What Are You Worth?

Demonstrating the Value of Your Program to Your Community and

Potential Investors

Ethan Joselow, MPH

Presentation Goals

To give an overview of common methods for demonstrating your value.

To provide a set of tools that you can use to define the value of your program for:– Your community– Potential investors

• (grantmakers, the state, the community itself)

Presentation Structure1. Understanding the costs avoided, savings

enjoyed

– Cost-benefit analysis

– Cost-comparison analysis

2. Social Costs Avoided

– Sick days, wages

3. Health Costs Avoided

– ER visits, hospitalizations

• What were your program’s costs?– Budget: Fixed and recurring costs…

• What costs were avoided as a result?– Lost time, wages, health care costs…– AKA Parts 2 and 3 of this presentation.

• Are the avoided costs greater than the program’s costs?

1. Cost-Benefit Analysis

Challenge: How do you find savings?

Looking at a program on its own…

1. Cost-Benefit Analysis

Program Element Total Cost

Survey administration $20,000

Medical screening $50,000

Educational programs $25,000

Administrative costs $5,000

TOTAL $100,000

Return on Investment Findings

Expenditures $100,000

Program Benefit (savings in health care expenditures) $400,000

Savings $300,000

Return On Investment 4:1

The Company X Worksite Wellness Program

Adapted from RTI-UNC Center of Excellence in Health Promotion Economics November 2006 Volume 1, Issue 3.

What are your

savings?

1. Cost Comparison Analysis

• Need to know:– Upfront costs– Recurring (unit) costs– Number of units delivered

• Ideal for:– Considering efficiency and practicality– Talking to funders about long-term savings from an

initial investment

It’ll pay for itself!

Comparing two otherwise equal program choices…

1. Cost-Comparison AnalysisProgram Goal: To monitor blood pressure, weight and a few other clinical measures for a homebound rural population.

Plan A: Plan B:

Nurse Home Visits Telehealth Monitoring

Upfront Costs $1,000 $10,000

Recurring Costs $30/visit $3/upload

Cost after 300 units $10,000 $10,900

Cost after 600 units $19,000 $11,800

Cost after 900 units $28,000 $12,700

Value Statement: After 900 units of monitoring, the telehealth system saves us $15,300 over nurse visits.

2. Social Costs Avoided• Information on avoided sick days, lost

productivity saved through services you provide.

• Evidence and Estimates.• Especially useful for speaking to employers and

their representatives.

2. Social Costs AvoidedWhat do you need to make an estimate?

• Your evaluation data– Number served, cost of the intervention.

• Research on the value of your intervention– Journal articles, evaluations of similar

programs…

• Local information– Average wage, labor participation rate…

2. Social Costs: ExamplesThe Facts:• In 2004, Georgia Federally-Qualified

Community Health Centers (FQHCs) treated:– About 24,000 Diabetic Workers.– About 12,000 Hypertensive Workers.

• The state average annual wage was:– About $24,000 per year.

…evaluation data

…local information

2. Social Costs: Examples

The Research:

“Economic Consequences of Diabetes Mellitus in the US in 1997” Diabetes Care, 1998 Feb; 21(2):296-309.Berndt ER, et al. “Workplace Performance Effects from Chronic Depression and its Treatment”. Journal of Health Economics, 1998; 17: 511-535.

“The average untreated diabetic has 8.3 additional sick days a year. Proper diabetes management can reduce sick days to 1.4 per year.”

“A person with uncontrolled hypertension works an average of 6 percent fewer hours per week compared to someone receiving proper care and attention. This works out to about 20 days of work lost a year.”

…or about 3% more workdays.

…or about 6% more workdays.

2. Social Costs AvoidedThe Savings:

• Sick days earnings saved by treatment of diabetes: $8,352,470– Cost to treat: $5,961,144

• Sick day earnings saved by treatment of hypertension: $34,907,048– Cost to treat: $10,138,394

…a return of $1.40 for each dollar spent.

…a return of $3.50 for each dollar spent.

3. Health Costs Avoided

• Medical Expenditures Per Patient– Do you promote physical activity?– If so, you may be saving $1365 a year in

medical expenses for every inactive patient you get moving.†

– Ask the local hospital how much of that money is likely coming out of their pockets.

– You save them money.

† Pratt M, Macera CA, and Wang G. Higher Direct Medical Costs Associated With Physical InactivityThe Physician And Sportsmedicine 28(10). October 2000 . Dollar figure for 2006 based on medical inflation estimated between 1987 and 2006 by the CMS National Health Expenditures tables.

3. Health Costs: Diabetes Savings

• Research shows a decrease in health care costs by reducing HbA1c levels of diabetics.

Adapted from: Gilmer TP, O'Conner PJ, Rush WA, Crain AL, Whitebird R, Hanson AM, Solberg LI: Predictors of Health Care Costs in Adults with Diabetes. Diabetes Care 28(1): 59-64, 2005.

…What does this mean for us?

Adapted from: Gilmer TP, O'Conner PJ, Rush WA, Crain AL, Whitebird R, Hanson AM, Solberg LI: Predictors of Health Care Costs in Adults with Diabetes. Diabetes Care 28(1): 59-64, 2005.

Patient Classification

HbA1C 10%-9% HbA1C 9%-8% HbA1C 8%-7%

Cost Savings

x # of Patients

= SAVINGS

Cost Savings

x # of Patients

= SAVINGS

Cost Savings

x # of Patients

= SAVINGS

Diabetes w/ Heart Disease and Hypertension

$2,675 _____ $ ______ $3,373 _____ $ ______ $966 50 $ 48,000

Diabetes w/ Heart Disease $2,764 _____ $ ______ $2,620 _____ $ ______ $750 _____ $ ______

Diabetes w/ Hypertension $1,503 _____ $ ______ $1,424 _____ $ ______ $407 _____ $ ______

Diabetes Only $1,071 _____ $ ______ $1,015 _____ $ ______ $290 _____ $ ______

$966 x 50 = $48,000 savings in health care

costs

3. Health Costs: Diabetes Savings

A Few Sources

• Web-based ROI calculators you can use NOW.– Alcohol Cost Calculator:

• http://www.alcoholcostcalculator.org/

– Obesity Cost Calculator:• http://www.businessgrouphealth.org/healthtopics/

obesitycostcalculator.cfm

– ROI Forecasting Calculator:• http://www.chcsroi.org/Welcome.aspx

Our Library of Resources1. Access to Care and ER Visits2. Behavioral Health3. Case Management and Promotoras4. Data Resources and Methodology5. Diabetes and Obesity6. Economic Impact Analysis and General ROI7. HIT8. Maternal/Child Health9. Migrant/Seasonal Farmworkers10.Prescription Drugs

The CHSD ROI Calculator

• A stand-alone tool developed by the TA team especially for rural health.

• Download the calculator at http://CHSDOnline.com

Questions?

Ethan Joselow

ejoselow@gsu.edu

404-413-0299