Cost benefit analysis of Tele-home-care for community-dwelling elderly in Japan

Wednesday, June 15, 2016: 9:10 AM
401 (Fisher-Bennett Hall)

Author(s): Miki Akiyama; Byung-Kwang Yoo

Discussant: Takuya Hasebe, PhD


“Tele-home-care” transmits health-related data of its users such as blood pressure, blood oxygen and ECG to a remote medical institution through telecommunication network, i.e., connecting a community-dwelling patient and a distant healthcare provider.  As observed in the US, long-term care has shifted from an institutionalized setting to a community setting in Japan during an era of a very rapid aging.  To promote such shift in settings, Tele-home-care has been implemented in numerous programs supported by the Japanese government as a part of over US$1.5 billion government subsidies for tele-health in the past six years. However, only a small subset of these programs conducted an economic evaluation.  Moreover, the literature on the economic evaluation of Tele-home-care is relatively limited and substantially diverse, e.g., studies reported by Tsuji and colleagues.

Objectives: Primary objective is to conduct a cost benefit analysis (CBA) of Tele-home care among a hypothetical cohort of community-dwelling elderly in Japan, integrating the published literature.  To address model uncertainties, probabilistic analyses with Monte Carlo simulation (1000 iterations) were performed.  Secondary objective is to implement break-even analysis to provider threshold values to achieve cost-saving.


We developed a standard decision model (using software: TreeAgePro 2015 version) to conduct a CBA of Tele-home-care among a hypothetical cohort (N=1000) of community-dwelling elderly resided in one local city using a single Tele-home-care network.  This analysis was conducted from the societal perspective with a five-year time horizon applying 3% discount rate for both cost and benefit.  All model parameters used a triangular distribution defined by likeliest, minimum and maximum values. All dollar values were adjusted to 2014 USD with consumer price index.

The cost of Tele-home-care included two components: (a) start-up equipment cost (per system per year, i.e., averaged over five-year depreciation period) (likeliest=$200,000, minimum =$150,000 and maximum=$300,000), and (b) operation cost per user per year (likeliest=$170, minimum=$120 and maximum=$300). The benefit of Tele-home-care was measured by annual willingness to pay (WTP) for Tele-home-car among a user (likeliest=$400, minimum $300 and maximum $500).


Our base-case analysis estimated that BCR of Tele-home-care was 1.03.  It indicates that a $1 investment on Tele-home-care will yield $1.03 values of WTP among users, i.e., cost-saving for a society.  Probabilistic analysis estimated that the mean of BCR: was 1.03, with 95% confidence interval = (.76, 1.36).

Break even analyses showed that cost-saving for society was achieved by Tele-home-care if at least one of the following conditions was met: (a) start-up equipment cost is less than $23,000 per system per year (averaged over five years), (b) operation cost is less than $200 per user per year; (c) WTP is greater than $370 per user per year, and (d) number of users is greater than 870 per year (on average).


Our preliminary analyses implied that Tele-home care in Japan is likely to be cost saving for entire society.  The estimated benchmarks regarding cost, WTP and the number of users are expected to help determine policymakers to further promote Tele-home-care.  Uncertainness in estimates indicated the need of further empirical studies.