An Iron Triangle ROI Model for Health Care
Originally published in ClinicoEconomics and Outcomes Research
Objective: Few, if any, return on investment (ROI) analyses of health programs make systematic considerations of patient access, instead focusing principally on gains related to cost and quality. The objective of this study was to develop an open-source model that adds an estimation of gains in patient access to a traditional ROI analysis. A classification system for quantifying gains in patient access is proposed.
Materials and methods: An Excel-based ROI model was built that not only incorporated traditional ROI considerations – cost savings and patient cases avoided – but also addressed changes in patient access. The model was then applied in a case study using New Mexico Medicaid data and two proposed initiatives – a statewide health information exchange (HIE) and a community health worker (CHW) program that focused on chronic disease patients. Savings, Health, Outreach, and Access estimates were derived from the literature. ROI estimates were produced that also incorporated relative gains in patient access.
Results: Combined, the HIE and CHW programs are predicted to generate a positive ROI by the fourth year, growing to 45% by the program’s tenth year. Total estimated cumulative cost for both programs after 10 years is $9,555,226. Total estimated cumulative saving for both programs after 10 years is $11,332,899. Access-related costs begin moderately in year 1 at $122,766 and grow to $1,858,274 by year 10. The model estimates an Access score of 19 in year 1. This figure grew to 380 by year 10.
Conclusion: Our model shows that a rough estimation of gains in to patient access can be incorporated to traditional ROI analyses. The results of our case study suggest that a CHW program and statewide HIE can generate a positive ROI for the state’s Medicaid program.