Remote Electronic Patient Monitoring Could Save $197 Billion Over 25 Years

Remote Electronic Patient Monitoring Could Save $197 Billion Over 25 Years
by Tim Rowan stored in: Tim Rowan's Home Care Technology Report and tagged: Telehealth

The United States is faced with a choice to spend more on healthcare — money that does not exist — or cut costs over time, according to a report underwritten by AT&T and conducted by Kauffman Foundation and Brookings Institution economist Robert E. Litan. $197 in savings would result from implementing telehealth systems. Failure to make policy adjustments that encourage healthcare providers to take advantage of remote monitoring technologies will cut estimated savings by nearly $44 billion.
Both forecasts consider results over a 25-year span. Litan is Vice President for Research and Policy at the Kauffman Foundation, a Senior Fellow in the Economic and Global Economics Programs at the Brookings Institution, and a Consultant to Empiris. He conducted the study of financial implications of remote monitoring technologies in 2008 but the report was recently published by the “Better Health Care Together” coalition (BHCT).
Widespread use of remote monitoring over broadband networks, located in both institutions and homes, to track vital signs of patients with chronic diseases such as congestive heart failure and diabetes is a critical and urgent development. “Remote monitoring can spot health problems sooner, reduce hospitalization, improve life quality and save money,” Litan said at a health care forum sponsored by BHCT.
During his remarks at the BHCT forum, Litan warned that adoption of remote monitoring technologies will be slowed and benefits reduced unless the United States does a better job of reimbursing health care organizations for remote care and encouraging continued investment in broadband infrastructure that can be tailored to meet privacy, security and reliability requirements for telemedicine applications.
“Hospitals and doctors can’t provide services unless they get paid. We need insurance reimbursement policies, beginning with Medicare and Medicaid, that cover remote monitoring,” Litan told the BHCT audience. “We also need policies that deliver broadband, including ’smart networks’ that ensure that patients’ critical data is secure and that communications are not disrupted.”
Jody Hoffman, Executive Director of Better Health Care Together said Litan’s study illustrates how new directions in health care can enable the United States to deliver quality care at lower costs. “Our first priority is to make sure every American has quality, affordable health coverage,” Hoffman said. “In order to do that we also need to get better value for our health care dollars and we believe information technologies can help in a big way.”
Litan’s savings estimates are tied to four specific conditions – congestive heart failure, diabetes, chronic obstruction pulmonary disease, and chronic skin ulcers and wounds.
Following is the Executive Summary from Litan’s report. The entire, 60-page document is available from BHCT at http://www.betterhealthcaretogether.org/study.
VITAL SIGNS VIA BROADBAND: REMOTE HEALTH MONITORING TRANSMITS SAVINGS, ENHANCES LIVES
For the millions of people around the world who have embraced the Internet, the transformational effects of modern communications technologies are well known. Using search engines to access information, attending classes and college lectures online, conducting financial transactions and shopping, and enjoying music, video and games over the Internet are increasingly routine. But other Internet-based activities have yet to reach their full potential; among the most significant is telemedicine – the use of modern communications to deliver a wide range of health care to patients at locations that are physically distant from the caregiver.
By enabling more regular contact between patient and caregiver, the use of IT technologies can mean earlier detection of health problems and better outcomes that enable people to live longer and more satisfying lives. Telemedicine can help those with chronic illnesses to lead normal work and personal lives and enable older Americans to remain in their own homes instead of moving to institutional settings.
Remote Monitoring Detects Problems Earlier; Means Better Outcomes and Less Hospital Time
These benefits of telemedicine, and in particular remote monitoring, are well-documented. Remote monitoring helps chronic disease patients avoid hospitalization and enables those in geographically isolated settings to access specialized and preventive medicine. Distant monitoring has special efficacy for patients with chronic ailments such as diabetes, congestive heart failure, chronic obstructive pulmonary disease, and chronic skin ulcers for which changes in vital signs can signal a need for medical intervention. Remote monitoring technologies can transmit data on a regular, real time basis and prevent hospitalizations by identifying and treating problems by triggering adjustments in care before negative trends reach crisis stage.
The improvements in patient experience can be dramatic. For example, a widely cited study by Meyer, Kobb, and Ryan reports that the combination of home telemonitoring, video visits, and coordinated care resulted in substantial improvements in health outcomes among a group of elderly veterans with a variety of chronic diseases. These gains included a 40 percent reduction in emergency room visits, a 63 percent reduction in hospital admissions, and a 60 percent reduction in hospital bed days of care, along with similar reductions in nursing home care.
These types of outcomes also deliver significant savings to the health care system, particularly for the chronic illnesses that account for roughly 80 percent of increases in Medicare costs.
Widespread Remote Monitoring Can Cut Health Care Costs By $197 Billion
Upon examination of existing literature and experience to date, I estimate that a full embrace of remote monitoring alone could reduce health care expenditures by a net of $197 billion (in constant 2008 dollars) over the next 25 years with the adoption of policies that reduce barriers and accelerate the use of remote monitoring technologies. The policy enhancements boost savings by almost $44 billion over the 25-year period, an improvement of almost 29 percent compared with continuation of the current policy baseline.
The savings are largely attributable to better management of chronic diseases because of remote monitoring. Widespread implementation of remote monitoring means key vital signs can be transmitted to a caregiver or a data center in real time and trigger an instant alert when readings change in a medically significant way. Caregivers also say that addition of two-way video to monitoring programs can further enhance the quality of interaction between patient and caregiver and can encourage patients to observe treatment regimens with greater consistency.
When broken down by condition, I estimate the following net savings over the 25-year period:
Congestive Heart Failure
$102.5 billion
Diabetes
$54.4 billion
Chronic Obstruction
Pulmonary Disease
$24.1 billion
Chronic Skin Ulcers
$16.0 billion
Savings Can Be Accelerated With Smart Policy in Medical Reimbursement and Technology
Success in translating potential savings into real savings depends in part on public policy decisions that speed the acceptance and penetration of remote monitoring. The realignment of reimbursement policy for telemedicine is among the most critical requirements. For example, Medicare and insurance reimbursement policies that recognize the value of investments in telemedicine equipment and expertise can spread the use of remote monitoring by reducing out-of-pocket costs and encouraging buy-in among practitioners. [For full set of policy recommendations see pages 50-51 and 54-55]
Right now, like other preventive care, telemedicine is only covered by current private and public health insurance plans to a limited extent. For example, remote consultations with physicians are reimbursed if they are conducted over two-way video. However, physicians are not reimbursed for examining remote monitoring data as a preventive measure. Right now, patients and insurers are capturing many of the quality improvements and cost savings from telemedicine, but paying for few of them. The costs are largely incurred by health care providers, but not fully reimbursed. This circumstance will not encourage optimal levels of investment in and commitment to the provision of telemedicine infrastructure and services. Quite simply, we need policy incentives that ensure that institutions and practitioners who invest in telemedicine are sufficiently compensated for the resulting improvements in both care and costs.
Smart communications policy also can expedite the adoption of remote monitoring and other telemedicine technologies. Policies that increase the public’s fluency with advanced communications technology will make telemedicine more effective and easier to implement. Policies that bring broadband technologies into more homes also will help bring in remote monitoring, video visits with providers, and self-care education. Investments in networks provide needed capacity for live video and continuous monitoring, and policies allowing quality-of-service offerings allow doctors to treat their patients without interruption.
In particular, the long-term success of remote monitoring requires telecommunications policies that encourage widespread deployment of broadband and accelerated private investment in “smart networks.” Policy should promote network investment and allow operators to tailor services to the needs of telemedicine, including data privacy and reliable real-time connectivity.

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