Do Innovations Provide a Return on Investment?

Do Innovations Provide a Return on Investment?

By Dr. John Øvretveit, Professor of Health Innovation, Implementation and Evaluation, and Director of Research at the Medical Management Centre, Karolinska Institutet, Stockholm, Sweden. E-mail:
Value-improving innovations: Can we use one of these innovations to improve quality and save money—how do we get a return on investment in our local health care service?

A number of the innovations presented in the Innovations Exchange are likely to both improve quality and save money. How do we judge if an innovation will, in our local service, produce a return on our investment of time and money, as well as improve quality?

Evidence of effectiveness in improving quality

Many of the innovations started with evidence of changes that were effective elsewhere, and the innovators developed and tested their own version. An innovation described in the listing will show the evidence base, and this gives one indication of whether we are likely to get the same results if we copied the innovation in our service.

Fidelity or infidelity: which parts can we adapt and still get similar results?

But services and patients are different, and we may need to adapt the innovation to fit our local setting or change our local setting to make it work. Innovation descriptions and researchers are getting better at giving guidance about which aspects we can and cannot adapt if we want to get similar positive results, and which “implementing conditions” we need. But there is still some uncertainty about the “nonnegotiable” or “active ingredients” that we need to copy exactly, especially if the innovation has many components. Added to this are features of the service organization, financing, or other “context” factors that might help or hinder implementation and influence results. So, we would be wise to make our own simple evaluations of our version of the innovation to get feedback about whether it will be effective locally.

What about the money?

But does it save money, or even make money? If an innovation is effective for improving quality, how do we know if the cost of implementing it and keeping the new way of working in operation is worth it? First, we need to estimate how much it would cost to implement it successfully—and this should include the testing costs noted above to get feedback on whether our adaptations will work.

The report of the innovation may give some indication of this, but we have to make our own local estimates and use “range thinking,” so as not to allow the “cents arguments” to obscure the “big dollar picture”: this means agreeing that the cost of implementation will “not be less than “$X and not more than $Y.” These discussions also bring out consideration of which conditions, such as IT or staffing, will be needed to implement it and “operate it” successfully.

Then there is the estimation of whether, once implemented, the innovation will use up fewer resources or more resources than the current service if it does become a routine part of our service. Together with this is an estimating of the reimbursement system likely to be operating when the innovation is implemented: will we get the same or less reimbursement? And do we have do make a change anyway (given that this innovation meets this need) because regulations require it?

From these range estimates we can predict the costs and savings (or gains) of an innovation that is likely also to raise quality. Further, this return on investment estimation forces us to consider things we may need to do to create the conditions for successful implementation of the innovation, and which we may not otherwise have considered.

Think it through first

One reason for doing all this is to think through, before committing the time and money to implementing an innovation: what is needed to make it work and sustain it. In some cases it is not better to try and fail; it is better to think and decide not to, so that the time and money can be spent on innovations, many of which are listed in the exchange, which produce value improvements for the service.

And one last word for researchers and innovation describers: resources count if you want others to use your work—give them the missing part of the puzzle—some indication of the costs and savings of copying the innovation in their service.

This is not saying that some innovations should not be implemented if they do not save money: for some the value of the quality improvement and suffering it reduces is worth the higher cost. Rather it is saying we cannot ignore the resource part of the equation and need to concentrate on value improvements, so as to unite the different parties who need to join together to make the change, to ensure that the change is sustainable rather than only a one-time project.

About the Author

Dr. Øvretveit has published a number of value improvement reviews that assessed the evidence of whether different quality improvements can both save money and provide better outcomes for patients (Øvretveit, 2009, 2011, 2012 [in press, draft available)], and Marshall and Øvretveit 2011).
Publish Date: 11/09/11
Date Last Updated: 09/12/12

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