The Economics of Proactive Models of Chronic Disease Care & Management.

“The problem with remote patient monitoring for someone with chronic disease is the ongoing cost of it?

This has been a common reason or response in conversations across Australia’s health sector during my last 6 or so years of being involved in various forms of virtual models of care for why we do not fund or invest in models of care that proactively engage, support and monitor our most vulnerable and biggest costs to our tertiary healthcare system which is people living with complex and chronic diseases. ?

My thoughts on this argument have always been; we can either risk it and proactively pay for this technology, monitoring, support and ongoing health education or we can continue to reactively pay when they turn up to our emergency departments, often late and incredibly unwell due to the often poor management of their chronic disease. We can perform often very expensive and intensive lifesaving procedures on them in emergency, put them into intensive care unit or a high dependency unit for a few days, we can then transfer them to a ward and then potentially transfer them to an inpatient rehab where we can provide several days of rehabilitation until we deem them safe enough to be discharged into an overburdened under resources primary care sector and just wait for them to represent again for a similar journey of care.

?But let’s talk costs and the economics of proactive models of care from what I’ve seen.

Now I’m only speaking from my experience here and there are many ways to deliver these models of care, higher touch, lower touch, full technology provided or bring your own device. Nurse led, GP led, health coach led or allied health led. I've even recently heard of AI led models being thrown about.

But let’s take a high-quality, high-touch service with a rough cost per patient around $5000-$7000 per year (give or take). For this you can provide a patient with the technology including blue tooth enabled TGA approved devices with around 1 registered nurse monitoring around 50-65 patients living independently in their own home at any one time. You can provide this person with business hours support, pharmacological adherence, access to virtual health coaching and virtual allied health, collaboration with their GP, early escalation to the primary care setting with data to support decision making and the health literacy and education this person needs to make better decisions, improve their own ability to self-care and not see emergency as their first choice of destination when things go invariably wrong.

Now this cost may seem high at present, but scale will obviously drive efficiencies; cost of technology would decrease and learnings and improvements to the services will be realised over time. But if we used this high-ish figure of say $6000 per patient for now (and there are cheaper and more expensive ways to do this!), what does this look like to have to deliver ROI for say the funder or the service paying for this of this model of care per patient.

Back in 2016 the Gratton Institute reported that ineffective management of chronic diseases was reportedly costing the Australian healthcare system $320 million dollars in avoidable hospital admissions. And in 2019 ABC reported that 37 percent of all hospitalisations were due to chronic disease. These numbers alone say to me there is a potential business case here to look at doing something differently

But lets dig a little deeper, and look at each time someone is admitted to an acute hospital bed in Australia the average cost is about $2000 per day , these figures can vary slightly and if we remove the expensive ICU beds?it still sits around the $1500 per day mark.

But lets look more closely at say COPD and heart failure admissions which make up a good proportion of admissions for chronic diseases; the Australian Institute of Health and Welfare reported in 2011 reported that for COPD with admissions that DID NOT include complication or comorbidities:

“Across all major metropolitan hospitals, the average cost per admission for COPD without complications was $5,500 and across all major regional hospitals, the average cost per admission for COPD without complications was $5,800

However, once you added any complication or comorbidities this jumped to an average of $9700 for all major metropolitan hospitals and on average $12,000 per admission for all major regional hospitals.

For heart failure the costs for admissions were similar:

?"Across all major metropolitan hospitals, the average cost per admission for heart failure without complications was $5,600 and across all major regional hospitals, the average cost per admission for heart failure without complications was $6,000."

And again, once you added complications and comorbidities to the equation we saw an?increase to the average for all major hospitals?to $11,800 per admission?and for all regional hospitals $12,900 per admission.

RACGP reported in 2018 that between 2016-2017 there were 715,000 potentially preventable hospital admissions with 47% of them being due to chronic diseases and heart failure and COPD are reported to both be in the top 5 for potentially preventable chronic diseases by the Australian Institute of Health and Welfare.

Now I’m not an economist and I don’t claim to have the exact figures for 2022 but based reported examples above in my mind the business case is clear. For the cost of say $6000 per patient (which would most definitely come down with scale or tweaks to the model of care) if we save one hospital admission for a patient living in regional Australia with COPD and other comorbidities, we could then fund at least one more patient for 12 months at no additional cost to our healthcare system to be supported, monitored and health coached. If we can save multiple admissions for that one patient per year the model then funds itself over and over again.

To add to this, numerous studies have shown that the use of this model of care does reduce hospitalisation and when a patient is admitted which they are from time to time it also reduces length of stay. A well documented trial by the CSIRO in Australia found a 53% reduction in hospital admissions and a 76% reduction in length of stay when they were admitted and many other studies have shown similar findings.

So I come back to the initial statement

“The problem with remote patient monitoring for someone with chronic disease is the ongoing cost of it?

But lets flip this statement on this head, “what is the cost of not monitoring these patients? Not only to the healthcare system, but to the persons quality of life?”

I think when it comes down to it the costs are much greater and we need to start putting this lens to models of care that proactively try to solve the chronic disease problem.

I’m always keen to chat about these models of care, share ideas, discuss problems, look at data and see what could be possible. So reach out if you are keen to chat.