Providing quality healthcare not only has a cost, but also a return on the investment.
That's the contention of an organization that wants to prove that Medicaid programs focusing on quality improvement are worth the cost.
The Center for Health Care Strategies, Inc., of Hamilton, N.J., is providing a Web-based calculator for Medicaid quality initiatives to help stakeholder organizations demonstrate the return on investment for such programs. The center is a not-for-profit health policy resource center focusing on improving the quality and cost-effectiveness of healthcare services for low-income populations and people with chronic illnesses and disabilities.
With funding from the Robert Wood Johnson Foundation and The Commonwealth Fund, the Center for Health Care Strategies worked with eight states to test the ROI Calculator through the Return on Investment Purchasing Institute, a national learning collaborative.
Programs in the eight states were able to demonstrate how return-on-investment forecasting can be used to maximize the value of investments in quality improvement, the center said.
"Users of the ROI Calculator enter detailed assumptions about their proposed initiatives, including target population characteristics, program costs and the magnitude and timing of expected changes in utilization," wrote Allison Hamblin of the center, who wrote a brief on the project.
Factors included in calculating ROI are data on intervention (clincal focus, intervention strategies and timeframe or duration of the initiative); target population (subgroups, disease prevalence among target groups, expected enrollment rate and risk stratification); utilization (baseline costs, trend and anticipated utilization); estimated program costs for launching and operating the initiative; and the discount rate, or organizational cost of capital.
To help estimate utilization changes, the ROI Calculator includes an evidence-based component that enables users to select from results of published studies to generate forecast assumptions. Studies in the evidence base include high-priority areas for Medicaid populations such as asthma, diabetes, congestive heart failure and high-risk pregnancy.
Based on all assumptions entered by a user, the calculator examines the impact on costs and ROI that may result from the program and provides a range of estimates based on sensitivity analysis.
The Center for Health Care Strategies said the calculator can be used to support the analysis of various options for resource allocation, measure tradeoffs between specific program design options, communicate outcomes and buttress funding requests and monitor the ongoing cost-effectiveness of programs by comparing them to initial expectations.
Arizona used the calculator to help determine the clinical focus for a proposed pay-for-performance initiative and determined that a planned focus on asthma would not have provided a sufficient return on investment. The program was redefined to focus attention on diabetes, immunizations and home care, and a better case was made to develop a request for a budget appropriation to fund the incentive program, Hamblin said.