Will Digital Health really save money in health spending?

Healthcare costs are climbing worldwide, irrespective of the geography, political organization, or any other condition. The challenges to solve in order to keep healthcare assistance sustainable are well known and  repeatedly analyzed, putting at the center of every analysis the ability to reduce costs of care and increase large-scale preventive actions, to counteract increasing age population.

Leveraging IT utilization to tackle these problems is a current idea, already implemented successfully in other industries.

But, is it possible to have a clear quantification of how much savings IT could deliver to the Healthcare system?

I have found a couple of examples to share, from very different “sections of the pie”: from the operational side to the use of Digital therapeutics.

1- Potential Savings Estimates from Transition to Electronic Transactions The CAQH Index tracks the adoption of electronic transactions for several routine business interactions in the healthcare system, and estimates potential cost savings from continued replacement of manual transactions with electronic methods. A nice point to consider is that in the model designed, they have taken into account that full adoption – meaning exactly 100 percent use of fully electronic transactions – is not achievable, and still there are clear improvements.

a) On average, each manual transaction costs providers and health plans approximately $3 more than each electronic transaction.

b) In 2014, they estimate that completing the transition from manual to electronic processes for the six main transactions studied [1] could save health plans and providers approximately $8 billion annually. The savings estimation was even greater in the following CAQH Index released in 2016 corresponding to an estimated $9.4 billion in direct cost each year [2]

“Drugs don’t work in patients who don’t take them”

— C. Everett Koop, M.D.

2- Potential Savings Estimates from Improvement of treatment Adherence (thanks to Digital Therapeutics) Non-adherence is multifactorial and must be addressed by understanding the underlying cause (e.g. side effects, lack of understanding of the disease, inconvenient posology, individual habits) [3]. Improving adherence guarantees better treatment efficacy rates and decreases need to repeat the treatment and, possibly, need to hospitalization.

a) An estimated 25-30% of all patients in the U.S. do not take their medications as prescribed by their doctors. Non-adherence has been shown to result in $100 billion each year in excess hospitalizations alone [4]

b) Impact of proper adherence to treatment is higher in some therapeutic areas, as for example, Cardiovascular and Infectious Diseases. A group from Proteus Digital Health Inc. has compared the cost-effectiveness of in-person directly observed therapy (DOT) versus the wirelessly observed therapy (WOT) using their innovative medication approach, that includes an ingestible sensor, for the treatment of continuation phase of treatment for Mycobacterium tuberculosis.  They have found that, under several potential cost scenarios, the immediate cost of M. tuberculosis treatment by WOT appears to be substantially less than DOT: WOT cost US$1273, accounting for respectively 79% to 49% of DOT costs (range depends on 2 different treatment schemes, 3-days or 7-days long). Interestingly, based on the ratio of providers’ treatment cost, the model demonstrated that WOT would allow providers to treat respectively 2.7 times and 1.4 times more patients compared to 7-day and 3-day DOT. [5]

In conclusion, there are already nice data to confirm the positive impact of Digital health approaches to improved healthcare performances.

One last observation from my quick review: most of the barriers to treatment adherence are under patients’ control (forgetfulness, emotional factors, decision to omit doses, etc.) [4], therefore put the focus on them is imperative to improve the outputs. Every company and provider in the Healthcare sector must “think as if it was the patient”, not simply “think in the patient”, and Digital health approaches are made of real patient’s data and experiences.

Moreover, the value and quantity of data collectible with Digital Health approaches could provide real-time and timely accurate personal information to detect lack of adherence and act to correct it in a quick way and even real-time.

Elisa Guida, PhD

Brand and Account Manager


[1] https://www.caqh.org/about/2014-year-review

[2] https://www.caqh.org/explorations/2016-caqh-index-report

[3] https://www.ncbi.nlm.nih.gov/pmc/articles/PMC3711878/.

[4] Osterberg L, Blaschke T. Adherence to medication. N Engl J Med. 2005 Aug 4; 353(5):487-97.