The information collected during the telemedicine demonstration period allowed relatively accurate values for telemedicine costs and benefits to be calculated. If an operational rather than demonstrational deployment of telemedicine is considered, what would be the cost to acquire and install the telemedicine network?

The research team makes the following assumptions about the telemedicine system, its installation, and its configuration of the telemedicine network:

• The telemedicine system must provide capabilities to support the same medical specialties used during the demonstration phase. The telemedicine equipment will be purchased, rather than leased. The telemedicine operational systems will provide all needed computational, display, and communication equipment. The remote system will also have a room camera, patient camera, intraoral camera, and digital stethoscope. The hub system will contain all provisions of the remote, except for the patient and intraoral cameras.

• The cost of installing telemedicine systems can vary widely, depending on the modifications and/or additions required at each facility. Because a "typical" installation could not be defined, researchers used the installation cost for the demonstration as the guideline for the operational system installation. This probably yields an excessively high installation cost because four systems were installed for the demonstration, and other tasks (for example, building a holding cell at USP-Allenwood for FCI inmates) were performed that would not normally be required.

• The telemedicine network will consist of two remote systems and one hub system. This is similar to USP-Allenwood and USP-Lewisburg as remotes and the VA Medical Center as the hub. For this network, we assume use of ISDN (4 Basic Rate Interface) rather than switch 56, as was used during the demonstration.

Under these assumptions, the research team estimates telemedicine equipment and related costs of $3,446 per month. This total consists of $1,457 in site operating costs, less a 10-percent discount for other nontelemedicine uses of the equipment, plus $2,372 as the monthly amortization of the equipment purchase price, again with a 10-percent discount. The site operating costs consist of $97,000 in installation costs, amortized by straight-line depreciation over 20 years (except that equipment, fixtures, and freight are amortized over 10 years), plus training, amortized over 5 years. The principal remaining component of site operating cost is long-distance voice telephone charges (averaging $328 per month).

Equipment charges reflect the amortized monthly value of $73,000 ($510) in each of three sites. In addition, the ISDN connection requires $1,800 in one-time installation costs, which adds $15 to the monthly cost when amortized over 10 years.