The health economics of virtual wards

9 minute read

Evidence from the UK suggests virtual wards cost a lot less than physical wards.

Do virtual wards cost more than physical wards?

The answer is most definitely no, but this has come up recently due to a study undertaken in Wigan in the UK, that was published in BMJ Open and referenced by the Health Service Journal. So it seems timely to explore the topic a little more.

The reason that they don’t, is that the big cost in both models is the clinical staff time. The tech costs are tiny in comparison. Tech-enabled virtual wards mean that a clinician can safely supervise many more patients.

So while a nurse on a physical ward may have eight patients, if the next day they were doing a shift on the virtual ward, where good technology enables them to easily prioritise their caseload, they could look after many more patients. Depending on acuity this could be five to eight times as many patients. The dashboard will show her perhaps 10 to 15 patients whose results are out of kilter and will need her input, with the rest of the readings showing that they are recovering well.

What does NICE say?

The National Institute for Health and Care Excellence (NICE) has looked at this and, while it is not wholly straightforward to find exact parallels to the tech-enabled virtual ward models – there is more evidence and cost-effective research globally on remote monitoring for long-term conditions – it found 15 studies that met its criteria and reported that of these, 13 (87%) demonstrated cost savings.

The relevant section is:

“Our team has analysed the evidence and found that virtual wards and hospital at home models of care are usually reported as cost-saving. A key driver of cost savings is a reduction in hospital bed days achieved and the lower per diem cost of virtual wards and hospital at home.

“Our team looked at 1000 studies and found that there were 15 that met the criteria being used. In 13 out of the 15, the home-based models were found to be cost-saving and in two they were found to cost more than the hospital alternative.

“Most of the included studies, however, have been assessed as having limitations in relation to their methodological quality, so it is recommended that further studies are undertaken.”

Helpfully, NICE has also outlined the aspects that should be included in future studies, to ensure strong quality and to make it more straightforward to compare them.

The Wigan Study

The study from Wrightington, Wigan and Leigh is worth a read. I suspect many commentators may not have got beyond the headline, but I’d recommend doing so. It is great that more research is being done and published and that is how we will learn and improve. The BMJ Open link is below and there is also a version at the end of the HSJ article for subscribers.

The HSJ headline, if you missed it, was “Virtual ward costs twice that of inpatient care, study finds” and it is one of their most commented articles currently. It is unsurprising that it has found quite a bit of attention, not least because it is so different from the other studies we have seen over the last few years.

The study has been thoughtfully put together and has many convincing aspects; the authors have spent time doing their best to closely match patients who received virtual ward care with controls. They have some interesting findings such as:

“Patients admitted to the virtual ward had a significantly lower mortality (63%) compared to those admitted to hospital. […] There is a 4% increase in the risk of death for each additional day of hospital stay.”

They also found readmissions within six months to be higher in the virtual ward group, with mortality in the readmitted group being higher.

The costing

However, I do disagree with the way the costing has been done for the comparison of virtual ward beds costs and inpatient beds.

The inpatient bed cost is given as £536.

There are two costs given for virtual ward beds — £935, the figure leading to the “double the cost” headline – and the authors also state at one point: “The cost of a virtual ward bed per day was around £72”.

I am not sure either of these figures are helpful in providing a realistic comparison of the cost of running a virtual ward bed versus running an inpatient bed.

The first takes the acute hospital bed days saved by admission to a virtual ward – 3.07 days on average – and multiplies it by 318 (we learn that there were in fact 366 patients cared for rather than 318 but 48 have been removed as it wasn’t possible to match them). This gives the £935 figure.

It’s a useful one to know, and I’d probably want to do that calculation myself as a director of ops or hospital CEO, but it isn’t the same thing at all as a bed day cost for the virtual ward.

At the other end of the spectrum, the £72 figure is rather fanciful in that it is the calculation if every one of the 40 beds was operating at 100% occupancy on every day of the year.

In reality, in 2022 the ward was running at a very low 25% occupancy. It looks a lot busier now. The latest SitRep figures published earlier this month show 105 beds at the Trust with very high occupancy levels.

But these two methodologies are like Goldilocks’ porridge, one is too sweet and the other too salty.

For me, the logical calculation to find a comparator is to take the actual number of bed days used by virtual ward patients and divide it by the annual costs of running the ward. This will be slightly overstated as we have omitted 48 patients but will be more accurate than the others. This tells us that the virtual ward bed day cost is £338, which is 63% of the inpatient cost.

If it counted all the patients, 366 – which I’d argue is completely appropriate in the financial costs regardless of whether or not they could be matched for the clinical part of the study – it is £294 or 55% of the inpatient costs.

The rule of thumb is that virtual wards usually cost between a third and a half as much as a physical ward. Those with permanent staff, high occupancy and good tech are closer to the third, those who lack those key features are more likely to be towards the half. It turns out that when the calculation is done in the usual way, the costs at Wigan are in this range, with the virtual ward costing around half, 55% — not double – of the physical bed cost per night used.

Finally, they also claim that this is the first UK study to consider cost-effectiveness of virtual wards. That is not the case either. There are a number of real-world evaluations and research studies that have examined this.

An example would be the work of Dr Carla Plydel and colleagues at Imperial College — Smartphone-based remote monitoring in heart failure with reduced ejection fraction: retrospective cohort study of secondary care use and costs, published in JMIR Cardio in June 2023.

“Key findings: This recent study at Imperial College Healthcare NHS Trust of 146 patients on a heart failure virtual ward found that the likelihood of hospital admissions was reduced by 74% and of A&E attendance by 57%, in the VW group. Costs were also markedly reduced at one quarter of the costs of the control group — £465 per patient v £1850.

“Results: A total of 146 patients (mean age 63 years; 42/146, 29% female) were included (73 in each group). The groups were well-matched for all baseline characteristics except hypertension (P=.03). RM was associated with a lower hazard of ED attendance (hazard ratio [HR] 0.43; P=.02) and unplanned admissions (HR 0.26; P=.02). There were no differences in elective admissions (HR 1.03, P=.96) or outpatient use (HR 1.40; P=.18) between the 2 groups. These differences were sustained by a univariate model controlling for hypertension. Over a 3-month period, secondary health care costs were approximately 4-fold lower in the RM group than the control group, despite the additional cost of RM itself (mean cost per patient GBP £465, US $581 vs GBP £1850, US $2313, respectively; P=.04).

“Conclusions: This retrospective cohort study shows that smartphone-based RM of vital signs is feasible for HFrEF. This type of RM was associated with an approximately two-fold reduction in ED attendance and a four-fold reduction in emergency admissions over just three months after a new diagnosis with HFrEF. Costs were significantly lower in the RM group without increasing outpatient demand. This type of RM could be adjunctive to standard care to reduce admissions, enabling other resources to help patients unable to use RM.”

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But look, it’s great we are having the conversation and doing the work to understand how virtual wards work in the real world.

If you’re interested in more on this, you’d be very welcome to review the Resources page of my website where I have done a round-up of some of the most relevant studies and real-world evaluations.

If I have missed a gem, please just let me know.

Tara Donnelly founded and runs Digital Care, a boutique advisory firm that supports clients in the NHS and digital health innovators scale digital care, with a particular emphasis on digital home care. She has worked in the NHS for over 30 years, with a career that has spanned a range of operational roles in hospitals across London including Director of Operations at the Whittington, Managing Director roles at University College London Hospitals and Chief Executive of the West Middlesex University Hospital. Her second Chief Executive position was leading the Health Innovation Network, the academic health science network for south London. Most recently she was the Chief Digital Officer for NHS England.

This article was originally published here.

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