Business Case for Quality in Healthcare

Instructions for Using the Return on Investment Template

Proposed Use:
The return on investment (ROI) template was designed to allow payer organizations to retrospectively analyze the
ROI on quality enhancing interventions (QEIs).

Data Requirements:
Use of the template requires input of:
1. Personnel and non-personnel costs incurred in the planning and development phase of the QEI
2. Personnel and non-personnel costs incurred to support the on-going operation of the QEI
3. Paid claims for the intervention group at baseline (pre-intervention) and post-intervention, expressed on a per-
member, per-month basis
4. Number of member months per year for the intervention group
5. Number of months per year the QEI was operational

Optional Features:
The template allows for:
1. Entry of paid claims data for a control or comparison group
2. Discounting of cash flow estimates using the organizational opportunity cost of capital

Data Entry Instructions:

Green shaded cells are input cells which allow direct data input by users
Yellow shaded cells are intermediate calculations
These cells contain formulas and should not be edited
Grey shaded cells are key outputs
These cells contain formulas and should not be edited

Additional instructions can be found in the document, Using the Return on Investment Template, that accompanies
this EXCEL model.
 Business Case for Quality in Healthcare
Initial Investment Costs of QEI (Prior to Implementation)
Project Title
Organization
Location

Reporting Period:

Cost Category
Personnel Salary and
Top Leadership Name / Notes FTE % Fringe Cost
Medical director 0.00% $ -
Principal investigator 0.00% -
Quality director 0.00% -
Chief Financial Officer 0.00% -
Chief Information Officer 0.00% -
Other leadership 0.00% -
Research and Data Analysis
Data analyst 0.00% -
Statistician 0.00% -
System analyst 0.00% -
Other data and analysis 0.00% -
Administrative
Program manager 0.00% -
Financial operations director 0.00% -
Clerical outreach worker 0.00% -
Outreach worker 0.00% -
Rural outreach worker 0.00% -
Consultant 0.00% -
Quality manager 0.00% -
Support staff 0.00% -
Other administrative 0.00% -
Clinical
Nurse practitioner 0.00% -
Nurse case manager 0.00% -
Nurse educator 0.00% -
Medical management manager 0.00% -
Intervention-specific clinical staff 0.00% -
Other clinical staff 0.00% -
Contracted services
Training and education
Other contracted services
Office operations
Printing
Office supplies/postage
Books/periodicals
Travel/conferencing
Training
Telephone
Other office operations
Equipment
Computer hardware
Software
Other equipment
Construction/renovation
Other initial costs
Subtotal direct costs, initial investment $ -
Indirect cost percentage (if % of direct costs)
Indirect costs, initial investment* -

Total costs, initial investment $ -

Notes:
*If method for calculating indirect costs is other than as a % of direct costs, enter indirect cost amount here and note method of allocation
 Business Case for Quality in Healthcare
Operating Costs of QEI (Post-Implementation)
Project Title
Organization
Location

Year 1 Year 2 Year 3

Cost Category Reporting Period:
Personnel Salary and Salary and Salary and
Top Leadership Name / Notes FTE % Fringe Cost FTE % Fringe Cost FTE % Fringe Cost
Medical director 0.00% $ - 0.00% $ - 0.00% $ -
Principal investigator 0.00% - 0.00% - 0.00% -
Quality director 0.00% - 0.00% - 0.00% -
Chief Financial Officer 0.00% - 0.00% - 0.00% -
Chief Information Officer 0.00% - 0.00% - 0.00% -
Other leadership 0.00% - 0.00% - 0.00% -
Research and Data Analysis
Data analyst 0.00% - 0.00% - 0.00% -
Statistician 0.00% - 0.00% - 0.00% -
System analyst 0.00% - 0.00% - 0.00% -
Other data and analysis 0.00% - 0.00% - 0.00% -
Administrative
Program manager 0.00% - 0.00% - 0.00% -
Financial operations director 0.00% - 0.00% - 0.00% -
Clerical outreach worker 0.00% - 0.00% - 0.00% -
Outreach worker 0.00% - 0.00% - 0.00% -
Rural outreach worker 0.00% - 0.00% - 0.00% -
Consultant 0.00% - 0.00% - 0.00% -
Quality manager 0.00% - 0.00% - 0.00% -
Support staff 0.00% - 0.00% - 0.00% -
Other administrative 0.00% - 0.00% - 0.00% -
Clinical
Nurse practitioner 0.00% - 0.00% - 0.00% -
Nurse case manager 0.00% - 0.00% - 0.00% -
Nurse educator 0.00% - 0.00% - 0.00% -
Medical management manager 0.00% - 0.00% - 0.00% -
Intervention-specific clinical staff 0.00% - 0.00% - 0.00% -
Other clinical staff 0.00% - 0.00% - 0.00% -
Contracted services
Training and education
Other contracted services
Office operations
Printing
Office supplies/postage
Books/periodicals
Travel/conferencing
Training
Telephone
Other office operations
Equipment
Computer hardware
Software
Other equipment
Construction/renovation
Other initial costs
Subtotal direct costs, operating $ - $ - $ -
Indirect cost percentage (if % of direct costs)
Indirect costs, operating* $ - $ - $ -

Total costs, operating $ - $ - $ -

Notes:
*If method for calculating indirect costs is other than as a % of direct costs, enter indirect cost amount here and note method of allocation
 Business Case for Quality in Healthcare
PMPM Paid Claims Baseline and Post Implementation - Intervention Group

Project Title
Organization
Location

Actual Per Member Per Month Payments

Category of Claims Baseline pmpm Intervention Yr 1 Intervention Yr 2 Intervention Yr 3

Inpatient care
Long term care, facility-based
Outpatient care
Office-based care
Emergency department care
Ambulance and emergency transportation
Home health care
Pharmacy
Other
Total $ - $ - $ - $ -

Estimated Savings (Increase) from QEI

Per Member Per Month Savings (Increase) Over Baseline

Category of Claims Intervention Yr 1 Intervention Yr 2 Intervention Yr 3

Inpatient care 0.00 0.00 0.00
Long term care, facility-based 0.00 0.00 0.00
Outpatient care 0.00 0.00 0.00
Office-based care 0.00 0.00 0.00
Emergency department care 0.00 0.00 0.00
Ambulance and emergency transportation 0.00 0.00 0.00
Home health care 0.00 0.00 0.00
Pharmacy 0.00 0.00 0.00
Other 0.00 0.00 0.00
Total Estimated PMPM Savings (Increase) $ - $ - $ -
x Average Monthly Membership for QEI
Total Estimated Monthly Savings (Increase) $ - $ - $ -
x Number of Months QEI was Operational During Year

Total Estimated Savings (Increase) $ - $ - $ -

 Business Case for Quality in Healthcare
PMPM Paid Claims Baseline and Post Implementation - Control Group

Project Title
Organization
Location

Actual Per Member Per Month Payments

Control
Category of Claims Baseline pmpm Control Yr 1 Control Yr 2 Control Yr 3
Inpatient care
Long term care, facility-based
Outpatient care
Office-based care
Emergency department care
Ambulance and emergency transportation
Home health care
Pharmacy
Other
Total $ - $ - $ - $ -

Estimated Savings (Increase) in Control Group

Per Member Per Month Savings (Increase) Over Baseline

Category of Claims Control Yr 1 Control Yr 2 Control Yr 3

Inpatient care 0.00 0.00 0.00
Long term care, facility-based 0.00 0.00 0.00
Outpatient care 0.00 0.00 0.00
Office-based care 0.00 0.00 0.00
Emergency department care 0.00 0.00 0.00
Ambulance and emergency transportation 0.00 0.00 0.00
Home health care 0.00 0.00 0.00
Pharmacy 0.00 0.00 0.00
Other 0.00 0.00 0.00
Total Estimated PMPM Savings (Increase) $ - $ - $ -
 Business Case for Quality in Healthcare
PMPM Paid Claims Baseline and Post Implementation - Incremental (Intervention - Control)

Project Title
Organization
Location

Actual Per Member Per Month Payments

Category of Claims Baseline pmpm Intervention Yr 1 Intervention Yr 2 Intervention Yr 3

Inpatient care - - - -
Long term care, facility-based - - - -
Outpatient care - - - -
Office-based care - - - -
Emergency department care - - - -
Ambulance and emergency transportation - - - -
Home health care - - - -
Pharmacy - - - -
Other - - - -
Total $ - $ - $ - $ -

Estimated Incremental Savings (Increase) from QEI

Incremental Per Member Per Month Savings (Increase) Over Baseline

Category of Claims Incremental Yr 1 Incremental Yr 2 Incremental Yr 3

Inpatient care 0.00 0.00 0.00
Long term care, facility-based 0.00 0.00 0.00
Outpatient care 0.00 0.00 0.00
Office-based care 0.00 0.00 0.00
Emergency department care 0.00 0.00 0.00
Ambulance and emergency transportation 0.00 0.00 0.00
Home health care 0.00 0.00 0.00
Pharmacy 0.00 0.00 0.00
Other 0.00 0.00 0.00
Total Estimated Incremental PMPM Savings (Increase) $ - $ - $ -
x Average Monthly Membership for QEI 0 0 0
Total Estimated Incremental Monthly Savings (Increase) $ - $ - $ -
x Number of Months QEI was Operational During Year 0 0 0

Total Estimated Incremental Savings (Increase) $ - $ - $ -

 Business Case for Quality in Healthcare
Return on Investment Analysis

Project Title
Organization
Location

Discount Rate 3%

Intervention Year Total

Pre-implementation 1 2 3 (All Years)
Investment in QEI
Initial Investment Costs $ -
Operating Costs - - -
Total Annual Investment Costs - - - -
x Present Value Factors 1.00 0.97 0.94 0.92
Total Discounted Annual Investment Costs $ - $ - $ - $ - $ -

Savings (Increases) from QEI

Estimated Utilization Increases $ - $ - $ -
Estimated Utilization Savings - - -
Total Annual Savings (Increases) - - -
x Present Value Factors 0.97 0.94 0.92
Total Discounted Annual Savings (Increases) $ - $ - $ - $ -

Return on Investment Summary

Undiscounted Annual Net Cash Flows $ - $ - $ - $ - $ -
Cumulative ROI 0.00 0.00 0.00 0.00
Net Present Value -
Internal Rate of Return NA
 Business Case for Quality in Healthcare
Return on Investment Analysis

Project Title
Organization
Location

Discount Rate 3%

Intervention Year Total

Pre-implementation 1 2 3 (All Years)
Investment in QEI
Initial Investment Costs $ -
Operating Costs - - -
Total Annual Investment Costs - - - -
x Present Value Factors 1.00 0.97 0.94 0.92
Total Discounted Annual Investment Costs $ - $ - $ - $ - $ -

Incremental Savings (Increases) from QEI

Estimated Incremental Utilization Increases $ - $ - $ -
Estimated Incremental Utilization Savings - - -
Total Annual Incremental Savings (Increases) - - -
x Present Value Factors 0.97 0.94 0.92
Total Discounted Annual Incremental Savings (Increases) $ - $ - $ - $ -

Incremental Return on Investment Summary

Undiscounted Annual Net Cash Flows $ - $ - $ - $ - $ -
Cumulative ROI 0.00 0.00 0.00 0.00
Net Present Value -
Internal Rate of Return NA