<p>Widespread adoption of telemedicine channels by hospitals not only enhances the efficacy of healthcare services but also provides various other benefits such as reducing energy/resource consumption, lowering carbon footprint, etc., thereby contributing toward the development of sustainable healthcare supply chains. However, whenever telemedicine misdiagnosis occurs, it may in turn aggravate the waste of medical resources and increase carbon emissions. It is not well understood how hospitals introduce a telemedicine channel and operate both telemedicine and physical hospital channels simultaneously to enhance healthcare system performance under a carbon emission constraint. To this end, this paper proposes two <i>M</i>/<i>M</i>/1 queueing models to analyze how the hospital makes the optimal price and service rate decisions of the two channels to improve its profit or social welfare with a limited operating budget. Our analysis indicates that, regardless of the hospital’s goal, the optimal price of telemedicine should always be lower than that of the physical hospital when a hospital introduces a telemedicine channel. Moreover, we show that fast telemedicine services can bring more profits than high-quality telemedicine services. For social welfare, the optimal service rate of telemedicine should be lower to ensure the welfare of patients who have already entered the healthcare system. Finally, we establish that telemedicine may not be beneficial for the development of a sustainable supply chain when: (I) telemedicine has high technical limitations; (II) the cost difference between telemedicine and the physical hospital is small; and (III) patients have high quality-speed sensitivity. Our research provides useful insights into how hospitals can use telemedicine to achieve a sustainable healthcare supply chain.</p>