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Telemonitoring at Visiting Nurse Health System

Kayla Maaraoui, Micheli Soong, Michelle Bhatti, Jessrin Jacob


HMGT 4321.001
September 20, 2015

1. Executive Summary
Visiting Nurse Health System is an accredited Medicare, state Medicaid, and commercial
insurance funded nonprofit home health company. The company started in 1948 with just two
nurses located in Atlanta, Georgia that served 26 countries in the Atlanta metro area. By 2009,
VNHS provided healthcare at home to over 20,000 individuals and had net revenues of $50
million. The companys three operational divisions include: home healthcare, hospice, and care
management. With rising healthcare costs, and Medicare and Medicaid changing reimbursement
rates based on diagnosis codes and readmission rates, VNHS started the use of telemonitoring.
Telemonitoring is the use of portable medical technology to monitor patient health
statistics. VNHS instated the Health Buddy which was a portable device connecting to a blood
pressure, weight scale, blood glucose and peak flow monitor. Patients over the age of 70 with
chronic conditions such as CHF, COPD, stroke, or Afib were automatically qualified as patients
eligible to use VNHS telemonitoring. Initially clinicians were wary about usin gthe telemonitors,
but over time the telemonitors proved to lower the amount of nurse visits and readmission rates.
These rate proved helpful in hospital partnerships due to the new ACA laws of looking for lower
readmission rates. The only problem is that Medicare and Medicaid insurance did not reimburse
for these telemonitors since it is an added tool that was not necessary. At the end of the article,
CEO Mark Oshnock was faced with the hard decision of whether to buy more Health Buddy
telemonitoring systems, having large fixed and hosting costs and low reimbursement rates,
2. Problem Statement
With an increased focus on preventative care, telemonitoring had proven to be an
effective tool in managing, as well as reducing re-hospitalization rates. At VNHS, the Health
Buddy system installed to implement patient telemonitoring had a clear use and benefit to it. It
helped increase physician capacity and distribute staff resources appropriately, reducing the costs

associated with home health visits done by nurses. Since 60% of business with VNHS was done
with Medicare, and Medicare only paid based on episodic care, those costs reduced revenue
streams significantly for the company. Of note, was the effect of re-hospitalization rates on
reduced profit streams; having the Health Buddy monitoring system was shown to decrease rehospitalization costs. However, with over 1800 patients in the home health division and only 50
telemonitors, there was clearly a need for more telemonitors circulating through home health and
even into hospice care. CEO Mark Oshnocks problem came in justifying the cost of buying and
installing this financial investment.
3. Data Analysis
The problem that arises with trying to implement an organization-wide telemonitoring
system is one of buying expensive monitors, of convincing staff that replacing them with a an
electronic monitor is a good alternative, and finally one of determining how these monitors
would be issued to patients. In analyzing this situation, it is apparent that clinical staff, patients,
and the board of directors are the influencing factors in the decision to be made about investment
and implementation.
When nurses and physicians are resistant to making the switch to electronic monitoring
instead of in-person visits, it makes implementation a longer and more stressful process:
The issue here arises from the fact that clinicians cannot see immediate results/benefits
from the system, thus leading to resistance. Although some of the staff had initial
exposure to the 50 devices bought, widespread acceptance by 200 professionals in the
home health division would need more time to gain traction.
Patients must be amenable to having such a device, and need to be compliant with its use
in order to obtain the best results from the system; without their flexibility in making these
changes, the investment becomes worthless. For the process to be successful:

Initial assessments must include ascertaining that patients have clear goals and ideas of
what they want from a telemonitoring system;
Patients with chronic diseases need to be willing to monitor themselves for the criteria the
Health Buddy was created to monitor - for example a patient who had recently been
diagnosed with chronic heart failure needs to monitor their blood pressure, salt and sugar
intake, and their weight. By implementing the Health Buddy, patients can easily manage
their disease with the assistance of the telemonitoring system--but patient compliance is
key.
In determining whether or not this investment is feasible, consultation with the board of
directors is necessary. To be able to justify the costs relating to the Health Buddy system, the
CEO needs to show a high enough profitability margin.
The cost of a single device is put at $2500, along with a $65 per month hosting fee. To
buy and host 1750 more units for 1 year, this would translate into a $5,740,000 cost; for
years after the first, this would be an added cost of $1,365,000 per year;
Currently, insurance companies do not reimburse VNHS for the devices or the
telemonitoring (although that is something they hope to change in the long-term);
Insurance companies only average $2500 reimbursement to VNHS per one 60-day
episode.

Key Decision Criteria:


i.

Cost of investing in the entire telemonitoring system-65%

ii.

Lowered re-hospitalization rates attracting hospital partnerships-15%

iii.

Clinical adoption by physicians and nurses-10%

iv.

Patient adoption and satisfaction with the Health Buddy system-10%

Alternatives:
To assess our alternatives we created a point system in which to evaluate each alternative
using a weighted system based on our key decision criteria.
Cost of
Investing

Lowered Rehospitalization
Rate

Clinical Adoption

Patient
Satisfaction

Do Nothing

65

Widespread
Implementation

20

15

10

10

We gave partial points for the do nothing option in the clinical adoption and patient
satisfaction criteria because VNHS already some success with the meager 50 units they have
already purchased. We also gave partial points to the cost of investing criteria in the widespread
implementation option because eventually some of the costs would be recouped in savings from
reduced home health visits.
Based on the total points per option, the Do Nothing option is the better alternative, by
12 points. Using a points allocation system such as this can be helpful for NVHS to make its
ultimate decision.
4. Conclusion
CEO Oshnock and VNHS have a challenge ahead on them. There are many obstacles,
most notably the inability so far to have the Health Buddy covered by insurance. A clear answer
was not given of Oshnocks decision so the reader is left to make a decision on their own. After
taking into consideration costs, reimbursement rates, readmission rates, and patient satisfaction,
Oshnock has to weigh for the company the pros and cons. This article has shown that
telemonitoring has amazing potential to revolutionize the entire healthcare industry.