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The Center for Connected Health (CCH) and the Center for Technology and Aging (CTA) have collaborated on the development of a Web-based tool for analyzing the return on investment (ROI) in remote patient monitoring (RPM) technologies. With funding from the California Healthcare Foundation, five California medical groups recruited by CTA tested and validated the tool.

Up to now, few payers have covered remote monitoring of patients with serious illnesses because there was no evidence of ROI. With the advent of payment reform and the Medicare and Medicaid penalties for excess re-admissions, healthcare organizations are growing interested in RPM, and some have initiated pilots to test the technology. But it's still difficult for them to evaluate whether RPM will save more than it costs when they roll it out to their organizations. That's where the ROI tool comes in.

"This new tool not only assists program managers to evaluate financial ROI, but it also identifies potential program efficiencies, making the ROI tool effective for both evaluation and decision making," said Kamal Jethwani, MD, corporate manager of research and innovation for CCH, in a news release.

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In an interview with InformationWeek Healthcare, Jethwani called the Turbotax-like program a "planning and modeling tool." Organizations can insert their pilot data into it, he said, or they can use benchmark data suggested by CCH if they are only in the planning stages of an RPM effort. If the group or hospital system has pilot data, it can project the results of scaling the program up.

The tool asks questions that many healthcare executives and doctors would not consider asking, said Jethwani. For example, how many doctor hours does a particular RPM program require? How much of a burden is it on nurses and other staffers? The tool then has users add those costs to other known expenses such as the average cost per patient per month of a particular vendor's RPM program.

The ROI tool uses electronic health record (EHR) or claims data to calculate the financial benefit of an RPM program and to whom it would accrue. If the program helps a hospital prevent excess Medicare re-admissions in the first 30 days after discharge, for instance, the hospital would reap financial rewards by avoiding penalties. Re-admissions averted after 30 days, on the other hand, would benefit only the payer, unless the healthcare system were taking financial risk for care delivery.

The five groups that helped CCH and CTA test the tool were Centura Health at Home, a home health agency; Dignity Health, a large healthcare system based in San Francisco; Healthcare Partners, a Los Angeles-based medical group and independent practice association; Sharp Healthcare, a San Diego-based healthcare system; and the Central California VA system. All of them calculated positive ROI over a five-year-period, using the ROI tool with pilot data.

Centura's pilot involved patients with chronic diseases, and nearly half of its estimated financial return was due to a reduction in nurse visits. The RPM tests of Dignity, Sharp, and the VA all involved patients with congestive heart failure, who are responsible for a large share of re-admissions. Healthcare Partners, which had the largest projected ROI over five years, was using RPM with patients who had chronic obstructive pulmonary disease (COPD).

In its trial, Healthcare Partners used a simple interactive-voice-response (IVR) system to send automated phone messages to patients asking about their health status. The patients responded on the keypad of their phone, and nurses monitored the data at the group's offices. If a patient showed certain symptoms, a nurse called him and, if necessary, had him hospitalized.

Based on a sample size of 70 patients, the ROI tool projected what would happen if the Healthcare Partners program were gradually scaled up over five years. It calculated that the ROI would be 1.3 in the first year, soaring to 18.9 in the fifth year. The returns came mainly from reduction in hospital re-admission rates.

Besides the decreased costs of providing care -- a boon to Healthcare Partners, which takes financial risk -- the rapid rise in ROI was due to the low cost of the interactive-voice-response system, Jethwani said. Scaling the IVR program to the whole population of discharged patients with congestive heart failure would be relatively inexpensive, he said.

The next step for the researchers is to persuade other provider organizations to try using the tool in their RPM pilots. "We hope to do a systematic data analysis of about 30 sites and then do a peer-reviewed publication on the ROI of RPM in general," said Jethwani. "We also want to take that user feedback and put it into product development for the next phase, and maybe do a second release of the tool a year from now."