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The ROI of Addressing Social Determinants of Health
January 11, 2018

The ROI of Addressing Social Determinants of Health

Ara is currently a senior executive at Unite US, a collaborative care coordination innovator. After founding and leading 2 successful technology companies as CEO, Ara led an international cloud business as senior vice president of Infor, the third largest B2B applications company in the world. Ara speaks 5 languages, and in his spare time serves as the entrepreneur-in-residence at New York Institute of Technology's center for entrepreneurship.
Use ROI metrics with direct cause and effect
It is important to select an ROI metric that has a direct and clear-cut cause and effect. In our example above, we selected “employee hours saved,” because there is a direct cause-and-effect relationship between employee hours saved and cost avoidance associated with this reduction. If we had selected “additional revenues” as the metric of our ROI, this would make our argument more ambiguous, and therefore harder to prove, because there are many variables that can claim a cause-effect relationship on revenues.

Hint: When running a ROI calculation for investing in a technology to address SDoH, seek a ROI metric with direct cause-and-effect relationship with cost. In the model proposed in this article, we will use “hospital readmissions” as the metric we want to use to cut costs.  

Start with a clear hypothesis
Your ROI journey should always begin with a clear hypothesis. This is where you state your argument. Make a claim in a sentence or 2, and clearly state how much you intend to invest and how much you expect to get back in return.
Example for this article: “By investing $300,000 per year for a software that addresses patients’ SDoH, we will reduce patient readmissions rates by 25% and yield a cost avoidance of $274,000 per year.”

Always aim for a believable ROI, rather than an extraordinary one
When trying to prove an ROI, it is not necessary to pitch significant magnitudes of financial impact. It is more important to make your ROI believable. So, aim for a modest ROI.
Hint: Aim for a low-hanging fruit like “timely payback”.
When the quality impact of a solution is abundantly evident and important (such as improving quality of care or saving lives), you don’t need to prove a formidable ROI to get funded.  The key is to focus the ROI on how the investment will pay (or almost pay) for itself. The quicker the payback, the easier it is to get funding.  

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