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

46 Pages Posted: 19 Mar 2021 Last revised: 22 Jul 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: February 1, 2021

Abstract

We study the impacts of telehealth adoption on geographic competition among urban and rural healthcare providers, and associated quality of care implications. To causally identify these effects, we consider a quasi-natural experiment: states' entry into the Telemedicine Licensure Compact, 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 Medicare payments, thereby establishing the Compact 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. We report evidence that urban providers are systematically more likely to respond to the policy change and financially benefit from it by expanding their service scope to a wider geographic market. As urban providers begin to offer their services to rural patients, rural physicians and hospitals experience a decline in patient volumes, and a revenue loss in turn. We subsequently consider parallel impacts on patient quality of care, and we discuss the implications of our results for healthcare providers and government.

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 Financial and Healthcare 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)

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

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Downloads
415
Abstract Views
1,417
rank
105,250
PlumX Metrics