The market for devices that help doctors and nurses check up on patients at home will double in the next five years, according to a new analysis.

Cost savings from cutting hospital readmissions for some chronic diseases, gains in efficiency and expanding health access to rural patients will help the market for the devices, known as remote health management (RHM) products, grow 15 percent a year.

That means the industry could grow from an estimated $1.8 billion in 2007 to $3.6 billion in 2012, according to the predictions from Scientia Advisors, a Cambridge, Mass.-based strategy consulting group that prepared the review released on Tuesday.

RHM products are used by some of the nation's 10,000 Medicare-approved home health care agencies that are often tapped by health care plans to help monitor patients with chronic diseases. The RHM market is divided into telehealth, such as remote monitoring of vital signs and health coaching, and remote patient monitoring devices, like remote blood pressure cuffs and remote ECGs. Non-networked home care equipment - such as a scale or glucose monitoring stick - isn't included.

Although the smallest slice of the larger $125.3 billion home health management market, it's the seeing the fastest growth, according to Scientia.

And it's not hard to see why. According to Scientia, almost 86 percent of Medicare's costs come from people with chronic conditions.

And much of their costs come from hospital visits and emergency procedures - many of which could be prevented, the theory goes, if doctors could intervene when a patient's health starts to slip, which is exactly what home monitoring proposes to help them do.

"One of the big things is driving down the costs. And with ER visits, if there's a way for us to cut those down, it's going to be a big help," Harry Glorikian, a managing partner of Scientia, tells DOTmed News.

Evidence from clinical studies, largely commissioned by companies that make the devices, is starting to paint a picture of where RHM is, for now, most effective.

"It's basically going after the chronically ill where you can show cost reductions...where you can clearly show there's an effect to having this monitoring system," observes Glorikian.

According to an Avalere Health LLC May 2009 study cited by Scientia, the costs of caring for Medicare patients with chronic diseases like congestive heart failure, obstructive pulmonary disease and diabetes were 43 percent less when using patient monitoring. The two-year study found much of the $1.71 billion in savings came from slashing hospital readmissions, as using remote health monitoring resulted in 24,000 fewer re-hospitalizations than other forms of post-acute care.

Also cited in Scientia's research was a study sponsored by Philips, a key player in the industry that has bought up four telehealth companies in the last few years. The study compared patients using networked monitoring devices with those only getting phone support from nurses, and found the telehealth group spent 26 percent less time in the hospital, with a result of 10 percent cost savings.

And more striking than the economic advantages were the human ones: survival rates in the remote patient monitoring group were 27 percent higher.

Obstacles to adoption

Despite predicting growth, Scientia acknowledges that significant obstacles have to be overcome to make widespread adoption of telehealth possible.

One hurdle is finding ways to incentivize doctors, most of whom work under fee-for-service programs and who make money by seeing patients in the office, not for using Internet-based monitoring systems. But all this could change once the much-lauded patient-centered medical homes get off the ground.

"Remote health monitoring actually fits really well in [this]," Glorikian says. "Medical home pilots are now being run that reorganize physician incentives around outcomes."

Under these programs, doctors will be paid for how healthy their patients are, and will be required to talk with them on the phone, correspond over email and look at diagnostic data collected remotely. Scientia knows of some confidential pilot projects run by self-insured groups looking at managing diabetes populations using RHM, and so far the changes are promising.

"Doctors will reorganize themselves to try to take advantage of it," Glorikian says.

But the market would still have to deal with the larger issue of reimbursement. Currently, Medicare and most health plans don't directly reimburse telehealth services. Instead, home health agencies hired by plans for disease management care will use them if they think they will help them improve service and save money.

But Glorikian predicts that bigger clinical studies will eventually convince more payers, and even the CMS, about the benefits of RHM.

"Most of the studies that show effectiveness have been run with smaller populations," Glorikian observes. "And this is because remote health manufacturers run these trials to convince clients to use these products... But if we run bigger trials, I think some of these companies feel they'll win better reimbursements, and help shift some of these barriers out of the way," Glorikian adds. "Then the market could be a lot bigger than what we're projecting today."

Glorikian looks to the larger RHM manufacturers and the government to underwrite these sorts of studies.

But will they? When asked by DOTmed News, Philips wouldn't reveal specifics about future studies, but Mike Lemnitzer, senior director of Philips' Telehealth Solutions, points out that "we have been the only vendor doing national studies."

"We're not shy to do large studies and make them public," he says.

But he thinks that the lack of reimbursement is only a perceived barrier, and that with the good results his clients have been seeing he doesn't know if there's really a need for large-scale trials to spur adoption.

"Our significant customers throughout the U.S., they're not waiting for reimbursement. They have to find solutions to prevent readmission to improve costs, and that's where we see growth," he argues.

Glorikian concurs. Even with the challenges for reimbursement, he observes that the market is "incredibly under-penetrated."

Broadband blues

But cost isn't the only concern for telehealth products. These devices require transmitting massive amounts of data from the patient to a health-monitoring center or even a physician's office. In practice, that usually requires broadband access, something still geographically restricted in America.

For instance, while Philips offers its broadband-based Motiva solution in Europe, they use an analogue system that goes through the phone lines for most of their telehealth releases in the United States.

"One of the things we recognize, and the reason we focus on analogue connectivity is because of the lack of broadband we see in the U.S.," says Philips' Lemnitzer. "So again we didn't put our eggs in the basket of requiring broadband access."

But this obstacle might soon crumble. The FCC recently announced its National Broadband Plan, which aims to expand access to high-speed Internet connections to nearly 100 million Americans by 2020. And through the Universal Service Fund, it makes money available to health care providers to help defray the cost of telecommunications services, such as broadband, in rural areas.

"I'd say in five years, broadband would be an interesting application for us as well," admits Lemnitzer.

Nontraditional players

Perhaps a greater danger to the health care companies could be the increased competition. Although a business such as Philips with long experience in the health care market remains one of the top players, others are moving in.

"You're seeing nontraditional health players be interested in home monitoring," says Glorikian. "Intel is the quintessential example," he adds, which recently teamed up with GE Healthcare to make a line of telehealth products. Other large companies entering this field include Bosch (through its Health Heroes Network), Honeywell and Inverness.

"Intel sees this as an opportunity to get their microprocessor out in more places. That's the bottom line," notes Glorikian. "If they could have a home health monitor in every home, that's a lot of CPUs in the market."

"It has the potential to be incredibly disruptive," he adds. "It's not always going to be the incumbents in health care today that are the cutting-edge."