Remote patient monitoring (RPM), once only the province of early adopters, has become part of the pandemic-inspired shift to virtual care. The new ecosystem of healthcare at home will continue to evolve as consumers ask for it and as payment models reward it.
The nation’s growing population of seniors will have a big influence over the growth trajectory of the RPM market. A study published in May found that 88 percent of Americans prefer to receive care at home as they age, a trend likely to fuel RPM technology use among Medicare and Medicare Advantage enrollees. As further evidence of RPM’s expected growth, a report by Insider Intelligence estimates that 30 million U.S. patients, or 11.2 percent of the population, will use RPM tools by 2024 — marking 28.2 percent growth in just four years.
Efforts from device manufacturers to develop advanced products are expected to further propel market growth. For instance, in July of 2020, Philips integrated a BioSticker wearable device that monitors chronic conditions as well as COVID-19 symptoms.
Investors seeking high-growth healthcare companies understand the attraction of RPM for patients. After all, who wouldn’t want to monitor their health at home instead of in a hospital, clinic, or physician’s office? But the buyer in this case is the provider, of course, inspired by the reimbursement promise offered by their payer partners.
Today, several CPT codes allow for reimbursement of RPM services, but policies vary. Commercial payers and Medicare are expanding their acceptance of RPM, making health IT companies, specialized care management providers, and device suppliers attractive deal targets.
But what is the true potential of RPM? Is it just a grander form of telehealth, or does it have the juice to become a common standard of care?
What is RPM?
RPM relies on digital devices and connectivity technologies to track an individual’s health status in real time. It’s used primarily for treating chronic conditions, such as diabetes, hypertension, and congestive heart failure. Through quantified vital signs collected on a specified schedule, RPM systems allow care teams to remotely track various physiological measures.
When a measure falls outside of expected parameters, the system typically generates an alert for care team follow-up. Otherwise, the data resides in the patient’s EHR for on-demand clinician review.
Although RPM’s value is in its at-home application, patients may be in a hospital setting when using RPM technologies. Within the hospital, patients may be in the intensive care unit or a regular nursing floor, for example. Outside the hospital, patients may be at home, another care setting, or a skilled nursing facility.
The use of RPM technologies enables early detection of condition deterioration, theoretically preventing downstream, high-cost encounters, such as reducing emergency department visits and hospitalizations. RPM also can shorten the duration of hospital stays when used for patients at discharge.
Any relatively affordable technology that avoids hospitalizations and ER visits is an attractive purchase for stakeholders when it promises a reduction in healthcare expenditures. RPM does just that. Although it’s an emerging technology, most observers believe it has significant cost-reduction potential.
Capital BlueCross in Pennsylvania forecasted that a health plan with 1 million enrollees could save $1 million per year with RPM for heart failure alone, which it attributed at least in part to a 45 percent reduction in acute admissions. Through experience, more healthcare payers and providers will discover optimal applications of RPM to get the most value from it.
How is RPM reimbursed?
An overhaul of remote patient monitoring CPT codes last year helped RPM became one of the more lucrative Medicare care management programs. A recent report in Medical Economics estimates that each RPM patient can earn a physician around $210 per month. Earlier this year, the Centers for Medicare & Medicaid Services also proposed the addition of six more RPM codes for reimbursement beginning in 2022.
Even after covering expenses associated with running a program, RPM can generate significant and consistent revenue, some experts say. As payment for RPM increases, providers will increasingly seek to buy solutions that help them deliver RPM at scale.
Is there enough market potential for RPM?
The market is expected to grow at a CAGR of nearly 23 percent from 2019 to 2026, amounting to $85 billion. Further, RPM has earned the endorsements of major medical societies, and a number of legacy health systems are embracing its use. RPM technology will grow in tandem with the availability of new devices and the expanding application of remote monitoring for additional health conditions.
The Medicare hospital-at-home model continues to influence where and how care can be delivered, and enrollment in this program has surged since November of 2020 when CMS launched the Acute Hospital Care at Home Program. The waiver program allows approved providers the flexibility to deliver acute medical services in patients’ homes — with many of them using RPM technologies. More than 90 hospitals nationwide have received waivers.
Why investment makes sense
Consumers want RPM because it can keep them out of the hospital and allows them to receive care in the comfort of their own home. Hospitals and practices are embracing RPM as a new revenue stream. Like any new care modality, RPM will have its stops and starts, but overall, it has excellent growth potential.
Investors want to consider how RPM will change the landscape of care delivery, looking closely at market competition and potentially overinflated multiples influenced by eager buyers. Secondary issues might include workforce concerns, supply chain delays for devices and components, as well as regulatory action regarding the potential for fraud.
If you’re considering RPM for your healthcare portfolio, Canton & Company can help identify emerging asset targets and provide the market intelligence you need to craft a value-creation strategy. Start a conversation today.