Partnerships between health care providers and community-based organizations (CBOs) can be complex to navigate, yet are essential for addressing health-related social needs (HRSN). These critical partnerships continue to evolve and improve the field of complex care for patients, but the financial components are often ambiguous. To help clarify these financial aspects, the ROI Calculator for Partnerships to Address Social Determinants of Health (ROI Calculator) was developed by the Commonwealth Fund to assist CBOs and their health care partners in designing financial arrangements to effectively fund social services for people with complex needs. HealthBegins now houses the publicly available calculator, and with support from the Commonwealth Fund and The SCAN Foundation, created a new “quick mode” feature. This mode includes prepopulated, editable, essential data, streamlining the use of the tool for users.
The Better Care Playbook recently spoke with Kathryn Jantz, Senior Associate at HealthBegins, to understand how health care organizations and CBOs can use the ROI Calculator. Our discussion explored how the ROI Calculator can be used to help address patients’ HRSN.
Q. What is the value of the ROI Calculator for health care and social care organizations that are looking to create partnerships?
A: In recent years, health care organizations have been transitioning from providing temporary support, such as grants, to CBOs to establishing financially sustainable partnerships. The ROI Calculator helps both health care organizations and CBOs understand the financial benefits to health care organizations of social investments, especially for stakeholders who are new to ROI concepts. The hope is that with increased transparency and shared understanding of how health care organizations benefit from social investments, funding streams to critical social resources will increase and stabilize.
This calculator is intended to support CBO program staff in increasing their financial expertise around their program by allowing them to quickly run different models and test how changing factors, like the number of program enrollees in a program, affects ROI success.
Q. What variables in program and payment design impact ROI calculation?
A: Foundationally, ROI is comparing program costs to program financial benefits to the investing entity.
When we talk about program costs, the ROI Calculator looks at the number of enrollees, the intensity of the intervention, the cost per month or per service delivered, and upfront costs. Each of these can have a significant impact on overall program costs.
On the other hand, when we look at program benefits the “quick mode” ROI Calculator predicts impacts of the social intervention on key health care outcomes. The “quick mode” calculator is based on a literature database of evidence on the following types of programs: supportive housing, legal assistance, transitional housing, care management by a social worker, medical respite/recuperative care, care management by a community health worker, medically tailored meals, care management by a multidisciplinary team, and meals. For programs that are similar but not the same as the literature, the results may be less accurate. In addition, the "quick mode" calculator also links only to a very specific set of outcome utilization metrics, including hospital admissions and readmissions; skilled nursing and rehab facility admissions; emergency department visits; and outpatient doctor visits. These metrics are the biggest drivers of potentially avoidable costs in the health care system, but there are other drivers that are not included here. For example, you might see impacts in areas like pharmacy or even durable medical equipment costs.
Q. How are individuals using the ROI Calculator or an ROI framework?
A: We’ve found that people have primarily used the calculator in two ways.
The first way we’ve seen the calculator being used is for prediction. People can use the ROI Calculator to estimate the potential impacts of a program to help with early conversations as well as negotiations with prospective partners. We encourage those using it for predictive models to provide ranges of impact knowing that with each outcome there is some level of uncertainty. Acknowledging this uncertainty upfront is important for both health care and CBOs in creating successful partnerships.
The second way is for evaluation. Some users modify the ROI Calculator data with their current program experience to calculate ROI retrospectively or with a goal of evaluation. Users have told us that having a way to demonstrate HRSN programs work is a real problem. Using the ROI framework for evaluation is one way to do that.
We encourage users to think long-term about the use of any projection or evaluation. For example, if a health care organization and their CBO partner make a prediction about ROI, but the program outcomes differ from the predicted outcomes, the financial impacts may fall short of those initially calculated. Similarly, if the retrospective ROI was based on a population that is different in some way than the anticipated future population, it can be unreliable. These shortfalls can have a significant impact on the ability for the two organizations to move forward in a sustainable or scaled way.
Q. How can stakeholders understand and apply the evidence on health care and cost outcomes?
A: In developing the ROI Calculator, the Commonwealth Fund did a robust survey of the literature on cost utilization impact and focused on studies with moderate or strong design. They identified the averages for data on program impact, but there’s a wide range. Unlike a new drug, we don't conduct randomized controlled trials for social services, so the evidence tends to be more observational and less robust, making it harder to extrapolate and replicate findings for specific circumstances.
In addition, the “quick mode” version includes data from a national pool, which may need to be adjusted for either local health care costs, policy factors, and utilization patterns. Users can make common sense adjustments and/or use publicly available data.
Q. What are the key variables in program and payment design that inform what the ROI Calculator will compute?
A: Some CBOs who have used the "quick mode" calculator report that the ROI was lower than the CBO had hoped for. We have a few pieces of advice:
- Set realistic expectations. A return of double the investment is unrealistic for any investment. That kind of rate is unrealistic compared to other sectors.
- Try to minimize fixed and upfront costs. Many organizations create these partnerships as pilot programs, but pilots tend to have high initial fixed costs and insufficient ROI to cover initial start-up costs. It’s crucial to evaluate the ROI when the program is at full capacity beyond the pilot phase. A small population size can make it difficult to demonstrate ROI. As an example, one organization that faced challenges with high overhead costs was a program in which staff provided short-term interventions and support in clinical settings and connected individuals experiencing intimate partner violence to resources. Despite the importance of this work, their caseload was small and initial set up costs were high.
- Try to capture all health care savings and revenue that the health care organization will experience. For instance, how much time could the program save for a nurse who can be caring for additional patients instead of addressing their social needs? We also see challenges with linking financial revenue that the health care entity might be getting. There has been a push recently for incentive metrics tied to equity factors and value-based payment models that have quality metrics associated. Incorporating those metrics requires having a logic model for how a social care intervention will impact a clinical intervention.
Q. How should stakeholders consider limitations in focusing on ROI when evaluating the value of addressing health-related social needs?
A: For some financial stakeholders, ROI can be their sole operating focus, but this narrow focus has limitations. The structural inequities in the current system of health and social care financing are baked into the financial drivers that inform ROI. Looking more broadly at value on investment or social return investment can support the transition to a better system. These approaches acknowledge those values that are not yet tied to financial drivers, but we believe can be, should be, and hopefully will be in the future.
There are three high-level limitations to consider regarding an ROI focus: (1) Monetary and non-monetary benefits: Earlier in this interview we talked about the domestic violence example. A nurse working there who has more time and more joy is less likely to leave her position. That is a monetary and non-monetary benefit that should be captured in a robust financial model; (2) Non-health care benefits: ROI doesn’t account for benefits to other systems. In our previous example, if there's interpersonal violence in the home, that increases the likelihood of child welfare involvement, which has a cost to the state and a cost to the family, which are not captured in ROI metrics; and (3) Equity: ROI also fails to center equity considerations. For the intimate partner violence example, there is often lower health care utilization in intimate partner violence, at least for a period of time, because the partner is keeping them away from systems that might be providing support. And since they are using health care minimally there isn't an opportunity to save health care costs or revenue opportunity related to people who are not using the health care system.
Value is subjective. When you think about real estate, the value of a home has nothing to do with the cost of the bricks and mortar. It has to do with how much someone's willing to sell for and how much someone's willing to buy it for. And when you think about the value of an hour of a nurse's time, it's not just translating what 30-minutes of their time costs, but it's also thinking about things like retention and job satisfaction. For example, if spending extra time with a patient reduces turnover and the nurse feels more joy and satisfaction, that adds value beyond cost calculation.
The “quick mode” tool has many built-in links like definitions, links to resources, evidence guides, and other resources. If you’re using the ROI Calculator, I encourage you to click through all of those linked areas so you can really maximize the tool to the fullest.
For more information, please explore this additional resource and webinar featuring the ROI Calculator on the Better Care Playbook.