Remote Monitoring Technologies Could Shave Health Care Costs by $197 Billion; Broadband-based Applications Can Improve Care for Chronic Disease

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The United States could cut $197 billion from its health care bill over the next 25 years by widespread use of remote monitoring to track the vital signs of patients with chronic diseases such as congestive heart failure and diabetes, according to a new study released today by economist Robert Litan. Better Health Care Together said Litan's study illustrated 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

The United States could cut $197 billion from its health care bill over the next 25 years by widespread use of remote monitoring to track the vital signs of patients with chronic diseases such as congestive heart failure and diabetes, according to a new study released today by economist Robert Litan. Litan said that savings would be maximized by public policy adjustments that encourage health care institutions and individual caregivers to accelerate the use of remote monitoring.

"Remote monitoring can spot health problems sooner, reduce hospitalization, improve life quality and save money," Litan said at a health care forum sponsored by Better Health Care Together.

But he warned that adoption of remote monitoring and other telemedicine opportunities 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 the privacy, security, and reliability requirements for telemedicine applications.

Failure to make the right policy adjustments will cut estimated health care savings by almost $44 billion over the 25-year period, Litan estimated.

Estimated Gain from Telemonitoring Under Baseline and Policy Cases:

  • Net Present Value of Savings, Baseline Case: $153.2 billion
  • Net Present Value of Savings, Policy Case: $197.0 billion
  • Gain From Policy Implementation: $43.8 billion
  • Average Gain From Implementation Per Year: $1.75 billion

"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 said. "We also need policies that deliver broadband, including "smart networks" that ensure that patients' critical data is secure and that communications are not disrupted."

Better Health Care Together Says Study Shows Need for New Directions

Jody Hoffman, Executive Director of Better Health Care Together said Litan's study illustrated 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."

Hoffman said that the forum was an opportunity to consider some of the key issues surrounding telemedicine.

Big Savings from Chronic Diseases

Remote monitoring enables caregivers, often working through computerized data centers, to be alerted in real-time, seven days a week of vital sign changes that could be medically significant. The alerts enable earlier intervention to help patients before they are seriously ill. Without remote monitoring, caregivers must depend on notification from patients who may not report changes until physical symptoms are dramatic and more challenging to resolve.

Litan's savings estimates are tied to four specific conditions - congestive heart failure, diabetes, chronic obstruction pulmonary disease, and chronic skin ulcers and wounds.

Estimated Savings and Gain from Policy Implementation, by Condition:

Baseline Savings:
Heart Patients - $79.7 billion
Diabetes Patients - $42.3 billion
COPD Patients - $18.7 billion
Chronic Wound Patients - $12.5 billion
Total Baseline Savings - $153.2 billion

Policy Savings Savings:
Heart Patients - $102.5 billion
Diabetes Patients - $54.4 billion
COPD Patients - $24.1 billion
Chronic Wound Patients - $16.0 billion
Total Policy Savings - $197 billion

Gain from Policy Change:
Heart Patients - $22.8 billion
Diabetes Patients - $12.1 billion
COPD Patients - $5.4 billion
Chronic Wound Patients - $3.5 billion
Total Gain from Policy Change - $43.8 billion

Robert Litan is vice president of Research and Policy at the Kauffman Foundation, and a Senior Fellow in the Economic Studies Program at the Brookings Institution. Litan, who holds a law degree in addition to his PhD in economics, has served on the staff of the Council of Economic Advisers (1977-79), as Deputy Assistant Attorney General in the Antitrust Division of the Justice Department (1993-95), and Associate Director of the Office and Management and Budget (1995-96).

Better Health Care Together is a coalition of business, labor and public policy organizations that believe broad-based health care reform is among the most pressing economic and moral imperatives facing the United States.

The study "Vital Signs Via Broadband: Remote Health Monitoring Transmits Savings, Enhances Lives," is available at http://betterhealthcaretogether.org/news.

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