An analysis by the London School of Economics (LSE) found the health-monitoring devices cost around £92,000 per year of good quality life gained – three times the level NICE recommends as cost effective.
Researchers said equipment costs needed to fall by up to 80% before the planned national telehealth roll-out would become cost effective.
The DH said it is working with industry to bring down equipment costs to create a ‘sustainable’ service.
The department wants millions of people to benefit from telehealth and telecare services, and launched the Three Million Lives campaign in January alongside industry to begin a large-scale roll-out.
Last month, the first findings from the DH-funded Whole System Demonstrator trial found telehealth could reduce hospital admissions and deaths. But researchers found no evidence the technology could reduce NHS costs.
Catherine Henderson, an LSE researcher, presented early findings from a separate economic analysis of the trial at a Westminster Health Forum event in London on Tuesday.
Her team compared the likely benefit to patients to the costs of equipment, support and infrastructure needed to run the service at the time of the trial in 2009/10.
Their analysis, which is yet to be peer reviewed, found telehealth would cost around £92,000 per quality-adjusted life year (QALY), the measure used by NICE to calculate the value of a drug or other medical product to the NHS.
The watchdog has traditionally rejected drugs and other medical devices when this value climbs above £20,000-£30,000.
'Unlikely to save costs'
Ms Henderson said: ‘On the basis of the results we concluded that it’s unlikely that the telehealth intervention is cost effective in terms of improving quality of life, in reference to the NICE willingness-to-pay threshold, the QALY.’
The average annual cost was £1,850 per patient per year. Equipment costs are beginning to fall, Ms Henderson added, but would need to drop by 50% to 80% for a telehealth service to provide good value to the NHS.
Even if prices fell by this amount, she said, there was only a 61% chance telehealth would be cost effective in the ‘most optimistic scenario’.
Stephen Johnson, DH deputy director of long-term conditions, said the department was working with industry to lower the cost of the devices. ‘We want a sustainable approach that gives this a fighting chance to work,’ he said. ‘We’ve got the evidence, but what is the business case?’
He added: ‘What we’ve got to do is work out how to make this cost effective.’
Mr Johnson revealed that private telehealth companies will earn revenue for each patient referred into a telehealth scheme as part of these arrangements.
He said the telehealth industry would help create care pathways for GP commissioners to follow.
Internal DH calculations uncovered by GP last month showed the department assumes equipment costs will fall to an average of £500 per unit. It calculated that at this price telehealth would need to save £70-£543 per patient to achieve £1.2bn savings predicted by ministers in March.
Further analyses from the Whole System Demonstrator trial will be published over the coming months.