Healthcare across Boundaries: Urban-Rural Differences in the Financial and Healthcare Consequences of Telehealth Adoption

40 Pages Posted: 19 Mar 2021

See all articles by Meizi Zhou

Meizi Zhou

University of Minnesota - Twin Cities - Carlson School of Management

Xuelin Li

University of South Carolina - Darla Moore School of Business

Gordon Burtch

Boston University - Questrom School of Business

Date Written: March 18, 2021

Abstract

We study the effect of telehealth adoption on geographic competition among urban and rural healthcare providers, and associated quality of care impacts. To causally identify the effects of telehealth adoption, we consider a quasi-natural experiment: states' entry into the interstate medical licensure compact (IMLC), wherein participating states coordinate to streamline licensing for physicians wishing to provide telehealth services across state lines. We first show that affected physicians receive more state licenses and earn higher compensation, thereby establishing the IMLC entry shock's validity and its positive effect on telehealth adoption. We then examine the heterogeneous effects on provider earnings and quality of care, across urban and rural areas. First, we report evidence that urban, specialist and high-quality providers are systematically more likely to deliver telehealth services, as they benefit the most by expanding their service scopes to a wider geographic market. Second, as the urban providers begin to offer their services to rural patients, rural providers experience a drop in their in-patient visits, and in turn a drop in earnings. We consider the implications for patient quality of care, and we discuss the implications for healthcare providers and the government.

Keywords: Telehealth, Physician Licensure, Promotion Payment, Hospitals, Healthcare Qualities, Telemedicine

Suggested Citation

Zhou, Meizi and Li, Xuelin and Burtch, Gordon, Healthcare across Boundaries: Urban-Rural Differences in the Financial and Healthcare Consequences of Telehealth Adoption (March 18, 2021). Boston University Questrom School of Business Research Paper No. 3807577, Available at SSRN: https://ssrn.com/abstract=3807577 or http://dx.doi.org/10.2139/ssrn.3807577

Meizi Zhou (Contact Author)

University of Minnesota - Twin Cities - Carlson School of Management ( email )

19th Avenue South
Minneapolis, MN 55455
United States

Xuelin Li

University of South Carolina - Darla Moore School of Business ( email )

1014 Greene Street
Columbia, SC 29208
United States

Gordon Burtch

Boston University - Questrom School of Business ( email )

595 Commonwealth Avenue
Boston, MA 02215
United States

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