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

Meizi Zhou (), Xuelin Li () and Gordon Burtch
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Meizi Zhou: Questrom School of Business, Boston University, Boston, Massachusetts 02215
Xuelin Li: Columbia Business School, Columbia University, New York, New York 10027

Information Systems Research, 2024, vol. 35, issue 3, 1092-1113

Abstract: We study the impacts of telehealth adoption on geographic competition among urban and rural healthcare providers. We consider a quasinatural 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 redistribution: 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; patient claims; hospitals (search for similar items in EconPapers)
Date: 2024
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Persistent link: https://EconPapers.repec.org/RePEc:inm:orisre:v:35:y:2024:i:3:p:1092-1113

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