An iron triangle ROI model for health care

Abstract

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.

Keywords: community health workers; health information exchange; patient access; return on investment.

Figure 1

Theoretical model. Notes: The first section begins by describing the empirical design of the iron triangle ROI model. In this section, an empirical framework for incorporating gains in patient access is proposed. The first section concludes by outlining all the variables that the “user” (the person performing an economic analysis using the model) can input and select for analysis. The second section of the article then describes a case study of the model using New Mexico Medicaid data and two proposed initiatives – a statewide HIE and a CHW program focused on chronic disease patients. Abbreviations: CHW, community health worker; HIE, health information exchange; ROI, return on investment.

Figure 2

Conceptual model of the effects of the HIE and CHW programs on ROI. Abbreviations: CHW, community health worker; HIE, health information exchange; ROI, return on investment.