Table 1. Categories of Costs Incurred at Different Stages of Implementing a Practice or Quality Improvement Program Stages of the Improvement Actions Ongoing Operation, Planning and Monitoring, and Cost Category Development Training Startup Maintenance Shutdown Personnel X X X X X Supplies X X X X X Equipment X X Training X X X X Information X X X systems Outreach and X X X communication External X X X consultant costs Considerations for Calculating Net Return. Instructions for completing Worksheet 2 are provided at the top of the worksheet. The grand total financial effect derived in the worksheet is the estimate for the ROI numerator. The estimation of these financial effects is more complex—and more subtle—than estimating the implementation costs. Implementation of improvement actions may have many positive effects on and health status. For example, improvement actions might reduce patients’ outcomes hospital-associated infections, rates of pressure ulcers, or patient mortality. Although these effects do not have a direct monetary value, many of them may affect a revenues and hospital’s expenses, which should be estimated in an ROI analysis. For example, reduction in adverse events can lead to reduced length of stay, which may affect finances either positively or negatively, depending on payment structures. In addition, reduction of adverse events that would result in decreased payments due to programs such as the Centers for Medicare & Medicaid Purchasing or Hospital-Acquired Condition Reduction Program would Services’ Value-Based have an even more direct effect on revenues. You will need to capture two types of financial effects: changes in the revenues and hospital’s changes in its operating costs. For example, by reducing its infection rates, a hospital could eliminate the costs it had been incurring to provide the extra care required to treat infections. It also could enhance or protect its revenues, if insurers offered incentives for infection control or imposed penalties for occurrences of infections. When calculating the net return for the ROI, it is necessary to take into account that hospital’s the effects on revenues and effects on costs work in opposite directions. From the hospital’s perspective, an increase in revenues is good, so a due to improvement actions higher revenue should be a number. On the other hand, a decrease in costs is good, so a due positive lower cost to improvement actions is good. The instructions for calculations of net return are provided on Worksheet 2.
Table 1. Categories of Costs Incurred at Different Stages of Implementing a Practice or Quality Improvement Program Stages of the Improvement Actions Cost Category Planning and Development Training Startup Ongoing Operation, Monitoring, and Maintenance Shutdown Personnel X X X X X Supplies X X X X X Equipment X X Training X X X X Information systems X X X Outreach and communication X X X External consultant costs X X X Considerations for Calculating Net Return. Instructions for completing Worksheet 2 are provided at the top of the worksheet. The grand total financial effect derived in the worksheet is the estimate for the ROI numerator. The estimation of these financial effects is more complex—and more subtle—than estimating the implementation costs. Implementation of improvement actions may have many positive effects on patients’ outcomes and health status. For example, improvement actions might reduce hospital-associated infections, rates of pressure ulcers, or patient mortality. Although these effects do not have a direct monetary value, many of them may affect a hospital’s revenues and expenses, which should be estimated in an ROI analysis. For example, reduction in adverse events can lead to reduced length of stay, which may affect finances either positively or negatively, depending on payment structures. In addition, reduction of adverse events that would result in decreased payments due to programs such as the Centers for Medicare & Medicaid Services’ Value-Based Purchasing or Hospital-Acquired Condition Reduction Program would have an even more direct effect on revenues. You will need to capture two types of financial effects: changes in the hospital’s revenues and changes in its operating costs. For example, by reducing its infection rates, a hospital could eliminate the costs it had been incurring to provide the extra care required to treat infections. It also could enhance or protect its revenues, if insurers offered incentives for infection control or imposed penalties for occurrences of infections. When calculating the hospital’s net return for the ROI, it is necessary to take into account that the effects on revenues and effects on costs work in opposite directions. From the hospital’s perspective, an increase in revenues is good, so a higher revenue due to improvement actions should be a positive number. On the other hand, a decrease in costs is good, so a lower cost due to improvement actions is good. The instructions for calculations of net return are provided on Worksheet 2.
f1_combo_returnoninvestment.docx