You can hear the same sound coming from hospital C-Suites across the country. The drum of rain, the boom of thunder, and the splash of galoshes as the CFO searches for ways to ride out the COVID storm. 

The pandemic has been — and continues to be — an unprecedented financial strain on the U.S. healthcare system. Though the passage of the CARES Act in 2020 lessened the burden¹, hospital CFOs now face rising inflation, a national labor shortage, and yet another wave of COVID infections. 

But words alone can’t convey the difficulty of the road ahead, so here’s the problem by numbers:

• For the third consecutive month, year-to-date hospital operating margins are in the red and adjusted expenses remain above those seen in 2020 and 2021.²
• A healthcare exodus continues with one in five workers quitting since the start of the pandemic.³
• National labor expenses have increased by more than one-third and contract labor expenses (as a percentage of total labor) are five times higher than pre-pandemic levels.⁴ 
• During the lockdown alone, U.S. hospitals lost an estimated $22 billion in revenue due to cancellations in elective surgeries.⁵

That last bullet is what keeps CFOs awake at night because elective procedures account for two-thirds of hospital revenue. The multi-million dollar question then becomes what strategies can CFOs deploy to increase patient demand and drive revenue.

One such strategy is the implementation of a remote second opinion program. 

The Growing Second Opinion Market

According to McKinsey & Company, with the current rate of telehealth adoption, up to $250 billion of current U.S. healthcare spending could be made virtual. Telehealth usage is now 38 times higher than it was before the pandemic and utilized for 15% of all outpatient encounters. While many changes were born out of necessity, the rapid adoption of these technologies has contributed to improved attitudes towards telemedicine by patients and their providers.

Additionally, regulatory changes — many of which were implemented during the pandemic —have facilitated the expansion of telehealth. 

All of this has caught the attention of the financial sector. According to RockHealth, a non-profit research organization specializing in digital care, U.S. venture capital invested a record $329.8 billion in 2021. This almost doubled the previous record of $166.6 billion set in 2020.⁶ The global market for medical second opinions (an important application of digital care) is on a similar trajectory with growth expected to reach $7 billion by 2024 with U.S. usage accounting for 41% of the total world market.⁷ 

You are already aware of the growing interest in telehealth services among patients, providers, and investors. But how do second opinion programs fit into this larger trend and what types of benefits do second opinion programs provide to hospitals?  

What is a Remote Second Opinion Program?

Remote second opinion (RSO) programs fall into a category of telemedicine services that allow patients to consult specialists to confirm, refine, or change their original diagnosis and/or treatment regimen. Though most practices use telehealth to enable virtual meetings, RSO programs utilize asynchronous communication as a more efficient medium for rendering a medical opinion.  

With a gold standard RSO program, a HIPAA compliant web uploader is used to aggregate a patient’s relevant medical records from multiple sources. Once uploaded and organized, a specialist then reviews the case materials from anywhere with a secure internet connection and renders a comprehensive written opinion.

Incorporating RSO services into your virtual care portfolio is a way to expand your reach beyond local geography. Sharing your hospital’s expertise with a broader audience attracts additional referring physicians which leads to more patients seeking specialist services. However, the key to an RSO program’s profitability is persuading patients to seek care at your institution.

This is more likely to happen in the setting of a revised diagnosis and modified treatment plan which occurs with surprising frequency according to the literature. 

A systematic review carried out by the Mayo Clinic found that second opinions result in a major change in diagnosis, treatment, or prognosis in 10—62% of cases with a larger fraction of patients receiving different advice on treatment rather than a new diagnosis.⁸ In Mayo’s own practice, researchers found that 88% of referred patients received a refined or new diagnosis, and in 21% of cases that diagnosis was distinctly different than the referral diagnosis. The cost of those cases (in which the diagnosis significantly differed) was higher due to the utilization of additional diagnostic services.⁹

In a systematic review carried out by Meyers et al. researchers found that 15% of patients receive a change in diagnosis after a second opinion.¹⁰ The Cleveland Clinic’s online second opinion service reports a rate of disagreement with the original diagnosis in about 11% of cases.¹¹

Second opinion programs lead to changes in diagnosis and treatment in the majority of patients who seek them out. Surveys have found that one in six patients who saw a doctor in the past year sought a second opinion¹² as do half of cancer survivors.¹³ These numbers are on the rise.

But the question is, how many of these patients decide to pursue future treatment at the facility that rendered the second opinion?

Increasing Procedures with Second Opinions

The answer is important as establishing an RSO requires investment and the patient fees barely cover its incremental cost. Among hospitals that employ these programs, conversion rates range from 7—30% of second opinions turning into patients seeking procedures: procedures that can amount to millions of dollars in extra revenue. 

RSOs not only generate revenue through patient conversion but also do so by boosting patient satisfaction. Studies have shown that overall satisfaction with second opinion programs can be high irrespective of a new diagnosis or treatment recommendation. One study reported a 95% satisfaction rate among all patients in which treatment was only changed in 37% of cases.¹⁴

Improved patient satisfaction results in higher revenue with studies showing that organizations that provide “superior” experiences achieve net margins 50% higher than their “average” counterparts.¹⁵ In fact, hospitals with higher patient ratings on HCAHPS surveys see a .4% increase in net operating profit margin for every one-point increase in hospital rating.¹⁶

We now live in an era of unprecedented change. A world where pandemics expose the perils of globalization, where technology erases entire industries overnight, and autocrats with a grudge can alter the fortunes of countries and markets. 

It’s in times like these that CFOs must embrace innovative solutions that not only solve the problems of today but provide a buffer against the uncertainties of tomorrow. To survive as a hospital today, you need to adapt to this era of unprecedented change.

RSOs offer such a solution by making healthcare more accessible, streamlining data exchange between care teams, and most importantly — by creating an additional revenue stream for hospitals.

CFOs need not suffer from the C-Suite blues.

Get a Demo of Expert View: The Remote Second Opinion Platform

 ¹ Graves JA, Baig K, Buntin M. The Financial Effects and Consequences of COVID-19: A Gathering Storm. JAMA. 2021;326(19):1909-1910. doi:10.1001/jama.2021.18863
² Swanson E. National Hospital Flash Report: April 2022. Kaufman Hall. https://www.kaufmanhall.com/insights/research-report/national-hospital-flash-report-april-2022. Published May 2, 2022. 
³ Galvin G. Nearly 1 in 5 health care workers have quit their jobs during the pandemic. Morning Consult. https://morningconsult.com/2021/10/04/health-care-workers-series-part-2-workforce/. Published April 1, 2022.
⁴ A special workforce edition of the National Hospital Flash Report. Kaufman Hall. https://www.kaufmanhall.com/insights/research-report/special-workforce-edition-national-hospital-flash-report. Published May 11, 2022.
⁵ Bose SK, Dasani S, Roberts SE, et al. The Cost of Quarantine: Projecting the Financial Impact of Canceled Elective Surgery on the Nation's Hospitals. Ann Surg. 2021;273(5):844-849. doi:10.1097/SLA.0000000000004766
⁶ Krasniansky A, Evans B, Zweig M. 2021 year-end digital health funding: Seismic shifts beneath the surface: Rock Health. 2021 year-end digital health funding: Seismic shifts beneath the surface. https://rockhealth.com/insights/2021-year-end-digital-health-funding-seismic-shifts-beneath-the-surface/. Published January 10, 2022.
⁷ How to develop a medical second opinion platform. Demigos. https://demigos.com/blog-post/medical-second-opinion-platform-development/. Published October 18, 2021.
⁸ Payne VL, Singh H, Meyer AN, Levy L, Harrison D, Graber ML. Patient-initiated second opinions: systematic review of characteristics and impact on diagnosis, treatment, and satisfaction. Mayo Clin Proc. 2014;89(5):687-696. doi:10.1016/j.mayocp.2014.02.015
⁹ Van Such M, Lohr R, Beckman T, Naessens JM. Extent of diagnostic agreement among medical referrals. J Eval Clin Pract. 2017;23(4):870-874. doi:10.1111/jep.12747
¹⁰ Meyer AN, Singh H, Graber ML. Evaluation of outcomes from a national patient-initiated second-opinion program. Am J Med. 2015;128(10):1138.e25-1138.e1.138E33. doi:10.1016/j.amjmed.2015.04.020
¹¹ Reddy S. New Ways for Patients to Get a Second Opinion . The Wall Street Journal. August 24, 2015.
¹² Wagner TH, Wagner LS. Who gets second opinions?. Health Aff (Millwood). 1999;18(5):137-145. doi:10.1377/hlthaff.18.5.137
¹³ Hewitt M, Breen N, Devesa S. Cancer prevalence and survivorship issues: analyses of the 1992 National Health Interview Survey. J Natl Cancer Inst. 1999;91(17):1480-1486. doi:10.1093/jnci/91.17.1480
¹⁴ Sanchez S, Adamowicz I, Chrusciel J, Denormandie P, Denys P, Degos L. Predictive factors of diagnostic and therapeutic divergence in a nationwide cohort of patients seeking second medical opinion. BMC Health Serv Res. 2021;21(1):902. Published 2021 Sep 1. doi:10.1186/s12913-021-06936-w
¹⁵ U.S. hospitals that provide superior patient experience generate 50 percent higher financial performance than average providers, Accenture finds. Newsroom. https://newsroom.accenture.com/news/us-hospitals-that-provide-superior-patient-experience-generate-50-percent-higher-financial-performance-than-average-providers-accenture-finds.htm. Published May 11, 2016.
¹⁶ Buhlman N, Lee T. When patient experience and employee engagement both improve, hospitals' ratings and profits climb. Harvard Business Review. https://hbr.org/2019/05/when-patient-experience-and-employee-engagement-both-improve-hospitals-ratings-and-profits-climb. Published May 8, 2019.