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

94 Pages Posted: 19 Mar 2021 Last revised: 23 May 2023

See all articles by Meizi Zhou

Meizi Zhou

Boston University - Questrom School of Business

Xuelin Li

Columbia Business School

Gordon Burtch

Boston University - Questrom School of Business

Date Written: February 1, 2021

Abstract

We study the impacts of telehealth adoption on geographic competition among urban and rural healthcare providers. We consider a quasi-natural experiment: states' entry into the Interstate Medical Licensure Compact, wherein the entry events facilitate healthcare providers to adopt telehealth technology. By analyzing a representative sample of providers, we first establish the Compact-entry shock's validity and its positive effect on the supply of medical services. We then report evidence that there are service and payment shifts from rural providers to urban providers, i.e., urban providers are more likely to benefit from the Compact-entry financially. Relying on patients' telehealth reimbursement claim data, we observe two mechanisms contributing to the revenue re-distribution: the substitution and gateway effects of telehealth. Finally, we show that telehealth readiness and service quality moderate the impact of telehealth adoption. These findings speak to both potentially positive and negative consequences for welfare.

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

Suggested Citation

Zhou, Meizi and Li, Xuelin and Burtch, Gordon, Healthcare across Boundaries: Urban-Rural Differences in the Consequences of Telehealth Adoption (February 1, 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)

Boston University - Questrom School of Business ( email )

595 Commonwealth Ave
Boston, MA 02215
United States

Xuelin Li

Columbia Business School ( email )

665 W. 130th Street
1175 Kravis Hall
New York, NY 10027
United States

Gordon Burtch

Boston University - Questrom School of Business ( email )

595 Commonwealth Avenue
Boston, MA 02215
United States

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