Transcript Testing the New ROI Tool in Connecticut: A Prospective Look

Estimating Return on
Investment for Public Health
Improvements
Update from ASTHO -Karl Ensign, Director of Evaluation
Association of State and Territorial Health Officials
(ASTHO)
Ninth Annual Public Health Finance Roundtable
Boston, MA
November 3rd, 2013
Support for ROI Tool & Capacity Building
Assistance

This project was supported by funds made available
from the Centers for Disease Control and
Prevention, Office for State, Tribal, Local and
Territorial Support (CDC, OSTLTS)

Grant #5U38HM000454-05

The content of this presentation are those of the authors
and do not necessarily represent the official position of
or endorsement by the Centers for Disease Control and
Prevention
ROI is one way of
measuring and
communicating public
health effectiveness in a
manner that is particularly
salient for policymakers,
funders, administrators and
the general public

Helps answer the following
questions:
 Are we making the right
investments?
 Are we becoming more efficient?
 What is our budget
accomplishing?
 What returns do different
investments yield?

Must be done thoughtfully
and carefully
WHERE AND HOW HAS ROI BEEN
USED IN PUBLIC HEALTH?
 Public health programs (injury prevention, tobacco prevention and control)
 Aggregate public health spending (Glen P. Mays, UKY)
 Improvement projects undertaken by agencies
(focus of new ASTHO tool)
ROI of QI – Advantages and Disadvantages

ROI is more immediate
 Timeframe is shorter

ROI accrues more directly
to the agency

Tends to be narrower in scope
 Return is more modest

Measures ROI for improvement projects
 QI projects undertaken through the National Public Health
Improvement Initiative (NPHII)

ASTHO developed tool in partnership with OSTLTS

Workgroup provided input and guidance
 CDC, state and local agencies, foundations, academia

Developed by Glen Mays, University of Kentucky

Beta tested by Connecticut, Maine, and Virginia

Pathways to Realizing ROI for QI
 Reductions in standard operating costs
• Greater efficiencies realized
 Revenue enhancements
• Increased cost reimbursement
 Increased productivity of agency
functions
• Increased service encounters
 Decreased time to produce outputs
• Reduced cycle time process
 Achievement of health outcomes
• Tool accommodates this
LET’S SEE HOW IT WORKS!
Basic Information -- Improvement Project
Planning and Development Costs
Routine Operating Costs
Cost Category
Personnel Costs
Non-Personal
• Contracted Services
• Office Operations
• Facilities/Maint/Rent
• Communications
• Equipment
• Construction/Renovation
Other Direct Costs
Indirect Costs
PreImplementation(
Baseline)
PostImplementation
(Year 1)
Year 2
…
Outcomes/Outputs
Cost Category
Service Units Delivered
Required Production Time
Target Population Reach
Other Outcomes/Outputs
PreImplementation
PostImplementation
(Year 1)
Year 2
…
How the Tool Calculates ROI

ROI = Benefits – Costs
Costs

Tool calculates ROI in two ways:
Improvements in Routine Operations – Investment Costs
Investment Costs
(Routine Operations + Other Outcomes) – Investment Costs
Investment Costs
Incorporates Standard Accounting Practices in
ROI Calculation

Amortization
 The cost of an investment should not be
absorbed entirely in the first year
 Amortization rate spreads the agency’s
cost/investment over the useful life of the
product

Present value
 The relative worth of a single dollar changes over time
 Accurate comparisons are made by applying a discount rate
(inflation) to
• Costs
• Returns
Tool Can Be Used throughout Project

Prospectively – Planning Phase

Implementation Phase

Retrospectively – Post Implementation
The journey continues…
The Tool Users Network

Meets monthly via webinar

Participants bring potential ROI projects to discuss

Currently working with
Goals of the Tool Users Network

Provide instruction on tool use

Provide peer/expert support/advice for ROI projects
undertaken

Develop knowledge on how ROI analysis can be applied
to public health improvement projects

Build ROI capabilities in public health agencies

Inform future iterations of the tool
Join Us!
Karl Ensign, Director of Evaluation, ASTHO
[email protected]
571.527.3143