The economic evaluation of telemedicine has faced difficulties, both in terms of the effectiveness and cost‐benefit analyses. The main challenges that lie ahead for economic assessment are: (a) technological changes; (b) sustainability of applications; (c) availability of outcomes and other patient data; (d) generalisability of evaluation results. These challenges have lead to an unsatisfactory modeling of cost analysis of teleradiology systems versus non‐teleradiology (visiting radiology services) applications.

This paper presents the analysis on the impact of telemedicine on health care. It particularly emphasizes a model for teleradiology cost systems. We study and compare cost analysis of teleradiology system versus non‐teleradiology systems. Finally, a model is presented which is made viable for computing the number of patients needed to demonstrate the viability of the telemedicine systems.

We conclude the following: (a) that large number of patients is needed to validate the economic impact of telemedicine services; (b) cultural change in USA will bring most prominent effect in improving health care thereby bringing health care costs down. This when combined with improving cost effective technology like telemedicine services will bring the overall health care costs down.