opportunities to support a return on investment (roi) analysis
TRANSCRIPT
National Resource Center Advisory Group WebinarMarch 17, 2018
Opportunities to Support A Return on Investment (ROI) Analysis
Ted Henson, National Association of Community Health Centers Cheryl Austein Casnoff, MPH; NORC at the University of Chicago
Michael Halpern, MD, PhD, MPH; Temple University
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Speakers Today
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Our Agenda
1. Why? | NACHC Purpose for gathering on this topic today
2. What? | Michael Halpern, Temple University Basics on Return On Investment (ROI) and Types of ROI
analyses
3. How? And next steps to consider | Cheryl AusteinCasnoff, NORC and Gina Capra, NACHC
Possible application of ROI concepts Recommended avenues for continuing the conversation
Need to Consider Costs in Health Care
Limited resources – can’t provide all types of health care and related services. Health centers need to:• Determine costs and benefits of current health service offerings• Prioritize the most important services• Examine the health and economic consequences of changing or expanding programs, services, or other specific health care interventions
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What is the Goal of Health Care Economic Analyses?
• Determine if some cost or expenditure is “worth it”?
• Who determines the threshold for “worth it”?
• Goal is to determine the costs and benefits of one health care program, intervention, systems, or treatment compared with another.– Benefits can be health outcomes (cases cured, diseases diagnosed), economic benefits (increased revenue), or mortality values (years of life saved)
– Comparing costs and benefits can be used to plan changes to programs and systems, expanded services, and prioritize health care initiatives
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Costs and Perspective in Health Care
Whether something is a “cost” depends on your role or perspective• For example, Medicaid payments are costs to the government but are positive (revenue) to health care centers
• Patients have “out of pocket” costs (transportation, lost wages when receiving health care, insurance premiums) that aren’t costs to health centers
When performing health economic analyses, need to consider which costs and benefits are relevant from a health care provider‘s perspective
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Types of Health Care Economic Analyses• Cost‐minimization• Cost‐benefit and return‐on‐investment• Cost‐effectiveness
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Cost Minimization Analysis (CMA)
• Examines the cost of one health care services vs. the cost of a different health care service
• CMA assumes the benefits (e.g., health outcomes) are the same for both health care services; only interested in difference in costs– Example: difference in costs for two drugs used to treat diabetes, when the effectiveness of the two drugs (e.g., A1c values) is the same.
– One drug may have lower initial costs but require more lab tests or have more adverse events that lead to greater longer‐term costs
– Need to consider overall costs for a treatment episode
• Goal of CMA is to find the least expensive intervention or treatment, since the outcomes are the same
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Cost‐Benefit (or Benefit‐Cost) Analysis
• Difference in costs between two health care interventions or services relative to the difference in savings (or revenue) between the two
• Used to determine the Benefit‐Cost Ratio: difference in dollars saved per each dollar spent of a health care intervention/program
Savings from a health care interventionBenefit‐Cost Ratio = Cost of the health care intervention
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Cost Benefit Analysis Example Cost Benefit
(Savings)Benefit-Cost Ratio
Intervention 1 $10,000 $25,000
Intervention 2 $20,000 $40,000
Difference, 2 vs. 1
$10,000 $15,000 Difference in Savings/Difference in Costs = $15,000/$10,000
= $1.50 saved for every $1 spent on Intervention 2 instead of Intervention 1
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• Benefit‐cost ratio > 1 indicates that the intervention being studied saves money (relative to the comparison intervention); Benefit‐cost ratio < 1 indicates that the intervention costs more than it saves
Return on Investment (ROI)• Similar to Benefit‐Cost Ratio
Cost Benefit (Savings)
Benefit-Cost Ratio
Intervention 1 $10,000 $25,000
Intervention 2 $20,000 $40,000
Difference, 2 vs. 1
$10,000 $15,000 Net Benefit/Net Cost = $15,000/$10,000 = $1.50 saved for
every $1 spent
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Return on Investment = (Net Benefit‐Net Cost)/Net Cost= ($15,000‐$10,000)/$10,000= $5,000/$10,000 = 50%
Example Cost‐Benefit Analysis
Workplace smoking cessation program at a large employer• Employer originally had no smoking cessation program (zero costs, zero savings)
• Costs to run the program were $1,193,322 over 10 years• Savings from the program (fewer employee illnesses, better productivity, etc.) was $2,575,511 over 10 years
• Benefit‐Cost Ratio = Savings/Costs = $2,575,511/ $1,193,322 = 2.16
• $2.16 saved for every $1.00 spent on smoking cessation• Return on Investment = (savings‐costs)/costs = 116%
Cost‐Effectiveness Analysis (CEA)• Change in cost relative to the change in outcomes for two interventions
Difference in Costs of Interventions– Cost‐Effectiveness Ratio = Difference Outcome of Interventions
• Cost‐Effectiveness ratio = additional dollars spent per additional health benefit obtained (“bang for the buck”)
• Outcomes can be health benefit (patient screened, diseases cured), mortality (years of life saved), or quality of life
• CEA always compares two different interventions– One of the interventions can be “do nothing”
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Example Cost‐Effectiveness Analysis
• Strategies to increase biennial mammograms among three predominantly rural Louisiana FQHCs (Davis et al., 2015)– Standard Intervention: education and recommendations followed by usual care; or
– Nurse Support Intervention: a nurse manager provided education and recommendations, scheduled mammograms, and followed up with phone support.
• Nurse Support costs more than Standard Intervention: difference of $68,665 for same number of eligible women in each group
• Nurse Support led to 63 more women being screened• Cost‐Effectiveness of Nurse Support vs. Standard Intervention = $68,665/63 = approx. $1090 per additional patient screened
Planning an ROI or other Health Care Economic Analysis
Doing an economic analysis can be complicated – before starting, it is important to consider:1. What is the goal of the analysis? That is, what might change based on the results from the economic analysis?• Will the results of an economic analysis be important for expanding certain services or reducing other services?
• Will an analysis provide justification for current programs or proposed changes?
• The goal should drive the specific economic analysis conducted – know what you hope to accomplish before starting.
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Planning an ROI or other Health Care Economic Analysis
2. What information (on both costs and benefits) will be needed to do the analysis? Can this information be collected or estimated?
– Example: Goal is to determine the costs and benefits of decreased time to available appointments by developing a new EHR. This would require several steps including developing and testing EHR, training personnel to use new EHR, setting up patient appointments with the new system, and having patients come to appointments – is information available on costs and benefits for all these steps?
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Planning an ROI or other Health Care Economic Analysis
3. Is it feasible to conduct a health care economic analysis?• Do you have enough time to gather the needed information before you want to use the results?
• Do you have the right resources to collect this information and perform the analysis?– Example: In a new program to enhance treatment for diabetes, the goal may be to decrease rates of diabetic retinopathy and renal failure. However, those outcomes take a long time to develop. It is quicker and cheaper to instead measure whether the new program decreases hemoglobin A1c as an “intermediate outcome” for the program.
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Health Care Economic Analyses Key Points
• Analyses are important to assess the benefits of health care services and systems relative to the costs of providing these services/systems (i.e., “bang for the buck”)
• Important to consider “perspective” – whose costs and benefits do you care about?
• Analyses compare costs and benefits of two alternative programs, treatments, or initiatives.
• Health care economic analyses provide information for making decisions – they don’t make the make the decisions.
• What is the goal of the analysis, and do you have enough information and resources to do the analysis?
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Recognize uniqueness of NCA content areas while also recognizing similarities across NCAs (if possible)Data collection related to Learning CollaborativesPotential need for additional data collection
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Areas of Consideration
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Next Steps: Considerations Moving Forward To inform WHAT TYPE of ROI analysis should be conducted and what areas to focus on for the ROI:
Review NCA Required Measures: Become familiar with NCA required data collection (if you are not already). Examine UDS measures that are tied to your NCA efforts.
Create A Net Benefits List and Independently Review It: Create a list of expected/anticipated net benefits your NCA hopes to achieve. Think through any assumptions made when thinking about each net benefit you expect to achieve. Benefits should have been documented in your grant application.
Do any of the expected net benefits overlap with any required NCA data collection? How easy/difficult to get the information needed to quantify the net benefits (i.e., is it worth
the effort)?
Compare Net Benefits Lists Across all NCAs: After all NCAs complete the first two recommended steps, lets compare all NCA lists and reconvene again: Review (all lists) for any areas of overlap across NCAs? If there are areas of overlap, which are meaningful to consider including in the future ROI
analysis to illustrate value?
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NCA Example: Required Goals and Metrics
Source: HRSA/BPHC NCA FY 2017 Notice of Funding Opportunity: https://bphc.hrsa.gov/programopportunities/fundingopportunities/Default.aspx?id=78555fcb-3467-4470-8490-ba207bab2faa
Discussion, Q/A
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