Economic evaluation of a store-and-forward teledermatology system for skin cancer patients

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1 RESEARCH Original article... Q Economic evaluation of a store-and-forward teledermatology system for skin cancer patients David Moreno-Ramirez*, Lara Ferrandiz*, Andres Ruiz-de-Casas*, Adoracion Nieto-Garcia, Pedro Moreno-Alvarez, Rafael Galdeano and Francisco M Camacho* *Dermatology Department, Hospital Universitario Virgen Macarena, Seville; Department of Social and Health Sciences, Faculty of Medicine, University of Seville, Seville; Primary Care Centre, San José, Seville; Primary Care Area Sevilla, Seville, Spain Summary We conducted an economic analysis of a store-and-forward teledermatology system for the routine triage of skin cancer patients. A cost-identification, cost-effectiveness and sensitivity analysis under a societal perspective was used to compare teledermatology with the conventional care alternative. In the period March 2004 to July 2005, a total of 2009 teledermatology referrals were managed from 12 Primary Care Centres (PCCs) of the public health system. The unit cost was of E79.78 per patient in teledermatology, and E per patient in conventional care (P, 0.005), with an incremental cost of E49.59 per patient in favour of teledermatology. The cost ratio between teledermatology and conventional care was 1.6. There was a significant inverse relation between the unit cost in each participating PCC and the number of teleconsultations transmitted from them (P, 0.001). Teledermatology resulted in a more cost-effective, or dominant, methodology. In a public health system equipped with an intranet, the routine use of teledermatology in skin cancer clinics is a cost-effective method of managing referrals. Introduction Teledermatology is an effective, accurate and reliable tool for the management of different dermatological conditions in a wide range of geographical and social situations. Nevertheless, the economic consequences of teledermatology remain to be elucidated. A recent research review included five economic studies with different results, which do not allow definitive conclusions about the economic advantage of teledermatology to be drawn. 1 Problems in the economic evaluation of teledermatology systems include: the definition of appropriate effectiveness measures, the type of economic study to perform, the economic perspective, and especially the identification of all costs related to technologies and staff. 2 A store-and-forward teledermatology triage system aimed at the selection of patients with suspicious skin growths was implemented at the Skin Cancer Clinic of the Hospital Universitario Virgen Macarena (Seville, Spain) in The facility currently covers a population of 300,000 inhabitants in southern Spain who live km from the hospital. Accepted 29 September 2008 Correspondence: Dr David Moreno-Ramirez, Dermatology Department, Hospital Universitario Virgen Macarena, Avda. Dr. Fedriani s/n 41009, Seville, Spain (Fax: þ ; dmoreno@e-derma.org) Journal of Telemedicine and Telecare 2009; 15: Teledermatology has become an essential tool for our daily practice at the skin cancer clinic. 3,4 The present study describes the economic results of this teledermatology-based triage system for skin cancer patients. The analysis was part of a comprehensive evaluation project in which the teledermatology system was evaluated in terms of clinical effectiveness, accuracy, reliability and validity. 5 Methods The economic evaluation involved cost-identification, measurement of cost-effectiveness and a sensitivity analysis using a societal perspective. The study was conducted at the Skin Cancer Clinic of the Hospital Universitario Virgen Macarena and 12 primary care centres (PCCs) of the public health system between March 2004 and July The study was approved by the appropriate ethics committee. During the study period, 2009 consecutive teleconsultations were conducted at the clinic, at an average rate of 134 teleconsultations per month, and 51% of the patients were not referred to the face-to-face clinic (i.e. skin cancer clinic visits were avoided). 5 DOI: /jtt

2 The cost of the 2009 teleconsultations was compared with the cost of the same number of consecutive patients having suspicious skin lesions who were managed through the conventional letter referral system. Prior to the cost identification analysis, cost allocation was carried out on an activity chart in which all the steps needed for the diagnosis and treatment of skin cancer patients in our health system were depicted (Figure 1). In the teledermatology system, after the first visit to the general practitioner (GP), digital pictures of those patients having cutaneous lesions fulfilling the criteria for a teleconsultation were taken and transmitted to the skin cancer clinic via an intranet. 5 After the evaluation of the teleconsultation by the remote, those patients having malignant or suspicious lesions were referred to the skin cancer clinic whereas patients having clearly benign lesions were not referred, and were managed by the GP instead. In the conventional letter referral system, all the patients complaining at the GP of cutaneous growths were routinely referred for a face-to-face visit at the skin cancer clinic. Specific costs of each intervention in primary care, visits to the in-person, and travel expenditures in both the alternative routes, teledermatology and letter referral, were then allocated. For the cost identification analysis, both fixed and variable costs were considered (Table 1). To define the costs derived from the medical and nurse intervention in primary care and hospital settings, the official prices of the public health system were used. 6 The cost of the evaluation of teleconsultations by the was based on the time invested in this task. The cost of the first visit to the GP was not included in the cost-identification analysis as this step is necessary in both referral systems, and is identical. Travel costs accrued to the patients were calculated both for public and private transport, depending on the distance between the PCC and the skin cancer clinic and according to official fares. 7 The transport used by the patients in the study was analysed: 50% of patients used private vehicles to the hospital, and the rest used public transport (bus, taxi, train). The average round-trip travel cost was of E8.47 per visit to the skin cancer clinic (E US$ 1.5). Most skin cancer patients in our area usually come to the hospital accompanied by a carer; however, the cost derived from the companion s travel and working days lost were not included in the cost identification. The price of working days lost was established on the basis of the official minimum wage, with an average cost of Figure 1 The steps in the diagnosis and treatment of skin cancer patients in our health system. The conventional system involves a first visit of all patients to the local, who makes the decision about referring the patient to hospital. FTF-cost D ¼ cost derived from the face-to-face visit at the skin cancer clinic; FTF-cost LD ¼ cost derived from the face-to-face visit at the local ; T-cost ¼ cost derived from travels to the skin cancer clinic (hospital); TC-cost D ¼ cost derived from the evaluation of teleconsultations by the skin cancer clinic ; TC-cost PC ¼ cost derived from the preparation and submission of teleconsultations at the primary care centre; WD-cost ¼ cost of working day lost Journal of Telemedicine and Telecare Volume 15 Number

3 Table 1 Cost analysis Teledermatology (E) care (E) Fixed costs (n ¼ 2009) Equipment (n ¼ 2009) Telecommunications 0 0 Variable costs Preparation and submission of (n ¼ 2009) 35, teleconsultations at the PCC Evaluation of teleconsultations by the (n ¼ 2009) 28, Face-to-face visit to the skin (n ¼ 980) 68, , cancer clinic Face-to-face visit to the local 0 206, Travel to the skin cancer clinic (n ¼ 980) , Working time lost (n ¼ 980) 12, , Total 160, , Unit cost (E per patient) Incremental cost E14.25 per visit to the skin cancer clinic. 8 Patients from PCCs more than 15 km from the hospital were assumed to lose one working day, whereas patients from PCCs closer than 15 km were assumed to lose half a working day. For the fixed cost assessment, the depreciation cost of the equipment (PCs, digital cameras) and the capital cost were calculated. Assuming a depreciation time of 3 years, the depreciation rate was 33% per year, which represented 42% of the acquisition cost for the 15 months of the study period. For the capital costs, a rate of 6% per year was charged, which resulted in a rate of 7.5% for the 15 months of the study. The total equipment cost was E , i.e. an average equipment cost of E4.90 per teleconsultation (Table 2). The public health service operated an intranet network. As the costs for the transmission of 1-MByte messages were negligible, they were not included in the cost analysis. The average cost per teleconsultation (unit cost), the incremental cost, and the cost ratio between both health care alternatives (in-person visit to the vs. teledermatology) were calculated. In the teledermatology arm, the cost of patients having suspicious or malignant lesions who were referred to the skin cancer clinic was differentiated from the cost of those patients having clearly benign lesions on teleconsultation who were not referred to the skin cancer clinic; the proportion of patients in each of these categories came from the validation study. 5 The influence of determining factors (e.g. teleconsultation workload, skin cancer clinic visits avoided, equipment costs) on the final price of the teleconsultation was examined using Spearman correlation. For the cost-effectiveness analysis, waiting intervals to the in-person visit at the skin cancer clinic since the first visit to the GP, as assessed in the descriptive study of this project, were considered as the main clinical outcome. This part of the project yielded a waiting interval to reach the skin cancer clinic or time to final intervention of 12.3 days (95% CI, ) in the sample of patients managed through teledermatology and 88.6 days (95% CI, ; P, 0.001) for a random sample of patients managed through the conventional letter referral system. 5 The main cost-effectiveness measure calculated was the incremental cost-effectiveness ratio, which gives information about the expenses or savings derived from the new alternative implemented. A sensitivity analysis was performed in which the same measures were calculated under the following assumptions: (a) 25% of skin cancer clinic visits avoided instead of the 51% (95% CI, 49 53) observed in the real scenario; 5 (b) use of an exclusive communication network for the transmission of teleconsultations with the communication costs borne by the teledermatology system. The statistical package SPSS 12.0 (SPSS Inc, Chicago, IL) was used for analysis. Results The unit cost was E79.78 per teledermatology patient and E per conventional care patient (P, 0.005). This difference led to an average incremental cost of E49.59 per patient in favour of teledermatology, with a cost ratio between teledermatology and conventional care of 1.62 (Table 1). In those patients with clearly benign lesions on teleconsultation, who were not referred to the face-to-face clinic, this difference increased with conventional care being 3.29-fold more expensive than teledermatology. Table 2 Equipment cost (fixed costs) Acquisition cost (E) Capital cost (E) Depreciation cost (E) Primary care centre PC ¼ 13, Digital camera ¼ Subtotal 18, Skin cancer clinic PC and monitor Subtotal 20, Total equipment cost (E) ¼ number of participating primary care centres Capital charge of 6% per year. Capital cost during the 15-month study ¼ 7.50% Equipment depreciated over three years. Depreciation cost during the 15-month study ¼ 41.66% 42 Journal of Telemedicine and Telecare Volume 15 Number

4 Figure 2 Relation between the average cost per teleconsultation (unit cost) and the number of teleconsultations transmitted from each primary care centre There was an inverse relation between the average cost per teleconsultation (unit cost) in each PCC and the number of teleconsultations transmitted from these PCCs (Figure 2). This was significant using Spearman correlation (P, 0.001) (Figure 3a). The part of the unit cost of a teleconsultation which was related to the acquisition of hardware might be termed impact of equipment cost, i.e. the percentage of the cost of the teleconsultation which was due to the cost of the equipment. There was a significant inverse correlation (P, 0.001) between the number of teleconsultations and the impact of equipment cost (Figure 3b). There was also a significant correlation (P, 0.001) between the impact of the equipment cost and the average cost per teleconsultation (Figure 3c). The study performed in the first part of this project observed a waiting interval to final intervention of 12.3 days for patients managed through teledermatology, and 88.6 days for patients managed through the conventional care system. 5 Considering this interval as the main clinical Figure 3b Relation between the number of teleconsultations and the percentage of the cost of the teleconsultation which was due to the cost of the equipment outcome, the cost-effectiveness analysis demonstrated that teledermatology was the dominant methodology, with an incremental ratio of E0.65 saved per waiting day avoided through teledermatology (Table 3). Sensitivity analysis: (a) Assuming that 25% of skin cancer clinic visits were avoided instead of the 50% observed in the study, teledermatology would still be the dominant methodology, albeit with lower savings (incremental ratio 0.35 vs. 0.65, P, 0.05) (Table 4); (b) In the case of a communication network exclusively used by the teledermatology application, teledermatology would be a nondominant methodology for the management of patient referrals, with an incremental ratio of 0.16 vs (P, 0.001) (Table 5). Under this hypothesis, teledermatology would incur an additional cost of E0.16 per waiting day avoided. Figure 3a Relation between the number of teleconsultations and the average cost per teleconsultation Figure 3c Relation between the percentage of the cost of the teleconsultation which was due to the cost of the equipment and the average cost per teleconsultation Journal of Telemedicine and Telecare Volume 15 Number

5 Table 3 Cost-effectiveness analysis. Teledermatology was the dominant methodology Table 5 Sensitivity analysis assuming an exclusive communication network for teledermatology Teledermatology care Teledermatology (E) care (E) Average cost per patient (E) Average waiting interval (d) Average incremental cost, Dcost (E) Average incremental effectiveness, Deff (d) Incremental cost-effectiveness ratio, Dcost/Deff (E/day of waiting time avoided) 0.65 Discussion The economic study carried out provides information based on the experience with a routine teledermatology system set up in a public health system equipped with a communication network. In this setting, store-and-forward teledermatology was a cost-effective method of managing referrals in a skin cancer clinic. It was 1.6-fold cheaper than the conventional letter referral system (Table 3). The economic analysis was carried out under a social perspective. This approach takes into account not only the expenditures incurred by the institution but also by the patient, especially those derived from travel and working time lost. A cost-effectiveness analysis was selected since this approach relates the incremental cost of teledermatology to its additional effectiveness. To date, few studies have dealt with the economic effects of store-and-forward teledermatology. 1,9 Despite these studies yielding controversial conclusions about the economic result of teledermatology, the authors involved agree that a number of interdependent factors influence the economic advantage or disadvantage of teledermatology. In our experience, the workload of the teledermatology facility, the percentage of hospital visits avoided, the reduction in waiting intervals and the absence Table 4 Sensitivity analysis assuming a 25% of hospital visits avoided Teledermatology (E) care (E) Fixed costs (n ¼ 2009) Equipment (n ¼ 2009) Telecommunications 0 0 Variable costs Preparation and submission of (n ¼ 2009) 35, teleconsultations at the PCC Evaluation of teleconsultations by the (n ¼ 2009) 28, Face-to-face visit to the skin cancer (n ¼ 1507) 105, , clinic Face-to-face visit to the local 0 206, Travel to the skin cancer clinic (n ¼ 1507) , Working time lost (n ¼ 1507) 18, , Total 20, , Unit cost (E per patient) Incremental cost Incremental cost-effectiveness ratio E0.35/day of waiting time avoided Fixed costs Equipment Telecommunications 124, Variable costs Preparation and submission of 35, teleconsultations at the PCC Evaluation of teleconsultations 28, by the Face-to-face visit to the skin cancer clinic 68, Face-to-face visit to the local 0 206, Travel to the skin cancer clinic , Working time lost 12, , Total 285, , Unit cost (E per patient) Incremental cost Incremental cost-effectiveness ratio E0.16/day of waiting time avoided of communication costs accounted for the economic dominance of the teledermatology system implemented. The workload of a teledermatology system has been repeatedly discussed as a major determining factor in the economic outcome. Several studies have assessed the number of patients at which teledermatology and the alternative method are equally expensive (sometimes called the break-even number). In that respect, Loane et al. concluded that in order to be economically viable, an average of 28 patients would need to be seen via telemedicine every week in the setting studied. 10 Moreover, in the trial of Wootton et al. the low use of a realtime teledermatology facility with an average of 26 patients per health centre in one year did not make the system economically viable. In that trial, the sensitivity analyses showed that increased use of the system improved its cost-effectiveness. 11 In our experience, the higher the number of teleconsultations transmitted from a participating PCC, the lower the unit cost of the teleconsultation in the PCC. This finding was in relation to a better use of the equipment expenditures (fixed costs), as the correlations demonstrated (Figure 3). Similarly, the capability of teledermatology to avoid visits to the skin cancer clinic also has a clear influence on the teledermatology cost advantage. In those economic trials in which teledermatology resulted in a more expensive alternative, the higher cost of teledermatology resulted in part from teledermatology failing to avoid enough clinic-based evaluations. 9 Along with the waiting intervals, the hospital visits avoided have also been considered as an intermediate clinical outcome in teledermatology effectiveness and economic trials. 3,5,12 The avoidance of hospital visits gives rise to savings in the institution side derived from the face-to-face hospital visits that do not take place. On the patients side, the avoidance of hospital visits leads to major savings in relation to travel expenses and working days lost. 44 Journal of Telemedicine and Telecare Volume 15 Number

6 Furthermore, the sensitivity analysis carried out in this study showed that one of the assumptions in which teledermatology turned into a less dominant methodology was teledermatology avoiding 25% of skin cancer clinic visits instead of the 50% observed in the real scenario. In previous studies, patients undergoing teledermatology consultations reached a point of intervention significantly sooner than patients undergoing the conventional referral process. 5,13 The influence of the waiting interval on the clinical course of skin conditions, especially of skin cancer, turns this measure into an appropriate effectiveness outcome in teledermatology economic trials. 1 Thus, the important shortening in time to final intervention accounts for the better economic dominance yielded by teledermatology in several experiences, in spite of the higher unit cost that teleconsultations may present. 9,13 In our study, this finding is summarized in an incremental cost-effectiveness ratio which entails the saving of E0.65 per patient and waiting day avoided through teledermatology. The public health system in which the teledermatology experience evaluated was developed, was equipped with an intranet network which runs many clinical and management applications; thus, no extra investment for the set up and maintenance of the network was necessary. Moreover, in this setting, communication via the intranet represented a negligible transmission cost which led us to exclude it from the cost identification analysis. The lack of communication costs represented the main determining factor of the economic advantage of the teledermatology experience evaluated. In the sensitivity analysis performed, the assumption of a communication network exclusive for the teledermatology application, with set up and maintenance cost, turned teledermatology into a less cost-effective methodology than the conventional care. Finally, the economic evaluation carried out in this study has certain limitations that should be considered before the extrapolation of the results obtained. Most of these limitations stem from the estimates that were applied to the cost identification analysis and from the real local scenario in which the study was carried out. The results of the study suggest that in a public health system equipped with an intranet network, the routine use of store-and-forward teledermatology in skin cancer clinics is a cost-effective methodology to manage with patients referrals, indeed providing shorter waiting interval to final intervention. Acknowledgements: The study was supported by a grant from the Instituto Carlos III (FIS PI 04/1194). References 1 Whited JD. Summary of the Status of Teledermatology Research. See ology%20sig%20research%20summary% doc (last checked 27 September 2008) 2 Whited JD. Teledermatology research review. Int J Dermatol 2006;45: Moreno-Ramirez D, Ferrandiz L, Bernal AP, Duran RC, Martín JJ, Camacho F. Teledermatology as a filtering system in pigmented lesion clinics. J Telemed Telecare 2005;11: Moreno D, Ferrándiz L, Pérez-Bernal AM, Ríos JJ, Carrasco R, Camacho F. Evaluation of a screening system for patients with pigmented lesions using store-and-forward teleconsultation. Actas Dermosifiliogr 2005;96: Moreno-Ramirez D, Ferrandiz L, Nieto-Garcia A, et al. Store-and-forward teledermatology in skin cancer triage. experience and evaluation of 2009 teleconsultations. Arch Dermatol 2007;143: Boletín Oficial de la Junta de Andalucía (BOJA) no 96, 19 May See html (last checked 27 September 2008) 7 Consorcio de Transporte Metropolitano del Área de Sevilla. Tarifas. See tarifas/tarifas.php (last checked 29 September 2008) 8 Boletin Oficial del Estado (BOE) no 315, 31 December See (last checked 27 September 2008) 9 Whited JD, Datta S, Hall RP, et al. An economic analysis of a store-and-forward teledermatology consult system. Telemed J E Health 2003;9: Loane MA, Oakley A, Rademaker M, et al. A cost-minimization analysis of the societal costs of realtime teledermatology compared with conventional care: results from a randomized controlled trial in New Zealand. J Telemed Telecare 2001;7: Wootton R, Bloomer SE, Corbett R, et al. Multicentre randomised control trial comparing real time teledermatology with conventional outpatient dermatological care: a societal cost-benefit analysis. BMJ 2000;320: Loane MA, Bloomer SE, Corbett R, et al. A randomized controlled trial to assess the clinical effectiveness of both realtime and store-and-forward teledermatology compared with conventional care. J Telemed Telecare 2000;6 (Suppl. 1): Whited JD, Hall RP, Foy ME, et al. Teledermatology s impact on time to intervention among referrals to a dermatology consult service. Telemed J E Health 2002;8: Journal of Telemedicine and Telecare Volume 15 Number