“Every euro invested saves €8 healthcare costs” — How does digital health funding work?
Written by Ronald Scheffer MSc and Prof. Daan Dohmen, 8 April 2021
Digital transformation
Digital healthcare is booming. On our Luscii platform alone, we experienced a scale-up from several thousand registrations before 2020 to our current standpoint of over 20 million. But what does this mean for healthcare costs?And how is all that digital care funded?
Three types of monitoring
Before discussing the cost-benefit of remote monitoring, it is important to consider first how this form of digital care is used in different settings. In our vision, we distinguish three ‘layers’:
The top layer in the pyramid is what we call “the virtual ward”. This relates to intensive monitoring, so that patients can recover at home as quickly as possible. An example is COVID-19 Home, where patients are discharged from hospital 6–11 days earlier. The frequency of monitoring is high: in this case, vital values are checked several times a day and patients relay how they are feeling, sometimes even continuously. We see this, for example, when using Luscii after operations, such as in orthopaedics, surgery or cardiology.
The second layer concerns remote patient support, like monitoring of ‘chronic conditions’, such as diabetes, COPD, heart failure, but also in situations like high-risk pregnancies or LongCOVID. For this group, the frequency of measurement decreases to a few times a week. There is more emphasis on education and coaching in our app, including advice on how patients can help themselves like the lung attack plan (in Dutch “long aanval actieplan”). In these settings our platform is often used regionally by the hospital in collaboration with GPs.
Finally, instable situations we see the use of digital health tools in ‘self-care’ . This involves supporting citizens or patients to prevent or assess whether they need to see a doctor at all, like triage. An example is the OLVG Corona Check app that supported citizens during the first wave. Thuisarts.nl and Zilveren Kruis Wijzer are similar Dutch initiatives.
These three ‘layers’ are dynamic. People may move between them. The business case in which you compare benefits against costs depends very much on what level in the pyramid you are looking at.
Costs of digital health
First of all, let’s consider things from a cost perspective. In all cases, there are costs for technology, monitoring activities and project implementation (and optimisation). How much depends on the application. In the virtual ward, there is the software platform and, due to the required certifications, special equipment is often needed to frequently measure vital values at home. Such equipment with Medical Device Class IIa or even IIb CE marking are purchased or rented. The extra costs for monitoring are relatively high, as nurses and/or doctors have to be present to be alerted based on the values 24 hours a day, 7 days a week. Also you have to take into account healthcare costs at home and readmissions for patients who can no longer stay at home due to deterioration in their condition.
With remote patient support, the second layer, the types of costs are the same. However, you can often use cheaper equipment for the technology. At Luscii, we see many hospitals opting for medical consumer equipment or even ‘bring your own devices’, such as thermometers or scales. The monitoring itself is also less expensive in this case, as it is often not necessary 24/7. In the Jeroen Bosch Hospital and Canisius Wilhelmina Hospital, their regional monitoring centres, together with GPs, handle no less than 80–90% of all data via the artificial intelligence in our platform, in combination with nurses at the monitoring centre (during the day).
Finally, the costs of ‘self-care’ mainly relate to licenses for the platform and algorithms, and a medical control centre for questions that cannot be handled by the app. With the OLVG Corona Check, we saw the impact of upscaling within this setting. Once the algorithms were implemented into our Clinical Engine, the vast majority of the data was handled without labour. This allowed a limited number of doctors, nurses and doctor’s assistants to attend to almost 200,000 people.
Benefits of digital health
Besides these extra costs, it is of course much more interesting to take a look at the benefits. Fortunately, there is more and more research into what a well-adapted digital care path can deliver. We will briefly discuss a few recent Dutch publications by way of illustration.
One interesting field is COVID-19. During the first wave Antonius Hospital looked at early discharge possiblities, publishing their first findings in JAMIA. Maasstad Hospital recently published follow up research results on the benefits of early discharge in the digital care path COVID-19 Home, their virtual ward. The publication in the NtVG (in Dutch) showed a total saving of €246,400 — based on 616 fewer nursing days. Of course, they offset this with the extra costs for oxygen administration at home, monitoring activities and technology, which included pulse oximeters and the platform itself. They also deducted one-off implementation costs. The net savings turned out to be almost €3,000 per patient.
A second interesting case study concerns chronic care. The digital care service InBeeld for COPD and heart failure, provided by Slingeland Hospital and the medical control centre NAAST, analysed the data from hospital admissions, bed days, outpatient visits and diagnostics in a retrospective design study. The researchers concluded in the publication (Clinical eHealth) a significant cost reduction of more than 50%.
Finally, the most well-known study in the Netherlands to examine a ‘self-care’ setting is that of Prof. Niels Chavannes, published in BMJ Open. His team found that Thuisarts.nl led to a 12% decrease in GP consultations, or 675,000 fewer per month. With the OLVG Corona Check, we saw the same sort of impact, with more than 5,000 people placed in quarantine, given ‘pre-care’ guidance.
Societal benefits
In addition to the cost-benefit analysis of healthcare costs, it is equally interesting to look at the societal benefits. UMC Utrecht studied this in high-risk pregnancies. Focusing only on healthcare costs, the publication (Pregnancy Hypertension) showed a net saving of 19.7%, after accounting for extra costs. This equates to €3,616 per pregnancy with remote monitoring versus €4,504 without. However, if you also take into account the societal benefits, such as travel time and forced work absences of the patient and their partner, then the net saving is as high as €1,665 per pregnancy.
Who actually receives these ‘benefits’?
The above shows cost-effectiveness in a few recent Dutch studies. Those who are interested can find many more (internationally) on PubMed and ScienceDirect. Once we know the potential benefits, the next question is where they will end up. In this respect, an international context is particularly interesting. How costs and benefits are distributed in a healthcare system is very much related to the way in which the healthcare system is organised. Via insurers, privately, such as in the US, or completely public like the NHS in the UK. Now that we are active in seven countries, we get an intriguing insight into the differences.
If you look at our projects within the NHS, you will see that virtual wards are the driving force. The NHS centrally sets up a vision (the ‘why’), establishes frameworks for the software (the ‘what’), and then leaves the choice for a supplier and the method of implementation (the ‘how’) to individual regions. They receive funding and choose a technology partner that suits them and is approved on the framework to ensure legal requirements of the MHRA are met in the fields of privacy, security and quality. This demonstrates a centralised vision with the freedom for regions to make choices that suit their needs locally. Also the benefits fall to each area. NHSX monitors progress on a national scale and has unrestricted access to regional cost-benefit analyses. This allows the best practices to be shared among regions.
Things are a little different in the Netherlands. Compensation is available too, although it is slightly less transparent. Health insurers make agreements with healthcare providers that include digital care. Transformation funds are provided to cover, among other things, one-off implementation and change costs. In recent years, clearly defined objectives have been set in long-term contracts to actively move care ‘towards the home’. This movement has been set in motion and wonderful initiatives are taking place. Yet, in practice, we still see two important challenges that can be simplified. Both have to do with the distribution of costs and benefits.
A. Distribution of costs and benefits between parties
First of all, the current way of reimbursing digital care is often based on the ‘second layer in the pyramid’, i.e. chronic monitoring. That makes sense as this has been the focus of most projects in recent years, such as for IBD, COPD and heart failure. The business case for this is obvious: fewer outpatient visits and admissions lead to more capacity at the same cost. This makes a direct contribution to compensating for the shortages in labour and money as a result of, among other things, the aging population. This is perfectly suited to long-term contracts because it often concerns long-term, chronic care with — we suspect — patients who do not or rarely switch between healthcare providers or insurers. This means predictability for the insurer and the possibility of gradually phasing out or rearranging internal costs (transformation) for the healthcare provider.
There is, however, a catch. Because with the virtual wards or ‘episodic care’, patients are only involved for a short period of time. For example, consider how our app is used for oncology, surgery and orthopaedics in more and more hospitals. Patients receive care for a relatively short period of time. Special CE-certifiied equipment is also often required, which is often forgotten when establishing contracts. And the 24/7 monitoring is more expensive than in chronic situations. The Maasstad researchers concluded in their study that the net saving may be almost €150,000, but at the same time, the costs for the hospital increased by up to €100,000, while their theoretical turnover (bed days) decreased by €246,000. The ‘theoretical’ is added because the budget agreements and infinite demand do not in fact result in a cost reduction in practice. And this fuels the insurer’s concern that digital care threatens to come ‘on top of’ current budgets. This is a wonderful illustration of complexity in which the business case is correct on paper, but not in practice. Even if the health insurer and healthcare provider can make an agreement, simplification is an advantage because it causes unnecessary delays.
Things become even more complex within the domain of ‘self-care’. Citizens are in this situation not patients with corresponding budgets. New forms of triage or prevention are therefore difficult to fund because, who in fact, pays? In other countries, such as England, Sweden and Germany, this is resolved by determining separate rates for such ‘pre-care’ triage or preventive services by existing and new providers. In more privately funded systems, citizens (or companies) pay themselves. Fortunately, insurers in the Netherlands are playing an increasing role in this respect, for example, by offering their own services to their policyholders, additional insurance policies or separate purchase of digital triage or preventive services, such as apps. We expect more of this to happen over de next years in case funding possibilities improve here.
B. Distribution of costs and benefits inside hospitals
An overarching challenge across all levels of the pyramid is the internal distribution within the hospital. An RRU (Results Responsible Unit. in Dutch “RVE”) is often internally assessed on output, which has an impact on access to innovation budgets, as well as the fees of medical specialists in the hospital according to profit shares. For this distribution, the national benchmark is (also) taken into account, which does not always stimulate cooperation. Fortunately, profit-sharing models are increasingly moving towards assessment of value-based healthcare and other outcomes rather than an incentive for output. We think this is crucial to properly reward the efforts of pioneers. For more info, check out an earlier blog by Ronald at ICT & Health.
To conclude: what is the next step
In short, we are very positive and proud of the Netherlands’ position as an international leader. There is no rule that prevents reimbursement of digital care. Insurers and healthcare providers have plenty of scope for agreements. And if this can’t be achieved within the rules, then the reimbursement authority NZa offers an optional provision (Dutch: Facultatieve Prestatie) to make it a possibility.
So, our call to action is to keep going and keep learning. So that in addition to upscaling (after all, scale means advantages in terms of digitalisation), we can also adapt our funding system for virtual wards and self-care. The Dutch authorities NZa and ZIN have already made a start. The NHSX is leading the way in the UK. In Germany interesting activities take place to reimburse apps. And in Ireland and Sweden regional models are adopted. Over the next months and years, we will also contribute to this topic. Ronald will work with his team and our clinical lead Dr. Jelle Homans and doctors and nurses from hospitals to futher validate use cases in the more than 30 domains our app is used now. And prof. Daan Dohmen will contribute to this issue through his chair at the Open University with PhD students and research. Our knowledge, publications and other insights will be shared here.
Finally, we end with a quote from the Safe@home research: “Every euro invested in digital care leads to €8 savings in healthcare costs”. This is a great opportunity. If we simplify further with investments and savings in the right place, that €8 will benefit the sustainability of our healthcare system. And with that, the patient benefits! That’s what it is all about.
About this article and the authors:
This article was written by Ronald Scheffer MSc and Prof. Daan Dohmen. Ronald and Daan are both co-founders of Luscii. Ronald holds a master’s degree in both Finance and International Business (University of Groningen). He joined FocusCura in 2015 to lead its international expansion. With the carve-out of Luscii into an independent company, Ronald joined Luscii as one of its co-founders, responsible for growth, both national as well as international. Daan is CEO at Luscii. Besides his work at Luscii, he is a Professor of Digital Transformation in Healthcare at the Open University and holds a PhD (cum laude) in Behavioural Science. In Luscii’s Medium publication, people working at Luscii share their experiences of creating a company that is not only successful from a business point of view, but also creates sustainable societal impact and strives to be a really great place to work and grow for individuals. More on Luscii can be found by clicking here.
