Wireless communication of video poses constraints on information capacity. Region-of-Interest (ROI) video coding provides higher quality in the ROI, but poorer quality in the background (BKGRND), for a given total bitrate (TBR). Researchers, including the authors, have also proposed more graceful quality management methods, using what is referred to here as an Extended-Region-of-Interest (EROI). We consider three levels of losslessness – mathematical, diagnostic, and perceptual, with the goal of associating them with the above-mentioned regions. We describe work in progress aimed at optimizing an elastic expert system based on the above methodology, with telehealth video as its anchor. The optimizations are threefold – user, perceptual, and network oriented, and are incorporated in the rate control algorithm. We propose a rate control method where, unlike conventional methods, bit allocation is shifted from the frame level to individual regions within the frame. Thereafter, the ab...