Demonstrating cost savings can sometimes be challenging. Fortunately, there is a lot of information and data available on the typical costs to treat asthma patients. Check out the resources below:
One important potential benefit of your program may be that it reduces medical costs, such as for hospitalizations and emergency department (ED) visits. Please note, this is different than program costs which are your program’s operating costs (see the Value Proposition Kit).
Demonstrating health care savings is an effective way of getting funders to buy into your value proposition.
By reducing hospitalizations, ED visits or other medical costs, your program may generate savings or prove to be a cost-effective investment for managed care organizations, hospitals, insurers, health departments and grant makers.
Consider the following questions when determining your health care savings:
- How much does it cost to serve one individual in my target population?
- How much does an ED visit cost for a typical asthma patient?
- How much does a hospitalization cost for a typical asthma patient?
- How much does it cost to treat an asthma patient? (Medications, doctor visits, etc.)
- How do your program interventions affect ED visits, hospitalizations, etc. of your target population?
Example:
By reducing hospitalizations for my target population by 58 percent, my program will save $5,144,600.
- Cost to hospitalize one individual from my target population: $17,740.
- Number of hospitalizations prior to home interventions: 500.
- Number of hospitalizations post home interventions: 210.
- Cost to serve my target population: $368,820.
- Before Home Interventions: $17,740 * 500 = 8,870,000
- After Home Interventions: $17,740 * 210= 3,725,400
- Health Cost Savings: 8,870,000 - 3,725,400 = 5,144,600
Remember to frame your health cost savings to tell a compelling story to your potential funder. Identify what drives their decision-making and tailor your value proposition to fit their interest.
While we are presenting the concept of health cost savings, potential funders may also want to know the return on investment (ROI) of your program. Simply put, your ROI tells an investor how many dollars in value one dollar invested will generate.
Example:
For every one dollar my program received, we generated $12.95 in health cost savings.
ROI: (5,144,600 – 368,820)/368,820 = 12.95
Use the Value Proposition Kit to determine your health care savings.