Purpose of the study: to examine the costs and cost-effectiveness of ‘second-generation’ telecare, in addition to standard support and care that could include ‘first-generation’ forms of telecare, compared with standard support and care that could include ‘first-generation’ forms of telecare.

Design and methods: a pragmatic cluster-randomised controlled trial with nested economic evaluation. A total of 2,600 people with social care needs participated in a trial of community-based telecare in three English local authority areas. In the Whole Systems Demonstrator Telecare Questionnaire Study, 550 participants were randomised to intervention and 639 to control. Participants who were offered the telecare intervention received a package of equipment and monitoring services for 12 months, additional to their standard health and social care services. The control group received usual health and social care.

Primary outcome measure: incremental cost per quality-adjusted life year (QALY) gained. The analyses took a health and social care perspective.

Results: cost per additional QALY was £297,000. Cost-effectiveness acceptability curves indicated that the probability of cost-effectiveness at a willingness-to-pay of £30,000 per QALY gained was only 16%. Sensitivity analyses combining variations in equipment price and support cost parameters yielded a cost-effectiveness ratio of £161,000 per QALY.

Implications: while QALY gain in the intervention group was similar to that for controls, social and health services costs were higher. Second-generation telecare did not appear to be a cost-effective addition to usual care, assuming a commonly accepted willingness to pay for QALYs.