Billions Spent On In-Office Healthcare Could Shift to the Home by 2025, and These Companies Could Benefit

In the U.S., $4.3 trillion was spent on healthcare in 2021, the largest of any country in the world, but what if healthcare spending could be reduced, freeing up dollars for other things? While reducing healthcare costs would always benefit patients, skyrocketing living costs make this a particularly timely discussion.

Remote patient monitoring could be one way to quickly cut healthcare costs meaningfully. In fact, some studies suggest healthcare is already trending in this direction.

Medicare services are already starting to shift to in-home health in a big way

In fact, McKinsey estimates that up to $265 billion worth of services provided to Medicare fee-for-services and Medicare Advantage beneficiaries could move from medical offices and hospitals to the home by 2025. McKinsey based that amount on a 2022 survey of doctors who primarily service patients utilizing those Medicare programs to pay for their healthcare.

As further clarification on the size of the potential opportunity in remote patient monitoring, the firm said up to 25% of the total cost of care for Medicare fee-for-service and Medicare Advantage patients could shift from medical facilities to the home by 2025.

Notably, that total doesn't even include healthcare services paid for by commercial insurers, Medicaid, private pay, or other sources.

How remote patient monitoring is changing healthcare

Importantly, advances in technology mean this transition from the office to the home is likely to be made without sacrificing quality of care or access to healthcare services.

Over the last five to 10 years, we've seen an increasing number of smart devices that allow consumers to monitor their own health go mainstream. The Apple Watch and other smartwatches with ECG capabilities and various other health-related sensors have caused a virtual explosion in terms of remote monitoring over the last few years.

However, while smartwatches may have opened patients' eyes to the possibility and potential benefits of remote monitoring, they come up far short of what's actually needed to accurately monitor one's health outside of an institutional health setting. 

This is where companies like Dexcom (DXCM), G Medical Innovations (GMVD), iRhythm Technologies (IRTC), and the privately held Canary Medical come in (disclosure: the author is the CEO of Quantum Media Group; G Medical Innovations is a client of Quantum). Physicians can prescribe remote patient monitoring through companies like G Medical or any of these others for a variety of serious health problems.

“For example, remote cardiac monitoring can uncover asymptomatic and infrequent abnormal arrhythmias before they become a major cardiac event requiring hospitalization and surgery,” explained Dr. Yacov Geva, president and CEO of G Medical Innovations. “The technology for remote monitoring has been around for 20 years or so, but despite advantages such as this, most patients weren’t really ready for it. I think the COVID-19 pandemic opened up patients’ eyes to the possibilities and advantages of receiving monitoring at home instead of in the hospital, where they may be more likely to catch an infectious disease that may be circulating through the facility.”

The benefits of remote patient monitoring

Perhaps the clearest benefit of remote patient monitoring is that it's far cheaper than paying for a hospital bed for an extended period, but that's not the only way it saves money. A recent study found that 86% of healthcare costs in the U.S. are attributed to chronic illness, and some 50% of Americans have a chronic disease.

A significant share of the amount spent on chronic illnesses comes from emergency room visits. Patients with remote monitoring equipment in place tend to make fewer ER trips because they aren't reliant purely on their anecdotal feelings. They have hard data that indicates an ER visit is not necessary.

On the other hand, remote monitoring can catch problems earlier, reducing the length of hospital stays and the need for expensive medical interventions. Patients have the data they need to tell them when to go to the hospital, rather than waiting until an emergency arises. As such, insurance providers also benefit when healthcare costs are reduced.

On a related note, remote patient monitoring helps optimize health outcomes because patients know when they need to go to the hospital or if an office visit may be sufficient. Healthcare providers have access to a steady stream of data on the patient's condition and progress, so they can make better decisions, leading to better long-term health for the patient.

Other benefits of remote patient monitoring include reducing the strain on hospitals or clinics experiencing staff shortages, reducing the spread of infectious diseases, and improving caregiver and patient involvement in the patient's care. Hospitals can also reduce Medicare penalties from excessive readmission rates.

Of course, no healthcare solution is perfect, so there are some shortcomings to consider when it comes to remote patient monitoring. For example, some patients might not be able to afford the extra equipment required for remote monitoring. Of course, doctors usually prescribe remote patient monitoring based on Current Procedural Terminology, or CPT codes, which allows patients to get the equipment for free or after paying a deductible. However, not all patients might be able to afford that deductible.

Additionally, remote monitoring requires an adequate internet connection, which may not be available everywhere.

Improving outcomes for diabetics via remote monitoring

While there could be significant opportunities in investing in remote patient monitoring companies, relatively few of them are publicly traded. For example, the privately held Canary Medical is one of the largest providers of data-sharing services for medical implants.

A few others do trade in the public markets. Most pure-play remote patient monitoring companies focus on one or more specific illnesses. For example, Dexcom focuses on continuous blood glucose monitoring (CGM). The company's newest device provides glucose readings in real time without the need for fingersticks or even scanning a device placed on the skim. Dexcom describes itself as "the #1 recommended CGM brand by people with diabetes and healthcare providers.

The Centers for Medicare and Medicaid Services (CMS) recently decided to expand CGM coverage for diabetics covered by Medicare. Dr. Thomas Martens, an internal medicine physician and key investigator for a recent Dexcom study, explained why the move was such a landmark win for diabetic patients in the U.S.

"This is a major win for the diabetes community, and another validation of how CGM can benefit all people living with diabetes," Dr. Martens said in a recent press release. "The evidence is clear: Real-time CGM use helps people with diabetes on all types of insulin, not just mealtime insulin, achieve better glycemic outcomes. This CMS decision is an important step forward in improving access to CGM technology, and we hope private insurers will follow."

Dexcom released Phase 2 trial data from its MOBILE study in 2022. That study found that Type 2 diabetes patients treated with basal insulin who used a real-time CGM device had better glycemic outcomes compared to those using a capillary blood glucose meter.

Improving outcomes cardiac care via remote monitoring

On the other hand, iRhythm Technologies focuses on cardiac monitoring using its Zio system and single-use monitors. Patients wear the Zio monitor for up to 14 days and then mail it back to the company, which analyzes the data and sends a report to their doctor.

In November, iRhythm released the results of four clinical trials at the American Heart Association's 2022 Scientific Sessions. In a press release announcing a new analysis of the company's mSToPS trial, Dr. Matthew R. Reynolds, a cardiac electrophysiologist at Lahey Hospital & Medical Center and Baim Institute for Clinical Research, highlighted the key benefit of iRhythm's Zio monitors: enabling early diagnosis.

According to him, the study examined the benefits of AFib screening at the three-year mark and found a "small but meaningful gain in quality-adjusted life expectancy with a nominal (<1%) increase in lifetime healthcare spending." Dr. Mintu Turakhia, chief medical officer and chief scientific officer at iRhythm, added that their recent studies add to a growing body of evidence highlighting the benefits of remote monitoring for cardiac patients.

"Taken together, these studies demonstrate screening for AFib in at-risk populations can lead to positive patient health outcomes, especially when coupled to appropriate therapy, including stroke prevention, rhythm control, and risk factor modification," he said. "These studies are not in isolation and build upon a strong body of evidence from randomized trials, including STROKE-STOP, EAST-AFNET 4, and others."

Benefits of broader remote patient monitoring

Meanwhile, G Medical takes a broader approach to remote patient monitoring with its Prizma Care multi-sensor unit. This FDA-cleared medical device transforms any smartphone into a medical monitoring device. 

Prizma is an ecosystem made up of the Prizma device, smartphone applications, additional peripheral devices for monitoring vital signs, and a personal portal for the patient and their physician. All that data is then used to build the patient’s own personal electronic medical record (EMR), which also includes other critical information like their medications and any allergies they might have.

Remote monitoring of vital signs could be of particular benefit for patients with multiple comorbidities or life-threatening conditions like heart problems. Dror Nuriel-Roth, VP of Operations for G Medical Diagnostic, explained that the data provided via remote monitoring is easily accessible to the physician who prescribed it, enabling them to follow up with their patients after reviewing the data and report.

“Once abnormal heart activity is detected via remote monitoring, the physician can act on it, either with medication or a procedure,” Nuriel-Roth said. “Remote monitoring services help prevent a more serious heart condition through early detection of abnormal arrhythmias. Remote patient monitoring also helps prevent the next stroke or heart attack that might affect a patient’s life forever.”

Investing in the remote patient monitoring space

Believe it or not, remote patient monitoring is not a recent development, although the COVID-19 pandemic did bring it into the spotlight and give it massive push forward. In fact, remote patient monitoring has been around since the late 1960s.

However, today's technology has greatly improved the consistency and quality of care that patients can receive remotely. This could be one reason we're starting to see this transition from in-office to in-the-home healthcare spending accelerate.

One estimate pegs the global remote patient monitoring market at $53.6 billion in 2022 and projects an impressive compound annual growth rate of 26.7% between 2022 and 2027. If it turns out to be accurate, that growth rate would make the remote patient monitoring market worth over $175 billion in only a few years, creating plenty of potential opportunities for investment.

Ari Zoldan is CEO of Quantum Media Group, LLC. G Medical Innovations is a client of Quantum Media Group, LLC.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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Ari Zoldan

Ari Zoldan is the CEO of New York-based Quantum Media Group, LLC. The company provides investor relations, public relations and equity research services to publicly traded companies. As an on-air media personality, Ari can be seen regularly on major media outlets and is frequently quoted in mainstream news outlets covering business, innovation and emerging trends.

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