The Limits of the "Return on Investment" Measure in Population Health, Disease and Care Management Programs

But where's the money?

The Disease Management Care Blog has always been leery of the "return on investment" (ROI) metric in health care. It knows that there are precious few health care interventions that actually "save" money. Many prevention, wellness and disease management programs     - depending on the analysis -  can cost money since they a) add additional resources to a system with already high fixed costs with b) a short one-year time horizon.

Yet, the good news is even if a program isn't successful in slowing the rate of cost inflation (or "bending the curve," which represents the savings), it can still represent a great value.  That's because the additional benefit represents significant benefit for each additional dollar of spending.

That's the message in this recent JAMA Viewpoint editorial Assessing Value in Health Care Programs authored by Kevin Volpp, George Loewenstein and David Asch. They offer up a thought experiment. Consider, they say, a state-of-the-art medication compliance campaign for heart attack victims that avoids a number of costly hospitalizations.  The price tag at $2000 has a positive "ROI" because the investment is less than the avoided cost of the hospitalizations.  However, if the price tag is $3000 and the investment is now greater than the cost of the hospitalizations, the ROI is "negative" even though the same number of patients didn't have to be hospitalized.

The DMCB recommends readers keep this manuscript/link handy the next time some Finance weenie demands an "ROI calculation."

Speaking of readers, the DMCB is happy to announce that it just hit 500 Twitter followers.  That's in addition to more than 500 "RSS" subscribers, 461 Google Reader subscribers and thousands of return visitors per month.  The DMCB knows each was earned one person at a time.