IEC SRD 63234-2:2020

IEC SRD 63234-2 ®
Edition 1.0 2020-02
SYSTEMS
REFERENCE DELIVERABLE
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Economic evaluation of active assisted living services –
Part 2: Example of use – Monitoring patients with chronic diseases
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IEC SRD 63234-2 ®
Edition 1.0 2020-02
SYSTEMS
REFERENCE DELIVERABLE
colour
inside
Economic evaluation of active assisted living services –

Part 2: Example of use – Monitoring patients with chronic diseases

INTERNATIONAL
ELECTROTECHNICAL
COMMISSION
ICS 03.080; 03.100.60 ISBN 978-2-8322-7834-5

– 2 – IEC SRD 63234-2:2020 © IEC 2020
CONTENTS
FOREWORD . 4
INTRODUCTION . 6
1 Scope . 7
2 Normative references . 7
3 Terms, definitions and abbreviated terms . 7
3.1 Terms and definitions. 7
3.2 Abbreviated terms . 8
4 General . 9
4.1 Document objective . 9
4.2 Economic evaluation process overview . 9
4.2.1 Alternate versus Reference Scenario . 9
4.2.2 Time period for analysis . 9
4.2.3 The cost of money . 9
4.2.4 The economic or financial indicators . 9
4.2.5 Multiple Alternate Scenarios . 10
4.2.6 Risks and critical success factors . 10
4.3 Document structure – the example . 10
5 Overview of the analysis and results of a remote patient monitoring service . 10
6 Description of the AAL Service or Intervention . 12
7 The non-financial benefits of the AAL service . 14
7.1 Overview . 14
7.2 Improving the health of the population . 14
7.3 Improving the patient experience with healthcare . 15
7.4 Improving the work life of healthcare workers . 15
8 The financial/sustainability analysis . 15
8.1 The financial analysis cost data . 15
8.2 Reference Scenario costs . 16
8.3 Intervention/Alternate Scenario implementation costs . 16
8.4 Intervention/Alternate Scenario health system costs . 17
9 Cashflow analysis and calculating the financial indicators . 18
9.1 Cash flow analysis: Alternate Scenario A - Ramp up to 10 000 patients . 18
9.2 Financial indicators for Alternate Scenario A . 19
9.3 Cash flow analysis: Alternate Scenario B - Ramp up to 100 000 patients . 20
9.4 Financial indicators for Alternate Scenario B . 21
10 Identifying risks and critical success factors . 21
11 Conclusions and recommendations . 22
11.1 Conclusions . 22
11.2 Recommendations . 22
Bibliography . 23

Figure 1 – Cash flow analysis table Alternate Scenario A . 19
Figure 2 – Cash flow analysis table Alternate Scenario B . 20

Table 1 – Overview of the remote patient monitoring AAL Service . 10
Table 2 – Description of the AAL Service . 12
Table 3 – Reference Scenario healthcare costs . 16
Table 4 – Alternate Scenario AAL service implementation costs . 17
Table 5 – Alternate Scenario health system costs . 18
Table 6 – Financial indicators Alternate Scenario A . 20
Table 7 – Financial indicators Alternate Scenario B . 21

– 4 – IEC SRD 63234-2:2020 © IEC 2020
INTERNATIONAL ELECTROTECHNICAL COMMISSION
____________
ECONOMIC EVALUATION OF ACTIVE ASSISTED LIVING SERVICES –

Part 2: Example of use – Monitoring patients with chronic diseases

FOREWORD
1) The International Electrotechnical Commission (IEC) is a worldwide organization for standardization comprising
all national electrotechnical committees (IEC National Committees). The object of IEC is to promote international
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rights. IEC shall not be held responsible for identifying any or all such patent rights.
IEC SRD 63234-2, which is a Systems Reference Deliverable, has been prepared by IEC
systems committee Active Assisted Living.
The text of this Systems Reference Deliverable is based on the following documents:
Draft SRD Report on voting
SyC AAL/154/DTS SyC AAL/166/RVDTS

Full information on the voting for the approval of this Systems Reference Deliverable can be
found in the report on voting indicated in the above table.
This document has been drafted in accordance with the ISO/IEC Directives, Part 2.
A list of all parts in the IEC SRD 63234 series, published under the general title Economic
evaluation of active assisted living services, can be found on the IEC website.

The committee has decided that the contents of this document will remain unchanged until the
stability date indicated on the IEC website under "http://webstore.iec.ch" in the data related to
the specific document. At this date, the document will be
• reconfirmed,
• withdrawn,
• replaced by a revised edition, or
• amended.
IMPORTANT – The 'colour inside' logo on the cover page of this publication indicates
that it contains colours which are considered to be useful for the correct understanding
of its contents. Users should therefore print this document using a colour printer.

– 6 – IEC SRD 63234-2:2020 © IEC 2020
INTRODUCTION
Under the "Triple Aim" [1] concept (now "Quadruple Aim"[2]), a well defined, inclusive set of
objectives for new interventions leading to improvements in the local and national healthcare
systems consists of the following:
• improving the health of the population;
• improving the patients' (e.g. AAL care recipients) experience of care,
• lowering (or holding constant) the per-capita cost of care to the healthcare system to ensure
sustainability; and
• (the recently added fourth aim) improving the work life of healthcare providers (e.g.
healthcare professionals and AAL formal carers), clinicians, and other staff.
Economic evaluations of proposed new healthcare services and technologies involve the
assessment of the costs and effects of any interventions in the healthcare system and provide
input into the economic sustainability objective above. Where there are important health
outcomes that can be evaluated in monetary terms, a cost-benefit analysis can be undertaken
as a 'non-reference case analysis' (Alternate Scenario analysis) with details provided on the
derivation of the monetary value of the health outcomes. Appropriate economic evaluations will
provide evidence to address the financial considerations of proposed new interventions along
with the impact on health outcomes.
To achieve the Quadruple Aim objectives, all new technology-supported homecare or Active
Assisted Living (AAL) services (such as remote monitoring of patient physiological
measurements, in-home medication adherence monitoring and management, as well as mobility
aids and emergency reporting services) should be evaluated to ensure they not only improve
the quality of the patients' lives but also provide economic benefits greater than the cost of
providing the service. Without financial benefits that exceed the cost of the service to the health
system funder, or at the very least an economically neutral situation while improving patient
outcomes over usual care pathways, the services will not be sustainable – or the healthcare
services funder must be prepared to knowingly increase its cost per patient supported by the
healthcare system to achieve the population health outcomes.
Furthermore, health system funders may be presented with a choice of options for investment
in new or expanded services. In order to compare options from a financial costs and benefits
perspective (as well as their health outcomes), economic evaluations of the options will provide
an equal basis for comparison of the options.
The evaluation example has been structured to provide example data for a Reference Scenario
(the current means of providing care to patients with chronic diseases, the target patient
population) and compare this against an Alternate Scenario (the healthcare intervention using
the AAL physiological measurement and monitoring service) for the economic comparison.
Standard economic measures including Return on Investment, Net Present Value, and Payback
Period of the investment are estimated.

___________
Numbers in square brackets refer to the Bibliography.

ECONOMIC EVALUATION OF ACTIVE ASSISTED LIVING SERVICES –

Part 2: Example of use – Monitoring patients with chronic diseases

1 Scope
IEC SRD 63234-1 provides a descriptive framework and template for the economic evaluation
of the implementation of technology-supported home healthcare, wellness or AAL services. This
part of IEC SRD 62234 provides an example of the use of the framework, specifically analysis
and economic evaluation of the implementation of technology-supported, remote, in-home
monitoring of patients (AAL care recipients) with chronic diseases.
This analysis is completed from the point of view of the healthcare system/services funder (e.g.
the government in a state-sponsored healthcare system or possibly a health
management/health insurance company in a privately funded system).
This document is structured like IEC SRD 63234-1, to provide a means of capturing data for
the Reference Scenario (the current means of providing care, also known as 'usual care', to the
target population of members of the population with one or more chronic diseases living at
home), compared against an Alternate Scenario (the deployment of an AAL service which
provides remote patient monitoring). Standard economic measures have been estimated (using
an electronic spreadsheet) including Return on Investment (ROI), Net Present Value (NPV),
and Payback Period of the investment.
2 Normative references
There are no normative references in this document.
3 Terms, definitions and abbreviated terms
3.1 Terms and definitions
For the purposes of this document, the following terms and definitions apply.
ISO and IEC maintain terminological databases for use in standardization at the following
addresses:
• IEC Electropedia: available at http://www.electropedia.org/
• ISO Online browsing platform: available at http://www.iso.org/obp
3.1.1
AAL service
action or function of an AAL system creating an added value for customers
EXAMPLE 1 Configuration and maintenance of AAL systems.
EXAMPLE 2 Assistant systems to support the home and living environment.
[SOURCE: IEC 60050-871:2018, 871-01-04]

– 8 – IEC SRD 63234-2:2020 © IEC 2020
3.1.2
AAL user
person who uses or benefits from, or uses and benefits from, AAL devices, systems or services
[SOURCE: IEC 60050-871:2018, 871-02-05]
3.1.3
AAL care recipient
person who receives and consumes AAL care services
3.1.4
AAL informal carer
person who provides informal (or lay) services to the AAL care recipient
3.1.5
AAL formal carer
person who provides personal or homemaking services to the AAL care recipient
3.1.6
AAL system
set of interrelated elements in a defined context as a whole and separated from
the environment
Note 1 to entry: A system is generally defined with the view of achieving a given objective, e.g. by performing a
definite function.
Note 2 to entry: Elements of a system can be natural or man-made material objects, as well as modes of thinking
and the results thereof (e.g. forms of organization, mathematical methods, programming languages).
Note 3 to entry: The system is considered to be separated from the environment and the other external systems by
an imaginary surface, which cuts the links between them and the system.
Note 4 to entry: The term "system" should be qualified when it is not clear from the context to what it refers, e.g.
control system, colorimetric system, system of units, transmission system.
[SOURCE: IEC 60050-151:2001, 151-11-27, modified – The domain "" has been
added. In the definition, "in a defined context" has been deleted.]
3.1.7
remote monitoring
condition monitoring and monitoring of persons from a distance by using telecommunication
[SOURCE: IEC 60050-871:2018, 871-04-27]
3.2 Abbreviated terms
AAL Active Assisted Living
ED emergency department
CMC centralized monitoring centre
CSF critical success factors
NPV Net Present Value
ROI Return on Investment
4 General
4.1 Document objective
While this document is a theoretical example, this evaluation uses real data as input to the
greatest extent possible. For example, costs of several technical components are based on
those available to a health service provider organization in the Ottawa, ON, Canada area at the
time of writing. Furthermore, examples of healthcare system benefits are taken from
documented research studies and costs from Canadian measured averages; however, not all
of these data elements came from a single study example.
All costs and benefits in this example are in Canadian dollars (C$), but parallel examples using
other currencies, and local costs and benefits may be created following this example.
4.2 Economic evaluation process overview
4.2.1 Alternate versus Reference Scenario
The economic evaluation process is a comparison of a Reference Scenario against an Alternate
Scenario, the AAL service or technology intervention, using a cashflow analysis over an
appropriate time period.
The Reference Scenario (also commonly referred to as a "base case" or "base scenario") is
typically the current means of providing healthcare or health services, often known as "usual
care", to the target patient population: members of the population living with one or more chronic
diseases such as Chronic Obstructive Pulmonary Disorder (COPD) or Diabetes Mellitus
('diabetes') still living in their own homes.
The Alternate Scenario describes AAL service or technology, the specific intervention or
benefits it hopes to achieve, and outlines the impacts on the delivery of healthcare. The
Alternate Scenario proposed is to augment the traditional healthcare services with in-home
monitoring of patient physiological signs (e.g. blood pressure, heart rate, blood oxygen levels,
weight, etc.) as appropriate for the condition. The assumption, based on evidence from a
number of smaller pilot projects, is that this AAL Service will prevent worsening of the conditions
and reduce the number of hospital emergency department visits and in-patient admissions that
would otherwise result, saving the overall health system costs.
4.2.2 Time period for analysis
This analysis uses a five-year time period. Major components of the equipment (hardware,
software, etc.) requiring upfront investment have an expected lifecycle of at least five years and
extending the study beyond this would require consideration of replacement costs which would
generally replicate the analysis for an ensuing five years.
4.2.3 The cost of money
This cashflow analysis assumes the "cost of money" (or time value of money) is 4,25 % based
on interest rates currently in place to large organizations (the US and Canadian 10 year
government bond rates are roughly 2 % to 3,5 % at the time of writing).
4.2.4 The economic or financial indicators
The financial analysis will present the following indicators:
• Return on Investment (ROI) – the gain or loss generated by an investment relative to the
amount of money invested (typically expressed as a percentage);
• Net Present Value (NPV) – the difference between the discounted future cash flows from an
investment and the original investment amount;
• Payback Period – the length of time to recoup the initial investment in a project, product
development or service implementation.

– 10 – IEC SRD 63234-2:2020 © IEC 2020
Jumping to the bottom line early, the proposed AAL Service, remote patient monitoring, exhibits
a positive ROI and NPV based on the assumptions and estimates made in this analysis.
4.2.5 Multiple Alternate Scenarios
Two Alternate Scenarios are analysed and evaluated. The first assumes growth to 10 000
patients annually, while the second is a larger deployment assuming a total of 100 000 patients
when in full operation to see if there are significant impacts due to economies of scale.
4.2.6 Risks and critical success factors
While this evaluation uses evidence-based inputs in the economic model to the greatest extent
possible, using estimates based on the results of a number of remote patient monitoring pilot
studies, as a forward-looking model there remains an amount of uncertainty in future outcomes.
Therefore, critical success factors (CSFs) in the implementation of the service are also
identified.
4.3 Document structure – the example
This document is structured following IEC SRD 63234-1, as a step-by-step means of completing
the evaluation process outlined in IEC SRD 63234-1 (even matching clause and subclause
headings as far as is applicable) and coming to a set of conclusions and recommendations
about the proposed remote patient monitoring service.
Clause 5 presents a summary overview or abstract (sometimes known as an Executive
Summary) of the remote patient monitoring, its analysis and recommendations.
Clause 6 provides a detailed descriptive overview of the remote patient monitoring AAL Service.
Clause 7 completes the financial analysis templates, gathering the information required for both
the Reference Scenario and the Alternate Scenarios.
Clause 8 calculates and displays the economic and financial indicators.
Clause 9 describes CSFs in more detail and proposes a set of considerations for implementation
of a full remote monitoring service for patients with chronic diseases.
Lastly, Clause 10 presents final considerations and recommendations that would be made as a
result of the non-economic and financial evaluations.
5 Overview of the analysis and results of a remote patient monitoring service
Table 1 provides an overview of the proposed remote patient monitoring AAL Service, the
existing care problem being addressed, and a short description of the expected benefits and
financial impact. More detailed information is developed and presented in Clauses 6 to 9.
Table 1 – Overview of the remote patient monitoring AAL Service
Element Description of entry
Title Remote Monitoring of Patients with Chronic Diseases
Summary This document provides and analysis of an AAL Service that provides in-home,
remote monitoring for patients of four chronic diseases:
Congestive Heart Failure (CHF)
Hypertension (high blood pressure)
Chronic Obstructive Pulmonary Disorder (COPD)
Diabetes mellitus
Element Description of entry
Current need or existing Patients with Chronic Diseases are a major user of the healthcare systems around
problem addressed world. Frequent trips to the Emergency Department (ED), use of emergency transport
services, and in-patient hospitalizations brought on by exacerbations of individual
Patients' diseases are expensive and a drain on the healthcare system.
For example, in Canada alone in 2010, the economic impact of chronic disease in
Canada was estimated to be about C$190 billion or about 42 % of healthcare
costs [3]. Furthermore, the issue is on the rise owing to the aging population. While
16,5 % of Canada's population was over the age of 65 in 2017, this proportion is
expected to grow to 24,2 % by 2041, in just over 20 years [4]. This will significantly
increase the incidence of chronic diseases in the population.
Target Population – Overview The target AAL care recipient (patient) population will:
• have one or more of the monitored chronic conditions (CHF, Hypertension, COPD,
Diabetes);
• have had three ED visits, or two ED visits and one hospitalization, or two
hospitalizations in the six months prior to beginning the remote patient monitoring
programme.
The estimated total population in Canada is about 11 million. (This may be high due
to double counting of patients with multiple co-morbidities.) Two scenarios are
considered later in this document: the first assumes that the healthcare system
wishes to achieve a monitoring volume of 10 000 patients, the second 100 000
patients, during the study period.
AAL service description The intervention will be to provide remote monitoring of patients in their homes as
(intervention scenario) appropriate to the disease. Technology is provided to the AAL care recipient:
• intelligent biometric measurement devices such as blood pressure cuffs, pulse
measurement, weight scale, pulse oximeter, spirometer, and/or glucometer, all
a
Bluetooth® -equipped to transfer the measurements. These devices are
appropriate to the individual patients' conditions.
• an in-home 'gateway' device such as a tablet to walk the patients through the
measurement and transfer of data and the upload of the measurements to the AAL
application. The tablet may also provide other functionality such as two-way
videoconferencing.
A home visit is made to the patient to configure the remote monitoring equipment and
gateway and also to provide basic or more advanced education to the patient in the
self-management of their conditions.
The measurements are collected over the internet by a centralized monitoring centre,
directly into the Remote Patient Monitoring application. Here the data is continuously
analysed against each patient's expected range of normal readings and an 'Alert' is
displayed to a healthcare professional (or another AAL formal carer) assumed to be a
Registered Nurse in this example) at the centralized monitoring centre and displayed
back to the patient via the tablet. If deemed appropriate, the healthcare professional
will contact the patient or dispatch a homecare nurse to visit the patient to suggest
changes to the patients' activities, diet, medications, etc.
Expected benefits By early detection of changes in the AAL care recipient's conditions through the
analysis and alerting of the central monitoring software, it is anticipated that:
• there will be a reduction in visits to the ED across the monitored patient population;
• there will be a reduction of in-patient admissions and/or a reduction in the average
length of stay of patients in the monitored population as compared to
– their own use of the healthcare system prior to beginning the monitoring
service;
– non-monitored patients of comparable conditions and acuity levels.
• there may also be a decrease in nurse home visit time.
Financial impact The financial indicators of the lower volume deployment scenario are as follows:
Indicator Value
Return on Investment (ROI) 147 %
Net Present Value (NPV) C$110 390 935
Payback Period 175 days (or 0,48 years)

– 12 – IEC SRD 63234-2:2020 © IEC 2020
Element Description of entry
HW: $   30 896
Total One-Time Investment
SW: $ 5 000 000
Team: $  360 000
Total: $ 5 390 896
Year 1 staffing costs
Monitoring Centre staff: $2 625 375
IT Support: $26 254
Conclusion and Conclusions from the financial analysis are:
recommendation(s)
• The remote patient monitoring AAL Service is financially sustainable.
• The implementation
...