Financial Analysis of Telemedicine in a Prison System

OBJECTIVE: To quantify the costs and benefits of medical care under a telemedicine agreement. METHODS: Two telemedicine contracts between the North Carolina Central Prison (NCCP) and the East Carolina University School of Medicine were analyzed, first from the point of view of the prison using break-even analysis and second from the societal point of view examining whether the arrangements were positive for the taxpayers of North Carolina. RESULTS AND CONCLUSIONS: While the prison system never broke even with the first contract, the break-even was attainable, as it would have required an average of only one consultation per day. The prison system attained break-even status in the latest year of the second contract, and simple forecasts indicate a good chance that usage will grow beyond the break-even point. From the societal point of view, the contracts are merely transfers of funds from one state agency to another. Therefore, the differences in them are irrelevant. What is relevant is a measure of average fixed and variable spending for telemedicine and what this expenditure buys in terms of avoided costs. Thus, we examined the average full cost per visit, as determined from the actual or estimated expenditures, and concluded that the program paid back its cost during year 4.