Hospitals navigate the high cost of remote patient monitoring

Health systems have embraced remote patient monitoring but they're still trying to determine how to establish the programs.

Remote patient monitoring programs allow hospitals to provide additional care to patients, reach underserved areas and improve outcomes among chronic disease populations. But despite the promise, leaders are grappling with how to get a return on investment due to reimbursement uncertainty from commercial payers and the Centers for Medicare and Medicaid Services.

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“The economic models are not there in scale,” said Tom Kiesau, chief innovation officer and co-lead of digital and technology transformation at consulting firm Chartis. “CMS [reimburses] for chronic care management and disease management, but health systems are not built to manage these kinds of microeconomic models and get scale across all populations.”

Commercial payer models are less developed than CMS’ models, Kiesau said. Value-based care models, either from CMS or commercial payers, are better for remote patient monitoring reimbursement but hospitals are not participating in enough of those models, Kiesau said.

The reimbursement challenge is why some health systems opt to partner. While every health system has to purchase devices for remote patient monitoring, some work with vendors who can manage both the remote care and the requirements from payers that will get providers reimbursed. Others go at it alone.

A study by researchers at the University of Nebraska Medical Center, published in the Journal of Telemedicine and Telecare in July 2023, found a single monitoring program for 1,364 diabetic patients cost $4.3 million to implement and $1.2 million annually to operate. Based on a cost of between $21 and $29 per patient per day, researchers found that each nurse coach involved with the program would have to manage between 62 and 93 patients for the health system to break even on the program.

All monitoring programs require significant upfront investment for equipment purchasing, delivery and setup as well as annual maintenance costs, said Joel Vengco, chief information and digital officer at Hartford HealthCare. For some systems, it's hard to justify the funds required unless they have a certain number of patients enrolled because of low reimbursement per patient.

“When people say you need a certain number of patients to be able to afford it, they’re absolutely correct,” Vengco said. “There’s a lot of promise but it’s still a work in progress.”

Mayo Clinic prefers in-house remote monitoring

The upfront costs of remote patient monitoring can be up to $15 million if a hospital decides to develop its program in-house, said Chris Altchek, CEO of remote patient monitoring company Cadence. The company provides technology and clinical care to Renton, Washington-based Providence, Nashville-based Ardent Health and Franklin, Tennessee-based Community Health Systems, among others.

“It requires you to be really good at technology, really good at process and really good at people,” Altchek said. “Doing all three right is where the success really comes from.”

Some health systems, like Rochester, Minnesota-based Mayo Clinic, are building remote patient monitoring programs in-house, focusing on the clinical quality rather than the financial return. Mayo has developed models in-house to treat cardiovascular and liver disease as well as other conditions.

Developing an in-house monitoring program means finding and training technicians, nurses and doctors who can read clinical data from devices and report any issues. It can be costly and hard to fill those roles, especially as the industry deals with a staffing shortage, but it’s worth the expense, said Dr. Paul Friedman, chair of Mayo's cardiovascular medicine department. The programs are created by Mayo clinicians and are meant to be device agnostic, which doesn't force Mayo to buy equipment from one vendor.

“One of the reasons that we've insisted on having our own oversight is we tried some external services… they're more than happy to sort of provide back-end data,” Friedman said. “When we piloted a program [with an external vendor], we were reading [the clinical data] ourselves and we had a very dramatic case where a relatively young patient developed a genuine life-threatening arrhythmia. [The vendor] read it as noise and we would have missed it, had it not been for the fact that we were also checking it ourselves.”

Similarly, Ochsner Health has developed its programs in-house, said Chief Digital Officer Dr. Denise Basow.

“By building our own, we're able to provide clinical care in a high-quality way that we want…and our patient engagement is much better than most have been able to achieve,” Basow said.

Remote monitoring costs run high

Few health systems have the resources of a Mayo Clinic or Ochsner Health. Mayo has been able to offset some of it costs by offering its cardiovascular ambulatory patient monitoring services, such as access to its technicians, to other health systems. The company has 10 clients across seven states, a spokesperson said.

Renton, Washington-based Providence has both partnered with vendors and created homegrown programs. When it comes to fee-for-service arrangements, it makes more sense to partner with vendors because there are a lot of requirements around how much time patients should be using their devices to receive reimbursement from CMS and other payers, said Dr. Eve Cunningham, chief of virtual care and digital health at Providence.

For value-based arrangements and within smaller disease populations, Providence has created its own programs but many of those programs only provide care for 20-30 patients, she said. “Those aren’t as expensive to stand up,” Cunningham said.

What’s preventing some health systems from partnering with vendors is an uncertain market landscape. There are many companies that excel at servicing specific chronic disease populations but few that go beyond that, Kiesau said.

“Every remote patient monitoring company, the leading ones, they’re still relatively small scale and they all have the same clients,” Kiesau said. “Because they're used in one service of the 500 that are out there.”