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TELEMEDICINE AND e-HEALTH

Volume 12, Number 2, 2006
© Mary Ann Liebert, Inc.

Original Research

Cost-Minimization Analysis of a Telehomecare

Program for Patients with Chronic Obstructive
Pulmonary Disease

GUY PARÉ, Ph.D.,1 CLAUDE SICOTTE, Ph.D.,2 DANIELLE ST.-JULES, R.N., M.Sc.,3
and RICHARD GAUTHIER, M.D.3

ABSTRACT

A cost-minimization analysis was performed on a telehomecare program for patients with a

chronic obstructive pulmonary disease (COPD). The research was quasi-experimental and in-
cluded a control group. We compared the effects and costs of care provided to a group of 19
patients under a telehomecare program to a comparable group of 10 patients receiving regu-
lar home care without telemonitoring.
Our results clearly indicate that there were fewer home visits by nurses and hospitaliza-
tions for patients in the experimental group. However, these patients made more telephone
calls than patients in the control group, although this difference was not statistically signif-
icant. Of utmost importance, the cost-minimization analysis yielded positive results. Indeed,
telemonitoring over a 6-month period generated $355 in savings per patient, or a net gain of
15% compared to traditional home care.
Our study confirms the findings of previous studies that analyzed the efficacy of tele-
monitoring for patients with COPD. Patients were found to easily accept the idea of using
the technology, and the telehomecare program demonstrated significant clinical benefits. Fi-
nancial advantages of the program could have been more pronounced had it not been for the
cost of technology that effectively erased a good portion of the savings.

INTRODUCTION common for patients with COPD to be given

an expanded role in their own treatment.1,2

C HRONIC OBSTRUCTIVE PULMONARY DISEASE

(COPD) is a long-term illness characterized
by breathing difficulties that are accompanied
by a progressive deterioration of functional ca-
pacity. Home care for patients with COPD en-
sures a better quality of life and prevents hos-
pitalizations. In recent years, it has become
This therapeutic approach generally consists
of patients managing the use of prophylactic
medication and following personalized treat-
ment plans in the home. Clinical studies have
shown that this therapeutic strategy is associ-
ated with significant improvements seen in
both clinical results and quality of life.3,4 Re-

1HEC Montreal, Quebec, Canada.

2University
of Montreal, Quebec, Canada.
3Maisonneuve Rosemont Hospital, Montreal, Quebec Canada.

114
6124_10_114-121 3/30/06 3:34 PM Page 115
COST-MINIMIZATION ANALYSIS OF A TELEHOMECARE PROGRAM
cent studies nevertheless report that patients
often do not always follow their personalized
treatment plans.5,6 Information technologies
now provide an opportunity to address this
problem through remote monitoring of the
home patient’s clinical condition.
Telehomecare, also called telemonitoring,
consists of remotely monitoring the health of
patients with information and communication
technologies. The technology may comprise
several different functions, such as detecting
problems as they arise and proposing palliative
solutions. Electronic data transmission can re-
duce measurement detection and transmission
errors. Telemonitoring has other potential ad-
vantages, such as patient education, more pa-
tient responsibility in the management of his or
her care, and cost reductions.7 Better integra-
tion of care provided from a variety of service
points, the introduction of preventive medical
practices and effective and continuous remote
monitoring may also alleviate crowding in
emergency rooms.8 Finally, telehomecare can
prevent hospitalization or even extend life.9–11
Scientific literature on this subject offers a rel-
atively limited number of telehomecare exper-
iments for patients with COPD. Dale et al.2 re-
motely monitored 55 patients with COPD over
a 3-month period and noted 36 escalations, of
which 29 (81%) were remotely managed in the
home while the other 7 required patient hospi-
talization. The actual number of hospitaliza-
tions was 50% less than what had been pre-
dicted for this cohort of patients. In a study
based on a pre–post assessment, Miaolo et al.1
followed a cohort of 23 patients with COPD for
24 months. Hospitalizations and acute attacks
decreased 50% and 55%, respectively, over the
24 months of home monitoring using telemed-
icine.
Telemedicine, therefore, offers attractive ad-
vantages in terms of improved accessibility and
superior care, but what of the cost effectiveness
of these programs? We found no study that
could clearly demonstrate the financial viabil-
ity of this type of program for managing pul-
monary disease. Our study offers to fill this
gap. Precisely, this paper presents the findings
of an economic analysis of a telemonitoring
program for patients with COPD. Using a
quasi-experimental research design with a con-
115
trol group, we examined the effects and costs
of care, comparing a group of patients receiv-
ing telecare to a comparable group receiving
home care without remote monitoring services.
MATERIALS AND METHODS
Description of the telehomecare intervention
Maisonneuve Rosemont Hospital provides
specialized pulmonary care in the homes of
adults living in the Montreal metropolitan area,
and suffering from chronic pulmonary prob-
lems. At the time of this study, the hospital was
serving 2393 patients. In response to the con-
tinually growing demand for care, a telehome-
care program was introduced to confirm the
clinical and economic viability of this type of
intervention. Tested over 6 months in 2003 and
2004, the program was intended to provide in-
tensive and continuous telemonitoring that
would improve the hospital’s ability to assist
and provide support to patients while reduc-
ing to a strict minimum the number of home
visits made by nurses. Faced with a serious
shortage of professional staff, the hospital
wanted to confirm how effectively the technol-
ogy could reduce nursing hours per patient.
The technology consisted of a Webphone
with an integrated touch screen and modem
(New IT Technologies Inc., Montreal, Quebec).
The device was programmed with a personal-
ized protocol for monitoring several parame-
ters of patient health. The patient received com-
plete training about the device during the first
meeting with the nurse and was then required
to collect and send clinical data over the Inter-
net. Each day, patients had to complete a data
entry form, documenting their peak flow rate,
their symptoms, and any medication taken.
This tool was designed to help patients under-
stand relationships between their state of
health, environment, lifestyle, and manage-
ment of medication. This would enable the
preparation of therapeutic action plans for bet-
ter management of the illness.
Once the information was transferred, it was
reviewed daily by the nurse responsible for re-
mote monitoring of the patient’s health and
compliance with prescribed treatment. The de-
6124_10_114-121 3/30/06 3:34 PM Page 116
116
vice also automatically analyzed the data trans-
ferred, alerting the patient and the nurse when
readings fell outside previously established
parameters. The patient also received prepro-
grammed advice on the recommended re-
sponse. The nurse was able to remotely moni-
tor the patient’s reactions and intervene
directly by telephoning the patient or by in-
forming the attending physician, who decided
on an appropriate response.
Changes represented by the home telemoni-
toring system included how patients collected
and transmitted clinical data concerning their
condition and, above all, the resulting response:
patient advice provided in real time (intelligent
functions programmed into the system) and in
non-real time (the case manager regularly con-
sulting the electronic database to monitor the in-
tervention). The telemonitoring system’s added
value, as compared to the traditional system, was
that (1) there was continuous remote monitoring
of the patient’s state of health and behavior; (2)
the system reacted immediately when state of
health or behavior fell outside of recommended
parameters; and (3) the advice tailored to the pa-
tient’s specific condition effectively reinforced
desired behaviors.
Design
The research project was designed as an ex-
periment conducted with an equivalent control
group. Patients were selected according to a
strict set of inclusion and exclusion criteria.
TABLE 1. NUMBER AND TYPES OF
Experimental group
(n
19)
Mean
Pulmonary and related diagnoses 1.2 1.0
Respiratory failure (53%)
Emphysema (26%)
Asthma (16%)
Secondary diagnoses 2.5 2.1
AHD (37%)
Heart failure (26%)
Diabetes (21%)
AHD, arteriosclerotic heart disease.
PARÉ ET AL.
This evaluative project dealt solely with newly
admitted patients. These patients had to have
severe COPD that required frequent home vis-
its. Patients were excluded from the cohort if
they had psychological or psychiatric disor-
ders, if they had a cognitive deficiency that
made them unable to participate in their self-
treatment, or if they had a visual or motor de-
ficiency that rendered them incapable of using
the telemonitoring technology (unless a spouse
or an informal care giver was able to help).
From a total of 337 newly admitted subjects
having received an eligible diagnosis between
December 1, 2003 and June 1, 2004, 30 patients
satisfied all the inclusion and exclusion criteria
and agreed to participate in a 6-month pilot
project. From this group, 20 were assigned to
the experimental group with home telemoni-
toring, while the other 10 became the control
group and were monitored through the tradi-
tional system of home visits.
The 30 subjects formed a homogeneous
group of patients. As shown in Table 1, the
number of diagnoses of pulmonary and related
conditions per patient is the same for both
groups. The most common diagnoses in the
two groups were respiratory failure, emphy-
sema and asthma. The most common sec-
ondary diagnoses were arteriosclerotic heart
disease (AHD), heart failure, diabetes and hy-
pertension. There were no significant differ-
ences noted in the composition of the two
groups in terms of age, gender, or oxygen de-
pendence. The mean age was 69 years in the
PULMONARY AND SECONDARY DIAGNOSES
Control group
(n
10) t-test
Standard Standard
deviation Mean deviation t p
0.8 0.8 1.2 0.245
Respiratory failure (40%)
Emphysema (20%)
2.1 2.0 0.5 0.644
Hypertension (40%)
AHD (30%)
Diabetes (30%)
6124_10_114-121 3/30/06 3:34 PM Page 117
COST-MINIMIZATION ANALYSIS OF A TELEHOMECARE PROGRAM
experimental group and 72 years in the control
group. Men represented 63% of the experi-
mental group and 50% of the control group.
Oxygen dependence stood at 53% in the ex-
perimental group and 50% in the control group.
Analysis strategy
The strategy for the economic analysis was
to examine cost minimization.12 Costs were
compared for interventions with clinical out-
comes considered similar in order to identify
the least costly alternative. The analysis un-
dertaken in this study sought to identify the ex-
tent to which telemonitoring could reduce costs
compared to the traditional model. Under this
perspective, the analysis was based on an iden-
tification of the additional costs incurred and
gains obtained when implementing a telemon-
itoring program. This was a “with/without”
comparison in which “without telehomecare”
served as the benchmark for evaluating the in-
tervention’s cost-effectiveness. The economic
analysis focused on evaluating the costs asso-
ciated with running the program as well as the
gains made and the costs avoided by imple-
menting the telehomecare program. Only di-
rect costs were taken into account. Finally, it
should be noted that this economic analysis
was conducted from the point of view of the
healthcare system as a whole. This means that
it did not take into consideration costs incurred
by the patient. It is our view that these costs
would not have affected the results of the eco-
nomic evaluation, inasmuch as the cost of the
telemonitoring technology was covered by the
healthcare network and both types of inter-
TABLE 2. VARIABLES USED IN THE
Variables
Time spent by nurses in home visits (number of minutes)
Travel time spent by nurses in order to make home
visits (number of minutes)
Distance covered by the nursing staff/home visits
(number of kilometers)
Time spent by nurses in telephone interventions
(number of minutes)
Time spent in emergency telephone interventions
by on-call personnel (number of minutes)
Number of hospitalizations and length of hospital stay
117
vention took place in the patient’s home—
hence the patient’s expenses should be similar
in both cases.
Variables used and sources of information
The main measures used to assess the effects
of the telemonitoring deployment were: (1) less
time spent by nurses on clinical monitoring
of patients and (2) fewer hospitalizations. Six
variables were used to arrive at estimates of
these results. Three variables measured differ-
ent aspects of home visits, two more dealt with
telephone communication between nurses and
patients, and the last variable measured the
costs associated with hospitalizations. Table 2
provides a summary of the variables used and
sources of data.
We also assessed patient satisfaction in the
experimental group by conducting a telephone
survey 1 week before the end of the experi-
ment. More specifically, we assessed their per-
ception of ease of use of the system, the qual-
ity of the technical support, and the perceived
overall usefulness of the telemonitoring pro-
gram.
Method for calculating costs
The cost of nursing services was calculated
based on the mean hourly rate set by collective
agreement for graduate nurses multiplied by
the time they spent caring for each patient, both
in the home and over the telephone. The cost
of services by graduate nurses is higher than
the typical cost for this type of personnel be-
cause a graduate nurse has a 3-year university
degree. This level of education was a require-
ECONOMIC ANALYSIS AND SOURCES OF DATA
Sources
Management control system: home visit logbooks
maintained by nurses
Management control system: home visit logbooks
maintained by nurses
Management control system: home visit logbooks
maintained by nurses
Patient medical records: notes in medical records—
nature of intervention and time spent (in minutes)
Patient medical records: notes in medical records—
nature of intervention and time spent (in minutes)
Patient medical records
6124_10_114-121 3/30/06 3:34 PM Page 118

118 PARÉ ET AL.

ment in this program, because the nurses are
required to work independently in the homes
of patients. Travel costs take into account the
actual time nurses spent traveling and the re-
imbursement of mileage according to rates set
by collective agreement. Finally, the cost of hos-
pitalization was estimated on a patient-by-pa-
tient basis. We used average costs calculated
according to the DRG method (3M™) used by
the Montréal University Hospital for all patients
who had had a COPD as their primary diagno-
sis for hospitalization (DRG #88) in 2003–2004.13
This average cost of hospitalization was ad-
justed based on four different levels that re-
flected the seriousness of the cases. We used an
average hospitalization cost corresponding to
the patient’s length of stay for each of the pa-
tient hospitalizations in the two groups.
The cost of the technology was estimated on
the basis of the current price of the device used
in the experiment at the time the experiment took
place. This strategy enabled us to conduct our
economic analysis using recent costs that re-
flected a trend towards falling prices, since cur-
rent costs would have differed from those used
in our experiment. Costs were amortized using
the straight-line method over a 5-year period.
Detailed information is provided in Table 3.
RESULTS
First and foremost, it was important to en-
sure that the telemonitoring program was well
organized and would work. Initially, the 30 pa-
tients who agreed to participate in the experi-
ment saw it through to the end, with the ex-
ception of one patient from the experimental
group who withdrew at the very outset of the
project. This patient was excluded from the

TABLE 3. ECONOMIC ANALYSIS OF THE TELEHOMECARE PROGRAM

Estimates for a six-month period

Experimental group Control group

Cost categories (n
19) (weighted n
19) Savings/(losses)

Home Visits
Remuneration of nurses (visit time) $2,623 $3,788 $1,165
Traveling expenses $391 $696 $305
Remuneration of nurses $1,040 $1,820 $780
(traveling time)
Telephone interventions
Remuneration of nurses $1,166 $491 $(675)
On-call telephone service
Remuneration of nurses $596 $301 $(295)
Hospitalizations
Total costs $16,022 $45,708 $29,686
Technology
Purchase of user licenses for the $15,343
telemonitoring software
Purchase of Web phones $2,090
Installation costs and costs for $6,783 $0 $(24,216)
support an maintenance of
equipment and licences
Total $46,054 $52,804 $6,750
Total per patient $2,424 $2,779 $355

Assumptions underlying calculation of unit costs: (a) Effects: Cost of nursing staff
$34.21/hr. Traveling cost

$0.37/km. Hospitalization cost (COPD/seriousness 1)
$3,543/hospitalization; (COPD/seriousness 2)
$4,660/
hospitalization; (COPD/seriousness 3)
$7,462/hospitalization; (COPD/seriousness 4)
$14,384/hospitalization.
(b) Technology: Amortization on a straight-line basis over a 5-year period for the following costs: purchase of 150
user licenses
$1,615/patient/year; purchase of 150 Web phones
$220/Web phone/year; installation cost

$10/Web phone/year; software updates
$484/license/year; and technical support
$220/Web phone/year. Cal-
culations in Canadian dollars.
6124_10_114-121 3/30/06 3:34 PM Page 119

COST-MINIMIZATION ANALYSIS OF A TELEHOMECARE PROGRAM 119

TABLE 4. PATIENT ATTITUDES TOWARD THE TECHNOLOGY AND THE TELEHOMECARE PROGRAM

Standard
n Mean deviation

Ease of use
During the first visit, the nurse gave me a good explanation of how to use the 17 3.76 0.75
Web phone and the procedure to follow.
The vocabulary used on the Web phone screen was easy to understand. 17 3.65 0.86
The Web phone was easy to use. 17 3.47 1.18
Quality of technical support
When I had technical problems with the Web phone, the problem was resolved 15 3.57 1.09
within 24 hours.
Perceived usefulness
Telehomecare gave me a sense of security. 17 3.35 1.22
Use of the Web phone helped me adopt new practices that stabilized my state 17 3.65 0.86
of health.

Likert scale of 1 to 4 where 1
strongly disagree and 4
strongly agree.

analysis. Furthermore, the data from the tele-
phone survey of the experimental group
showed that patients had no difficulty working
with the technology (Table 4).
Results from the cost-minimization analysis
clearly demonstrate that there were fewer
home visits by nurses for the experimental
group (Table 5). These patients received an av-
erage of 4.2 home visits over the 6-month pe-
riod, compared to 7.5 visits per patient for the
control group (p  0.001). In addition, even if
the average stay of a home visit was less for pa-
tients in the control group, the total nursing
time per patient was still less for the experi-
mental group because they received fewer
home visits (p  0.005).
Patients with telehomecare made more tele-
phone calls than patients in the control group,
although this difference was not statistically
significant. The average length of these calls
was longer for telemonitoring patients than it
was for patients receiving traditional home
care (p  0.10).
Finally, there were only 2 hospitalizations

TABLE 5. EFFECTS OF THE TELEMONITORING PROGRAM

Experimental Control
group group
Types of effects observed (n
19) (n
10)

Home visits
Percentage of patients who received at least one visit 100% 100%
Number of visits per patienta 4.2 7.5
Average length of a home visit (in minutes)b 57.5 46.6
Average distance traveled by nursing staff per patient (in kilometers)a 55.6 99.0
Average traveling time per patient (in minutes)a 96.0 168.0
Telephone interventions
Percentage of patients who used the service 84% 60%
Average number of calls per patient 6.2 4.5
Average intervention length per patient (in minutes)c 17.5 10.1
On-call telephone service
Percentage of patients who used the service 79% 40%
Average number of calls per patient 2.5 1.4
Average length of intervention per patient (in minutes) 22.2 19.9
Hospitalizations
Percentage of patients who were hospitalized at least once 5% 40%
Average number of hospitalizations per patientc 0.1 0.6
Average hospital stay (in days)b 13.5 7.3

T test: ap  0.001; bp  0.005; cp  0.05.

6124_10_114-121 3/30/06 3:34 PM Page 120
120
among the 19 telehomecare patients, while
there were 6 hospitalizations among patients
receiving traditional home care (p  0.05). The
average hospital stay was longer for telemoni-
toring patients than it was for patients in the
control group (p  0.005).
Table 3 presents estimates of costs for the two
home care groups (with or without telemoni-
toring). In order to ensure that we were ana-
lyzing comparable data, we weighted our
calculation of home care costs without tele-
monitoring on the basis of 19 patients. The cost-
minimization analysis yielded positive results:
the telehomecare program cost $6,750 less than
the traditional home care program, represent-
ing a saving of $355 per patient. This amounts
to a net gain of 15% over traditional patient
monitoring, a program that cost $46,054.
The principal source of savings in the tele-
monitoring program was lower hospitalization
costs; hospitalizations represented 64% of the
cost of the traditional home care program
($29,686/$46,054). To a lesser extent, savings
also came from the lower cost of care provided
in the home. These savings represented 5% of
the total cost of running the traditional home
care program ($2,250/$46,054). However, these
savings were largely eaten up by the increase
in time spent by nurses on telephone calls with
patients. Finally, it was the technology that
used up most of the program’s savings. The
technology cost came to $24,216 or 53% of the
total cost of the traditional home care program.
This also represented four times the cost of
nursing services in the experimental group
($24,216/$5,816) and over 53% of the total cost
of the telehomecare program.
DISCUSSION
Our study confirms the findings of previous
studies that analyzed the efficacy of telemoni-
toring for patients with COPD. Patients were
found to easily accept the idea of using the
technology,1,14,15 and telehomecare provided
significant clinical benefits, particularly in
terms of a reduction in the number of home vis-
its and hospitalizations.1,2,16 In terms of pro-
gram economics, the telemonitoring program
generated significant savings in the form of a
PARÉ ET AL.
lower hospitalization rate and, to a lesser ex-
tent, less frequent home visits. This resulted in
a net gain of 15% over traditional home care.
As mentioned above, most of the savings were
used up by the technology costs.
More evaluative research is required in order
to confirm the economic viability of this kind of
telehomecare program. Future studies should
not only examine other patient populations that
would be apt to receive telemonitoring but
should also compare various technological envi-
ronments and utilize larger samples.
Despite the inherent limitations of this eval-
uative approach, including the small sample
size, we firmly believe that our results are valid
to the extent that (1) the telehomecare program
was maintained over a relatively long period
of time and the technology was used well dur-
ing this period and (2) significant differences
were observed between the two programs in
terms of attitudes (as seen in Table 4), structure
(Table 5), and costs (Table 3).
ACKNOWLEDGMENT
The Canada Research Chairs Program is
gratefully acknowledged for providing finan-
cial support for this research.
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Address reprint requests to:
Guy Paré, Ph.D.
Canada Research Chair in Information
Technology in Healthcare
HEC Montréal
3000 Côte-Ste.-Catherine Road
Montreal, Quebec H3T 2A7 Canada
E-mail: guy.pare@hec.ca
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