An economic evaluation of the Japanese telehealth system by CVM: comparison of four regions

Abstract

The telehealth system is a type of telecare, which transmits health-related data of its users such as blood pressure, ECG, and blood oxygen to a remote medical institution via a telecommunications network. Eighty Japanese local governments are already implementing such systems, utilizing a total of more than 10000 devices. We analyze the economic benefits of the telehealth system in the following four regions in Japan: Kamaishi City, Iwate Prefecture; Nishiaizu Town and Katsurao Village, Fukushima Prefecture; and Sangawa Town, Kagawa Prefecture. The contingent valuation method (CVM), which has been recently widely adopted in the fields of environmental economics and health economics to measure the benefits of services which are not traded in the market, is used. We conducted a survey of 348 users in Kamaishi City on their willingness to pay (WTP) to use the service. According to their WTP, we estimate the demand function of the system, which is assumed to be a logistic curve. The average amount of WTP calculated is 4519 yen (approximately US$37). We then compare the benefits with the costs of the system, which consists of equipment, salaries of doctors and nurses, and other operations. The ratio of benefits over costs (B/C ratio) is about 1.07, which implies that the system of Kamaishi City yields more benefits than costs. This is a rather surprising result when viewed in comparison with the systems of other regions. We also analyze how the benefits expressed in terms of WTP are attributed in exact monetary terms to factors such as (a) less anxiety in day-to-day life, (b) stabilization of illness, (c) enhancement of health consciousness, and (d) decrease in medical expenditures. The parties bearing the costs of the system are identified, namely, the amounts paid by individual users and public fund such as tax and medical insurance. Thus, we suggest reimbursement to the telehealth system using medical insurance.