With the current focus on ROI and cost avoidance, "Show me the money" is a typical request these days. To show the real money, the improvement in business measures attributable to the project must be converted to monetary values. To develop the ROI, the monetary value is then compared to the project costs. ROI represents the ultimate level in the five-level evaluation framework presented in Chapter 2. This chapter explains how healthcare improvement projects include a step to develop the monetary values used in the ROI calculation.
The Healthcare Financial Management Association has conducted several studies on the status of healthcare, including a 2011 critical project report, "Value in Healthcare; Current State and Future Directions."1 This landmark study sheds light on the efforts to convert quality improvements to monetary values. The study indicated that many providers, while recognizing the significance between quality improvements and cost reduction efforts, are just now starting to measure the cost impact of poor quality and waste in their organizations. They are just beginning to move beyond the traditional methods of cost accounting. Almost one third of respondents believe no, or limited, dependency exists between quality improvement and cost reduction efforts. Only one half believe in some dependency, and the link is increasing. Less than one quarter believes the mutual dependency between quality improvement and cost reduction efforts is extensive. These statistics are critical because most research clearly shows that when quality improvements are converted to cost savings or cost avoidance, not only can a direct link be shown, but the results can be staggering.
This same study showed that 43 percent of the studied organizations do not measure the cost of adverse events. Another 37 percent measure the impact but do not manage the metrics. Only 20 percent actually measure the cost of adverse events and manage the metrics to reduce the cost or improve margins. Finally, the study showed that 50 percent of participants are not measuring the cost of waste in care processes, such as duplicate/unnecessary tasks or procedures. Another 29 percent measure them but do not manage the metrics. Only 21 percent actually measure and manage these metrics to reduce the cost or improve margins. The results clearly show that a critical issue in healthcare is to determine the actual cost of unwanted events or processes. It is a vital way to manage the costs and have more efficient healthcare processes.
A southeast-based, religiously affiliated hospital chain had an excessive number of sexual harassment complaints throughout its network of 8,000 employees. The complaints were formally filed with the human resource director, which triggered an investigation to determine whether the complaints had merit and, if so, steps were taken to resolve the issue. Most of the complaints were based on lack of knowledge of the organization's sexual harassment policy and what actually constitutes sexual harassment activity. ...