An improved method is presented for evaluating the physiological status of a patient diagnosed with congestive heart failure and treating the patient accordingly to alleviate the congestive heart failure. As part of the method, the thoracic or cardiac impedance and ventilation of the particular patient are derived solely from an input consisting of cardiac signals (EKG) generated by electrical energy of the patient's heart as the heart is undergoing its cardiac cycle with a dynamic impedance obtained by subjecting the EKG to alternately high and low input impedances. The derived thoracic impedance and ventilation are used to control the pattern and rate at which stimulating electrical pulses are applied to the patient's vagus nerve by an implanted stimulator, in a manner to deliver therapy to the patient's heart by adjusting the heart rate to a prescribed target rate for alleviating the congestive heart failure. A change in state of the patient from one of rest to one of physical exercise and vice versa detected from the derived impedance and ventilation is accommodated by modifying the vagal stimulation therapy to adjust the patient's heart rate to a new target rate accordingly, while continuing to deliver the therapy for alleviating the congestive heart failure. A closed loop system is preferably employed for the control and adjustment functions.