{amsmath,amsxtra}\pagestyle{empty}\DeclareMathSizes{10}{9}{7}{6}\begin{document}$$\hat{ \beta}_1 < 0 , \, \hat{ \beta}_2 > 0 , \, \hat{ \beta}_3 < 0$$ \end{document} , and \documentclass{aastex}\usepackage{amsbsy}\usepackage{amsfonts}\usepackage{amssymb}\usepackage{bm}\usepackage{mathrsfs}\usepackage{pifont}\usepackage{stmaryrd}\usepackage{textcomp}\usepackage{portland,xspace}\usepackage{amsmath,amsxtra}\pagestyle{empty}\DeclareMathSizes{10}{9}{7}{6}\begin{document}$$\hat{ \beta}_4 > 0$$\end{document} .

Empirical Tests

By applying the ordinary least squares method and using STATA 10.0 with the survey data, we can further estimate the coefficients corresponding to each variable in equations (3) and (4).

Results

The multiple regression results for the application of telehealth and conventional health services to selected variables are presented by equations (3) and (4) and convey a wealth of information. The demand for telemedicine health services is estimated as: \documentclass{aastex}\usepackage{amsbsy}\usepackage{amsfonts}\usepackage{amssymb}\usepackage{bm}\usepackage{mathrsfs}\usepackage{pifont}\usepackage{stmaryrd}\usepackage{textcomp}\usepackage{portland,xspace}\usepackage{amsmath,amsxtra}\pagestyle{empty}\DeclareMathSizes{10}{9}{7}{6} \begin{document} \begin{align*} \hbox{Telemedicine health services} = - { 0.868_{(-3.96)}} P_T +{ 305.73_{(2.43)}}\ elderly \ percentage \ R^2 = 0.81; \overline{R}^2 = 0.75 \tag{3} \end{align*} \end{document}

The demand for conventional health services is estimated as: \documentclass{aastex}\usepackage{amsbsy}\usepackage{amsfonts}\usepackage{amssymb}\usepackage{bm}\usepackage{mathrsfs}\usepackage{pifont}\usepackage{stmaryrd}\usepackage{textcomp}\usepackage{portland,xspace}\usepackage{amsmath,amsxtra}\pagestyle{empty}\DeclareMathSizes{10}{9}{7}{6} \begin{document} \begin{align*} \hbox{Conventional health services} = - { 329.26_{(-2.99)}} \, P_C + { 1.99 \times 10^7_{(7.45)}}\ elderly \ percentage \ R^2= 0.88; \overline{R}^2 = 0.82 \tag{4} \end{align*} \end{document}

Estimated coefficients are: \documentclass{aastex}\usepackage{amsbsy}\usepackage{amsfonts}\usepackage{amssymb}\usepackage{bm}\usepackage{mathrsfs}\usepackage{pifont}\usepackage{stmaryrd}\usepackage{textcomp}\usepackage{portland,xspace}\usepackage{amsmath,amsxtra}\pagestyle{empty}\DeclareMathSizes{10}{9}{7}{6}\begin{document}$$\, \hat{ \beta}_1 = - 0.868 , \hat{ \beta}_2 = 305.73 , \hat{ \beta}_3 =- 329.26$$\end{document} , and \documentclass{aastex}\usepackage{amsbsy}\usepackage{amsfonts}\usepackage{amssymb}\usepackage{bm}\usepackage{mathrsfs}\usepackage{pifont}\usepackage{stmaryrd}\usepackage{textcomp}\usepackage{portland,xspace}\usepackage{amsmath,amsxtra}\pagestyle{empty}\DeclareMathSizes{10}{9}{7}{6} \begin{document}$$\hat{ \beta}_4 = 1.99 \times 10^7$$ \end{document} as expected with t-statistics in the parentheses. A 1% increase in the elderly proportion significantly increases the quantity demanded of telehealth by 305.73 and the quantity demanded of face-to-face health services by 1.99×10⁷. A dollar increase in the unit price of telehealth significantly reduces the quantity demanded for such services by 0.868. A dollar increase in the unit price of conventional health services reduces the quantity demanded for such services by 329.26. Empirical results are highly statistically significant and the fits of regressions (adjusted R-squared, −R² ) are quite good.

Our primary interest is how the longevity affects utilization of health services. Specifying the prices (costs) of health services average in the systematic framework in the constant terms, the relationships between longevity and health services are estimated as: \documentclass{aastex}\usepackage{amsbsy}\usepackage{amsfonts}\usepackage{amssymb}\usepackage{bm}\usepackage{mathrsfs}\usepackage{pifont}\usepackage{stmaryrd}\usepackage{textcomp}\usepackage{portland,xspace}\usepackage{amsmath,amsxtra}\pagestyle{empty}\DeclareMathSizes{10}{9}{7}{6} \begin{document} \begin{align*} \hbox{Telemedicine health services} = - 629.58 + 305.73 \ elderly \ percentage \tag{5} \end{align*} \end{document} \documentclass{aastex}\usepackage{amsbsy}\usepackage{amsfonts}\usepackage{amssymb}\usepackage{bm}\usepackage{mathrsfs}\usepackage{pifont}\usepackage{stmaryrd}\usepackage{textcomp}\usepackage{portland,xspace}\usepackage{amsmath,amsxtra}\pagestyle{empty}\DeclareMathSizes{10}{9}{7}{6} \begin{document} \begin{align*} \hbox{Conventional health services} = - 35332561.34 + 1.99 \times 10^7 {elderly \ percentage} \tag{6} \end{align*} \end{document}

Substituting the value of the elderly percentage from statistics in Table 1 into equations (5) and (6), the relationships between longevity and health services are depicted by Figures 1 and 2. These graphs present the influences of longevity on the demand for health services.

Fig. 1.

The influences of longevity on telemedicine provision.

Fig. 2.

The influences of longevity on conventional health services.

Discussion

This research has made an effort to provide empirical work for investigating the needs for health services in different healthcare systems in an aging society. Estimation results serve as paradigms for adjusting the medical care security system to meet the needs and priorities of the future to other areas.

The coefficients on the elderly percentage indicate that the health stock deteriorates with human being's ages and the demands for health services via online and face-to-face healthcare systems increase. On the relationship between longevity and telemedicine, as Figure 1 shows, the society begins to request telehealth when the elderly proportion is >2.06%, the elderly percentage in 1950 in Taiwan. The aging of the nation is accompanied by a growing need for the utilization of telemedicine. The estimation results indicate that with 9.5% elderly proportion, there is potential to provide 2,274.86 telemedicine health services which are currently underprovided at only 954.9 as Table 1 presents (Please get these units cleanly defined). The predicted telehealth services are 2.38 times as much as the currently provides. On the relationship between longevity and conventional health services, as Figure 2 shows, when the elderly proportion is >0.56%, the needs for face-to-face health services increase in the elderly percentage. With 9.5% elderly proportion, the estimated volume of health services via conventional medical care system is 1.54×10⁸. The current quantity of such services is 1.11×10⁸, as shown in Table 1, and underprovided by 38%.

By the year 2040, the baby boomers of the United States and other developed countries will reach their 80s and 90s. Changes in health are of particular concern to older adults because good health is closely related to general well-being. It appears that the aging of our society will be accompanied by a growing need for the utilization of healthcare services in the years to come.¹¹ Estimation results from Taiwan's experiences reveal that the demands for health services via online and conventional medical systems increase simultaneously in the elderly percentage. These health services are complementary for enhancing health status in an aging society. Telehealth does not attempt to substitute for conventional health services. However, the current provision of telecommunications health services is much less than that of estimated to meet the demand of older adults.

This article is limited to data collection over the period 1995–2004 in Taiwan. Healthcare provided via telecommunications have become of services for enhancing the handicapped or the terminally ill individuals' perceptions of their relationship to salient features of the environment in the private sector since 2004 because the cost-benefit analysis conducted by the government sector casts doubt on the efficiency of the telemedicine system and guides medical resource allocation. Such provision is still in multidimensional concepts and qualitative pilot experiments. However, this limitation is not intractable and the results we obtain are not influenced in the empirical examinations. Advances in medical technology has increased our average life expectancy¹² and improved our quality of living. Perceived advantages are congruent with those reported in other studies.¹³ Life expectancy for the population in the world has increased over the past century. Health services demanded through conventional and telemedicine systems increase in an aging society. Our findings might be equally relevant for other countries with the growing aging population.

Footnotes

Acknowledgments

The author is thankful to the National Science Council in Taiwan for providing the foreign research scholarship, 99-2918-I-006-014 and to the Fullbright Foundation for the 2009–2010 research research awards. The usual disclaimer applies.

Disclosure Statement

No competing financial interests exist.

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