Using ROI Forecasting to Maximize the Value of Medicaid Investments

Publication Date: April 2008

Publisher: Robert Wood Johnson Foundation

Author(s): Inc. Center for Health Care Strategies; A. Hamblin

Research Area: Health

Type: Report

Abstract:

Medicaid stakeholders are often challenged to identify health care programs that offer both quality improvement and cost savings potential. To assist states and health plans in estimating the return on investment for proposed quality improvement initiatives, the Center for Health Care Strategies (CHCS) developed a new online tool, the ROI Forecasting Calculator for Quality Initiatives.

The ROI Calculator is designed to help Medicaid stakeholders generate realistic return on investment (ROI) forecasts for quality improvement initiatives. In particular, the ROI Calculator can be used to help facilitate discussions around resource allocation, program design, program funding, and monitoring and evaluation of quality improvement initiatives. The online tool, funded by the Robert Wood Johnson Foundation, prompts users to provide information about proposed initiatives, including target population characteristics, program costs and expected changes in health care utilization. The resulting forecasts can be used to help decide in which programs to invest to improve health care quality or to create a financial case to policy-makers for obtaining the resources to make those investments.

With support from the Robert Wood Johnson Foundation and the Commonwealth Fund, CHCS worked with eight states to test the value of this tool through a Return on Investment Purchasing Institute, a national learning collaborative.