Measuring ROI in Healthcare

Measuring ROI in Healthcare, Tools and Techniques to Measure the Impact and ROI in Healthcare Improvement Projects and Programs, by Victor V. Buzachero, Jack Phillips, PhD, Patricia  Pulliam Phillips, PhD, and Zack L. Phillips, RRT, MHA,  McGraw-Hill Professional 2013

Beyond the for-profit business definition of ROI, in the “other” world of healthcare, additional project results and changes can very well determine the success of a project, or an institution-wide change initiative.  What this innovative book allows readers to do is think about the qualitative, as well as the quantitative results of a proposed project. 

The authors use examples chosen from a variety of healthcare institutions.  Readers will find useful the section on identifying intangible benefits – improved patient satisfaction, employee engagement, brand awareness, networking, plus enhanced reputation, image, and reduced stress and conflicts.  The entire communications strategy, including  a section on how to communicate results and progress, and what to say when there is bad news, is an important think piece that anyone attempting culture change – and measuring a healthcare group or project based on ROI is big culture change – should cover in advance.  Historic public communications events, from the Tylenol poisoning crisis, to Gov. Christie’s lane closing debacle, can all be handled more effectively, with minimum blowback when the message and the target audience are managed with careful preparation. 

How data is converted meaningfully to money is well-illustrated by the case of a southeast religiously affiliated institution showing an excessive number of sexual harassment complaints throughout its network of 8000 employees.  How could the HR head express the real monetary value of this pervasive problem?  When HR executives launched a sexual harassment prevention process involving all 8000 employees, they wanted to understand all the costs of sexual harassment problems. 

First, the HR director examined the total cost of sexual harassment prevention, litigation, and defense for the previous year, including charges and lawsuits that were settled or dropped.  There were other costs, however, that also had to be added in, including time required to work the issue stated as direct and indirect costs, and a big unknown, employee turnover.  The employee turnover value was derived from studies contained in a database called ERIC.  The data showed that the cost of voluntary turnover in the healthcare sector averaged about 1.25 times annual salary.  Based on all these data elements, the HR director was able to calculate the obvious and hidden costs of sexual harassment, and the ROI of the sexual harassment prevention project.

The sexual harassment example illustrates the use of data to select, support and drive home projects and initiatives.  We know that businesses are now generating incredible amounts of data, and the challenge of creating a meaningful strategy or ROI statement of results, is happily what we now face.  This is a good challenge, one that will need to be managed at a high level to prevent project burnout and project failures.