2 330 pm ET July 25 2013 Context CE Sustainability RFP 8 projects Technical assistance available Webinar series Individual calls Contribution to the field Other Sustainability TA underway ID: 813300
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Slide1
Articulating the Value of Consumer Engagement
2
– 3:30 pm ET July 25, 2013
Slide2Context
CE Sustainability RFP: 8 projectsTechnical assistance available
Webinar seriesIndividual callsContribution to the fieldOther Sustainability TA underway
Slide3Articulating the Value of Consumer Engagement
Carla Zema, PhDZema ConsultingJuly 18, 2013
Slide4Outline
ImportanceRecap of ROI from Sustainability WorkshopArticulating Value – Understanding Different Methods
Review of Key Elements of AnalysisDetermining Costs and BenefitsValuing BenefitsConclusion and Next Steps
Slide5Importance
One of the great mistakes is to judge policies and programs by their intentions rather than their results
-- Milton Friedman
Slide6More
Effective
LessEffective
More Costly
Less
Costly
ADOPT
DO NOT ADOPT
Tradeoff to consider
Tradeoff to consider
Weighing Effectiveness and Cost
Slide7Use of results
Justify implementation to internal and/or external stakeholdersInterest potential partners, such as funders, community partnersJustify use of resources
Complement other evaluations
Slide8ROI Template
Element
ContentsDescriptionScope of the activity or programAudience/point of viewStakeholders/funder(s) who will obtain ROI from participationFinancial benefitsHard dollar categories, $ for eachStrategic benefitsDescription with $ if possibleIntangible benefitsDescription, qualitative value
CostsHard dollar costs; other costs a stakeholder might want to include
Additional
components
e.g.,
time, probability of success
ROI
Calculation and/or qualitative evaluation
AF4Q Sustainability Workshop, 2013
Slide9A rose by any other name…
ROICost-benefit analysis (CBA)Cost-effectiveness analysis (CEA)
Slide10Comparison of Methods
CEA
CBAROIBasic calculationCost-effectiveness ratio = Total costs
-------------------------- Measure of effectiveness
Net benefit = Total benefit-Total costs
Ratio = Total benefits/Total costs
ROI =
Net benefit
-------------------------------
Total cost
Result
Cost per measure of effectiveness (or incremental/marginal cost per unit measure of effectiveness)
Net benefit valued in dollars
Ratio
results in number greater than or less than 1
Percentage
Slide11Comparison of Methods
CEA
CBAROIProsEasy to compare programs with similar outcomesUseful if outcomes are difficult to value Results are in dollars making interpretation easyUseful when considering only one program and/or when programs have different outcomes
Easy interpretation
“ROI” more widely known
Cons
Measure of effectiveness can be awkward to interpret
Difficult to use if more than one benefit
Can be difficult to value benefits
Indirect or intangible benefits are often not included
Slide12Steps to Conduct an Analysis
Define the framework for the analysisDetermine the perspective of the analysisDecide on the timeframe for the analysis
Define the populationIdentify and measure the costs and benefitsValue the benefits (for a CBA)Discount (depending on timeframe)Calculate resultsConduct a sensitivity analysisUse results for decision-making
Slide13Define the Framework
What is the overall objective?Which options are being considered?How will effectiveness be measured?What is the status quo? (What if no action is taken?)
Will the analysis be prospective, retrospective, or concurrent?Will a CEA or CBA be conducted?
Slide14Determine the Perspective of the Analysis
Critical to defining the costs and benefits Must be maintained throughout the analysisMay or may not be the primary audience for the results
Examples:FundersPayersPracticeEmployersSocietal
Slide15Decide on Timeframe
Must be clearly definedConsiderations:Does program have a specific timeframe for implementation?When would results be expected?
What timeframe is meaningful to the primary audience for the results?
Slide16Define the Population
Considerations:Particular subgroup of patients or practices?Certain geography (e.g. state, county)?Types of practices?
Multiple systems?Types of payers?All practices or just those with a certain number of patients/provider?
Slide17Identify and Measure the Costs and Benefits
Categories:DirectIndirect
IntangibleInclude only actual or real costs and benefits that are beyond the status quoDo not include transfersHandling missing data
Slide18Value the Benefits for a CBA or ROI
For a CBA or ROI, benefits must be valuedCan be “gains” or “costs avoided”Options:Market value of benefit
Downstream financial impact of the benefitMake sure the valuations are realistic and meaningful to stakeholders
Slide19Discounting
Costs and benefits should be discounted if greater than one yearNo consensus on standard discount rateRange of 3%-5% with 4% commonly used for social program
Slide20Calculate Results
Spreadsheet software such as Microsoft Excel make calculations simple and transparentKeep each costs and benefit as well as quantities and rates as separate cells to increase transparency and make changes easierResults cells are then simply functions that calculate the results
Slide21Conduct a Sensitivity Analysis
Opportunity to explore the variation in the results if inputs are modifiedHelpful given that some inputs have some uncertainty or a range of possible valuesTwo types:
PartialExtreme case
Slide22Partial Sensitivity Analysis
One input variable is varied at a time while holding all other values constantCompare new results with base case resultsConsider varying variables:representing
assumptions that were made for the analysisthat have a range of possible valuesthat were estimated due to missing or unavailable datathat have uncertain values
Slide23Tornado Diagram Example
Payer mix
Reimbursement rateP4P incentiveIncrease in improvementNumber of providersNumber of practice staffPractice volume
Cost of trainingNumber of patient partners
Slide24Extreme Case Sensitivity Analysis
Similar to partial sensitivity analysis in terms of variables to vary in the analysisInstead of one variable at a time, all variables that are selected are varying simultaneouslyOnce in a “best-case” scenario
Again in a “worst-case” scenario
Slide25Summary
CEAs/CBAs are not a silver bullet and do not provide a definitive answerOffer important information to inform decision-making and complement other evaluation information on effectivenessCritical component of any program or project evaluation
Slide26Next StepsWebinar series will walk you through the process
Homework: Finalize frameworkBegin to identify costs and benefits
Individual technical assistance is availableNext webinar will be opportunity to get group feedback
Slide27Contact Information
Carla Zema, PhDZema Consulting(724) 972-4141
Carla@ZemaConsulting.com