How to Assess the ROI of Your Population Health Initiative

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In this brave new world of value-based healthcare, it shouldn’t come as a surprise that investing in population health management (PHM) is a requirement for success.

When I receive a request to invest in PHM, I’m not always sure what precisely to fund or how best to measure the ROI of the investment. Frankly, not every PHM intervention makes sense for every situation. It is important to assess which interventions bring the most benefit and develop potential ROI measures prior to making any financial commitments.

Assessing the potential ROI for investments in PHM, in a clear, understandable framework, can help organizations systematically identify and prioritize their PHM investments.

Methods for Assessing Population Health Management Investments

I see so much potential for PHM that will positively impact individual and entire populations of patients. Incentives are evolving and new success measures are needed. The terms covered lives and risk stratification need to become part of our everyday vocabulary.

Determining where to focus resources starts by asking these questions:

  • Does this investment help us grow?
  • Does this strategy help us maintain our margin?
  • Are we balancing risk and reward?
  • Does it make sense to build this new tool/intervention ourselves, or should we outsource?

Assessing which investments will provide the best care for a given population at an affordable rate is rarely cut and dry. It requires partnering with physicians and clinicians to understand the potential impact of an intervention and the estimated timeframe for the investment to begin paying dividends.

Creating a tool to guide this process is extremely helpful. One method is to create a matrix with cost and quality, risk and reward, or cost and benefits. (In the example below, remote monitoring is the clear winner in the cost vs. benefit assessment with the lowest cost and highest benefit).

cost quality risk reward matrix

Another methodology for ranking PHM interventions are scoring sheets. The assessment criteria is listed in the columns and potential investments are displayed in the rows. Each box is scored on a scale of 1-3, adding a weighting element to the assessment.

Fit with overall strategy Growth potential Positive margin impact Value to member Total
Care management
Remote monitoring
Public policy
Wellness programs

Criteria to Assess PHM Investments

Determining an organization’s investment criteria in this new era of PHM is absolutely essential. These four overarching criteria are a good starting point for assessing PHM opportunities:

  • Alignment with overall strategy: What is the nature, scope, and purpose of the PHM strategy? Does the proposed intervention fit with the overarching strategy of the organization?
  • Growth potential: How will the intervention impact growth? Will it attract and engage patients?
  • Positive margin impact: What is the cost of the intervention? What is the ROI? Is there a potential for growth or eliminating waste?
  • Value to patient: Will this intervention make a positive difference in the quality of care delivered and enhance the patient experience?

An additional factor to consider is diversification of the organization’s PHM portfolio. It’s too risky for most organizations to invest all their resources in a single strategy. PHM provides the organization an opportunity to employ multiple interventions and pilot projects, refining the processes over time.

Putting Assessment to the Test

There is no easy way to develop and execute new PHM strategies. There is, however, a simple way to get started. The following exercise is designed to provide a starting point.

Several team members of Health Catalyst led by Leslie Falk, Senior Managing Editor, developed various interventions for improving PHM. Several enhancements that could be considered for the payer/health plan sector are presented below. Please participate in this simple exercise with your teams. Assign a score from 1 to 5 (with 5 representing the greatest impact on population health) for each of the recommendations below.

Proposed Intervention Rating
Provide care managers and patient navigators.

Many health plans provide care managers, healthcare professionals (Registered Nurses, Social Workers, and Physical Therapists) who help provide an array of services to assist individuals and families cope with complicated health or medical situations and empower the patient to achieve a better quality of life. Patient navigators are the glue between patients and providers. They understand the patients’ needs, social and physical environment. They know the care process physiology, evidence-based interventions, and the healthcare system ecosystem intimately.

Provide advanced care planning. Ensure plan participants have a clear understanding of advanced care planning. Assist patients in determining what types of decisions need to be made and encourage them to consider those decisions before they become necessary. Instructing patients in creating an advance directive, a legal document that goes into effect if the patient becomes incapacitated and is unable to speak for themselves.
Be active in public policy. Drive public policy and a national recognition of Physician Assistants, Nurse Practitioners, and Doctors of Nursing Practice. Providing them with proper recognition and compensation will assist in meeting the growing demand for healthcare services.
Evaluate all sites of care. Ensure appropriate reimbursement for lower-cost treatment and rehabilitation facilities, such as in-home care and patient-centered medical homes Ensure incentives are in place to reward desired behavior.
Sponsor internal employee wellness programs. This could include education on healthy eating habits, exercise participation programs, and automated analytics with data capture through device integration.
Invest in, and provide, remote monitoring and care capabilities. In-home tele-monitoring, video conferencing, and pharmaceutical automated medication dispensing machines (where appropriate) should be considered.
Provide content, analytics, and diffusion support. Health plans have invested in quality improvement professionals to work with their provider partners. The services provided include helping organizations to develop and sustain evidence-based order sets and protocols. Analytic tools can provide ongoing metrics and analysis to determine the impact of interventions. Provider engagement programs, data governance, and operational changes enable providers to make the intervention changes part of their everyday processes.
Influence public policy regarding payments for delivering value (preventive care, reduced readmissions) with no additional monitoring and reporting requirements. Integrated IT systems, automated metrics, and analytics with common state and federal value/quality definitions are a must for measuring value and quality.
Nurses and PHM. Measuring the value nurses deliver to PHM initiatives and influencing public policy to recognize the importance of nurses in PHM. For example, many studies have documented the value of nursing education as it relates to reduced hospital readmissions.
Your ideas:

Which of these ideas has the greatest potential to improve the health of populations at a reasonable cost? Which is the least helpful? What ideas would you add to this list? Please share your ideas with us and we may publish them in a future article.

Investments in PHM offer the potential for a profound ROI to the organization. It’s important to remember however, not every PHM intervention applies to every situation. Assessing which interventions deliver the greatest impact, as well as determining when the investment will begin paying dividends, are crucial to achieving success in the brave, new world of PHM.

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