1 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 10,000 devices. This paper analyzes 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 4,519 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 benefit