Research and Exploration

New approaches to patient monitoring aim to deliver better care at lower costs

david white

David White
Market Research Analyst,
Philips Connected Sensing

The long-term trend in healthcare spending simply isn’t sustainable and that’s a crisis for everyone – consumers, providers, payers – and yes, medical device manufacturers too - but the long overdue change in healthcare reimbursement has finally arrived.  

The federal government is the single largest buyer of personal healthcare in the United States by a mile, accounting for 28% of national healthcare expenditure¹. Faced with an aging population and an increase in chronic disease, the traditional fee-for-service approach is giving way to payment models that reward better outcomes delivered at lower cost. Some organizations have arguedthat Medicare’s approaches are unfair or inept². For example, that they do not allow for socio-demographic factors outside the hospitals control. So, at best, Medicare’s approach is a blunt instrument. However, wearable biosensors may help providers to turn loss back into profit.

Payment reforms make patient monitoring more attractive for providers

Medicare is experimenting with several approaches to move towards value-based care that involve the early detection of patient deterioration that delivers both clinical and financial benefits.

Readmission penalties

Many acute care providers are familiar with bounce-backs - chronic disease suffers who are stabilized in an inpatient setting, discharged to the community or a SNF, yet soon decompensate and “bounce back” to the acute care hospital. These patients can cycle relentlessly and traumatically between hospital and home. That’s debilitating for the person, as well as unnecessarily costly. For example, in 2013 hospitals admitted over 600,000 Medicare beneficiaries to treat congestive heart failure. The cost of each initial stay was almost $11,000, on average³. However, 23% of those patients were readmitted within 30 days of discharge, with the readmission per patient costing an average of $14,263.

Other chronic diseases, such as chronic obstructive pulmonary disease (COPD), follow a similar pattern. Overall, CMS estimates it spends $26 billion each year on readmissions – 65% of which is potentially avoidable⁴. For specific chronic conditions, Medicare is now penalizing readmissions. Hospitals with “excessive readmissions” are faced with a financial penalty at year-end. In the next financial year, over 75% of acute care hospitals faced that penalty, with the total penalties estimated at $528m⁵.
What if keeping an eye on your patient was so simple and inexpensive that it could be used consistently, spanning the patient's journey, from acute care to home?''

hospital readmissions

Bundled payments

With the introduction of the Bundled Comprehensive Payment Initiatives (BCPI), Medicare took aim at episodic care. The intent of bundled payments is to ensure high quality care at a reasonable cost. One recent example of bundled payment is the comprehensive joint replacement (CJR) program, introduced in April 2016.  Under this model, a healthcare organization assumes responsibility for the financial risk of hip and knee replacements. That includes preparation for the procedure, the procedure itself, and 90 days of post-discharge care.

Provide care effectively and efficiently, and care givers can make a profit on that episode of care. Conversely, if poor care leads to complications, most likely the providers will make a loss. In particular, any readmission is going to blow a big hole in an organizations budget. Striking the right balance between high quality and low cost in a repeatable way is key to success.

The potential value of wearable biosensors with new payment models

Today, patient monitoring can be patchy, inconsistent and fragmented across the health continuum. While a person’s journey should follow a steady progression from acute care to recovery, typically the degree of monitoring they experience does not⁶. The intensive monitoring on an ICU drops dramatically to less frequent spot checks during rounding. After discharge from acute care, vital sign checks are infrequent, if they happen at all.

What if keeping an eye on your patient was so simple and inexpensive that it could be used consistently, spanning the patient’s journey, from acute care to home? It would be possible to establish baseline vital signs for an individual. It would be possible to build a picture of their lifestyle and activities, to use as context for accurate vital sign interpretation into the future. Couldn’t this approach help eliminate the toll and expense necessary because patient deterioration on the general ward is detected too late? And couldn’t such an approach help keep people with chronic diseases comfortable in their homes?

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[¹] National Health Expenditure fact sheet, CMS
[²] Rethinking the Hospital Readmissions Reduction Program, American Hospital Association, March 2015
[³] AHRQ, Healthcare Cost and Utilization Project (HCUP)
[⁴] Findings from Recent CMS Research on Medicare, Niall Brennan
[⁵] Medicare’s Readmission Penalties Hit New High, Kaiser Health News
[⁶] Missed opportunities? An observational study of vital sign measurements, Critical Care and Resuscitation, June 2008