Estimating Return on Investment for Public Health ImprovementsUpdate from ASTHO --

Karl Ensign, Director of EvaluationAssociation of State and Territorial Health Officials

(ASTHO)

Ninth Annual Public Health Finance RoundtableBoston, MA

November 3rd, 2013

Support for ROI Tool & Capacity Building Assistance

This project was supported by funds made available from the Centers for Disease Control and Prevention, Office for State, Tribal, Local and Territorial Support (CDC, OSTLTS)

Grant #5U38HM000454-05 The content of this presentation are those of the

authors and do not necessarily represent the official position of or endorsement by the Centers for Disease Control and Prevention

Helps answer the following questions: Are we making the right

investments?

Are we becoming more efficient?

What is our budget accomplishing?

What returns do different investments yield?

Must be done thoughtfully and carefully

ROI is one way of measuring and communicating public health effectiveness in a manner that is particularly salient for policymakers, funders, administrators and the general public

WHERE AND HOW HAS ROI BEEN USED IN PUBLIC HEALTH? Public health programs (injury prevention, tobacco prevention

and control)

Aggregate public health spending (Glen P. Mays, UKY)

Improvement projects undertaken by agencies(focus of new ASTHO tool)

ROI of QI – Advantages and Disadvantages

ROI is more immediate Timeframe is shorter

ROI accrues more directly to the agency Tends to be narrower in scope

Return is more modest

Measures ROI for improvement projects QI projects undertaken through the National Public

Health Improvement Initiative (NPHII) ASTHO developed tool in partnership with

OSTLTS Workgroup provided input and guidance

CDC, state and local agencies, foundations, academia

Developed by Glen Mays, University of Kentucky

Beta tested by Connecticut, Maine, and Virginia

THE NEW ROI TOOL!!

Pathways to Realizing ROI for QI Reductions in standard operating

costs• Greater efficiencies realized

Revenue enhancements• Increased cost reimbursement

Increased productivity of agency functions• Increased service encounters

Decreased time to produce outputs• Reduced cycle time process

Achievement of health outcomes• Tool accommodates this

LET’S SEE HOW IT WORKS!

Basic Information -- Improvement Project

Planning and Development Costs

Cost Category Pre-Implementation(Baseline)

Post-Implementation (Year 1)

Year 2…

Personnel Costs

Non-Personal• Contracted Services• Office Operations• Facilities/Maint/Rent• Communications• Equipment• Construction/RenovationOther Direct Costs

Indirect Costs

Routine Operating Costs

Outcomes/OutputsCost Category Pre-

Implementation

Post-Implementation (Year 1)

Year 2…

Service Units Delivered

Required Production Time

Target Population Reach

Other Outcomes/Outputs

How the Tool Calculates ROI ROI = Benefits – Costs

Costs

Tool calculates ROI in two ways:Improvements in Routine Operations – Investment Costs Investment Costs

(Routine Operations + Other Outcomes) – Investment Costs Investment Costs

Incorporates Standard Accounting Practices in ROI Calculation

Amortization The cost of an investment should not be

absorbed entirely in the first year Amortization rate spreads the agency’s

cost/investment over the useful life of the product

Present value The relative worth of a single dollar changes over time Accurate comparisons are made by applying a discount

rate (inflation) to• Costs • Returns

Tool Can Be Used throughout Project Prospectively – Planning Phase

Implementation Phase

Retrospectively – Post Implementation

The journey continues…

The Tool Users Network

Meets monthly via webinar Participants bring potential ROI projects to discuss Currently working with

Goals of the Tool Users Network

Provide instruction on tool use Provide peer/expert support/advice for ROI

projects undertaken Develop knowledge on how ROI analysis can be

applied to public health improvement projects Build ROI capabilities in public health agencies Inform future iterations of the tool

Join Us!Karl Ensign, Director of Evaluation, ASTHOkensign@astho.org571.527.3143