Telemedicine: Remote monitoring could cut health-care costs by $197 billion

November 14, 2008

As much as $197 billion could be saved over 25 years if patients stayed home and communicated electronically with their physicians or other health-care providers, according to a study released in October.

As much as $197 billion could be saved over 25 years if patients stayed home and communicated electronically with their physicians or other health-care providers, according to a study released in October by  Better Health Care Together, a group of business, labor and public policy organizations.

The study, “Vital Signs Via Broadband: Remote Health Monitoring Transmits Savings, Enhances Lives,” was researched and written by Robert Litan, vice president of research and policy at the Kauffman Foundation and senior fellow in economic studies at the Brookings Institution.

Treatment of chronic medical conditions such as diabetes, congestive heart failure, chronic obstructive pulmonary disease, and skin ulcers would be best aided by the widespread adoption of remote monitoring, according to the study. The technology required could be simple, such as a home computer where the patient can transmit text messages and medical readings to the provider, but, the study advocates, live, two-way video and audio for e-visits would be ideal. This regular, real-time transmission of data would detect problems earlier and prevent or shorten hospitalizations.

The report cites a large 2002 study of elderly veterans with chronic diseases that showed that the combination of home telemonitoring, video visits, and coordinated care resulted in 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.

In order for this to happen, however, public and private payers need to improve reimbursement for physicians and clinicians for monitoring and communicating with the patients, according the study.

“Right now, patients and insurers are capturing many of the quality improvements and cost savings from telemedicine, but paying for few of them,” Litan writes. “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.”

The study advocates incentives that ensure that institutions and physicians who invest in telemedicine are compensated for the resulting improvements in both care and costs.