Return on Investment | inlp-toolkit

Calculating a Return on Investment

As a conclusion to the INLP Sepsis Improvement program, a business case analysis of the outcomes of the program and impact on the participating hospitals was conducted.

The purpose of this section is to:

Provide an example of a Return on Investment (ROI) - INLP Sepsis Improvement program
Assess the effectiveness of identifying cases of sepsis and applying industry best practices
Determine the outcome of the practices by assessing the sepsis related mortalities
Review lessons learned

Base of the ROI: Individual Hospital Level

Base Calculations

Average Length of Stay (ALOS): base unit for cost estimation

OSHPD HAFD (financial) reports
Hospital specific reports
Exclude psychiatric, long-term care, and newborns when possible

Cost per Day

OSHPD HAFD data from 2009
Hospital specific reports

ALOS Assumptions

Septic Patients Length of Stay = 14.5 days

Severe Sepsis Patients Length of Stay: 2x longer

Literature suggests severely septic patients can stay up to 6 times longer in intensive care units (ICU). Since severely septic patients in the ICU are already counted in the ALOS in OSHPD, the conservative calculation of two times longer was used.

ALOS x cost per day = average cost of a hospital stay

Sum of all hospital stays = program ROI

Cost Methodology

To best determine the cost savings associated with sepsis, an industry accepted base cost of $22,100 (in 2008) was used and escalated by 1% each year as increases in cost were estimated to be at most 1% each year*

2008 = $22,100
2009 = $22,321
2010 = $22,544
2011 = $22,770

*Data Source: Institute of Medicine Medication Safety

Sepsis Cases and Mortalities Methodology

Cases of sepsis and sepsis related mortalities were determined by using coded data reported by each individual hospital participant. Two analyses of the data were conducted to assess the relative improvement:

In the first approach, data for 2008 and 2009 was annualized in order to best compare cost savings
In the second approach, data was compared for July – December of each year

Case Mix Index (CMI) is a risk score that is assigned by CMS based on severity of coded cases

CMI was used for each hospital and applied by year, to adjust cost based on severity scores

Sepsis Improvement: Investment and Savings

Based on annualized estimates, the program realized about $1.1M savings due to reduced mortalities and improved treatment

*Data is shown in thousands

Lessons Learned

All hospitals used different accounting systems and collected financial data differently - the INLP team needed to spend time with each system and make a lot of friends.
Make sure to understand why you are collecting the data ahead of time. Data needed for improvement are different data elements needed for research. Plan ahead and include all possible stakeholders.
Determine ahead of time which costs will be associated to the improvement effort and which will not. For example, grant dollars used to furnish staff offices were not included.
To demonstrate wider impact for the effort and cost, consider calculating other associated benefits, such avoidance to the ICU due to earlier detection in the emergency department
Once all this hard work is over make sure to share the findings broadly. We did not “market” the cost benefits as widely as we could have. This would help to “win over” CFOs regarding the benefit of improvement activities
Collecting data requires someone’s time so make sure the hospital is prepared to dedicate the necessary staff time

Summary of Findings: Sepsis

Through the sepsis improvement program, sepsis cases increased by 67 percent and the sepsis mortality rate was reduced by 46 percent
Total of 9 hospitals completed the final measurement with 8 of the hospitals completing the full program
Contra Costa joined in 2010 and did not have Year 1 and Year 2 data for comparison
The total program investment was approximately $2.5M
Estimated savings is $1.1M for a 56 percent ROI
The 67 percent increase in cases of sepsis along with the 46 percent decrease in the mortality rate demonstrates an overall successful implementation of improved identification and treatment of sepsis

*Based on the IOM proxy cost (see assumptions)

Sepsis/Septic Shock Cases = ICD-9 coded data
Total Sepsis Days = Adjusted sepsis length of stay x Sepsis cases
Total Cost of Sepsis Cases = Total sepsis days x Adjusted cost per day
Sepsis Mortalities = ICD-9 coded data
General Acute Care Mortalities = 40 percent of the total (based on literature)
§ntensive Care Unit (ICU) Mortality = 60 percent of the total mortalities (based on literature)

Cost of Sepsis Mortalities = (Mortality Cases x Adjusted days of stay) X Sepsis cost per day

Example: