To strengthen healthcare industry, lot of research work is being done to explore new, accurate and efficient technology for healthcare industry that can monitor and keep track of health of patients in everyday life or in case of accidents and emergencies. Internet of Things based distributed healthcare system interconnects various medical resources using IoT, distributed databases and distributed DBMSs to provide reliable, effective and smart healthcare service to the elderly and patients with a chronic illness. Internet of Things based distributed healthcare system (IoT-DHS) is a technology that has made major impact on healthcare industry but still there are many challenges and open issues that need to be addressed and find solutions. In IoT-DHS, all available medical resources are interconnected to provide effective and efficient healthcare services to everyone, who is in need of medical assistance. This paper reviews state-of-the-art works in IoT-DHSs, based on which the taxonomy of these systems is proposed considering various aspects such as monitoring methods, communication technologies, computing techniques and low-power protocols. A comparative study of these IoT-DHSs is made to know the suitability of various healthcare systems. The challenges and open issues associated with existing IoT-DHSs are also discussed in detail. This paper helps technical people of medical industry, researchers and scientists interested in cloud computing and IoT technologies for medical field.