MMHA 6540 Week 8 Payer ROI Brief Example

Will Falls Prevention Pay for Itself? A Return on Investment Brief for Prairie Gate's Executive Committee

Student Name

Walden University

MMHA 6540: Population Health Management Applications

Instructor Name

Month Day, Year

Will Falls Prevention Pay for Itself? A Return on Investment Brief for Prairie Gate's Executive Committee

Request

The executive committee is asked to fund the falls prevention program for one year at about $660,000 and to judge it against a stated threshold: the program breaks even if it prevents about 44 fall-related admissions among its 600 participants. The committee should also decide now what it will do if the program falls short of break-even but improves members' safety and experience, since that is a likely result in the first year.

How Return Is Calculated

Return on investment is the net financial gain divided by the cost: the savings from avoided admissions, minus the program's cost, divided by the program's cost (Reiter & Song, 2021). The calculation assumes each avoided fall-related admission saves the plan about $15,000, an illustrative figure that combines the hospital stay, follow-up care and, for some patients, a short skilled nursing stay. It counts only admissions, since they drive most of the cost of falls (Florence et al., 2018); avoided emergency visits without admission would add further savings that are not counted here.

Three Scenarios

Table 1 shows return under three scenarios. The chart planned for the brief would plot return against avoided admissions as a straight line crossing zero at 44; the table gives the same points.

Table 1

Return on Investment by Avoided Admissions (Illustrative)

Is Break-Even Realistic?

The program's participants are members who have already fallen, so their risk of another fall-related admission is high. Based on the past year's claims for the target segment, the plan expects roughly 160 fall-related admissions a year among 600 participants without the program. Breaking even therefore requires preventing about 44 of 160, or a little over a quarter.

That is ambitious. Pooled trials of balance-challenging exercise for community-dwelling older adults show falls dropping by roughly a quarter (Sherrington et al., 2019), and home safety interventions reduce falls among higher-risk people as well (Gillespie et al., 2012). But not every fall leads to admission, not every participant will complete every component, and effects in real-world programs are usually smaller than in trials. A realistic expectation for the first year is a reduction somewhat below the break-even point, perhaps 20 to 35 avoided admissions, with the return improving in later years if the program reaches participants faster and class attendance rises.

Why Fund It Anyway

A first-year return below break-even is not a reason to decline. The program's per member per month cost of about $2.75 is small. Falls cause pain, fear and loss of independence that the return calculation does not count, and members and their families notice when a plan helps them stay safely at home. Medicare Advantage plans compete for members partly on such benefits. And the plan will learn, from one year of data, whether the program can reach break-even with adjustments. Programs that address home environment and function together have reduced disability among older adults (Szanton et al., 2019), so the benefits may extend beyond falls.

Risks to the Estimate

Three factors could make the result worse than expected: slow enrollment, a repair backlog that delays modifications, and regression to the mean. The last matters most. Members were selected because they recently fell, and some of them would have had a calmer year regardless of anything the plan did, so a simple before-and-after comparison will overstate the program's effect (Barnett et al., 2005). The evaluation framework must compare participants with similar members who have not yet been offered the program. Factors that could make the result better include savings from avoided emergency visits and skilled nursing stays, which this brief does not count.

Recommendation

Fund the program for one year. Judge it at twelve months on avoided fall-related admissions compared with a comparison group, using the break-even threshold of about 44 as the benchmark, and on process measures showing whether the program reached members quickly. If avoided admissions are between 20 and 44 and process measures are improving, continue with adjustments. If they are below 20 and process measures are not improving, redesign or stop.

References

Barnett, A. G., van der Pols, J. C., & Dobson, A. J. (2005). Regression to the mean: What it is and how to deal with it. International Journal of Epidemiology, 34(1), 215-220. https://doi.org/10.1093/ije/dyh299

Florence, C. S., Bergen, G., Atherly, A., Burns, E., Stevens, J., & Drake, C. (2018). Medical costs of fatal and nonfatal falls in older adults. Journal of the American Geriatrics Society, 66(4), 693-698. https://doi.org/10.1111/jgs.15304

Gillespie, L. D., Robertson, M. C., Gillespie, W. J., Sherrington, C., Gates, S., Clemson, L. M., & Lamb, S. E. (2012). Interventions for preventing falls in older people living in the community. Cochrane Database of Systematic Reviews, 2012(9), Article CD007146. https://doi.org/10.1002/14651858.CD007146.pub3

Reiter, K. L., & Song, P. H. (2021). Gapenski's healthcare finance: An introduction to accounting and financial management (7th ed.). Health Administration Press.

Sherrington, C., Fairhall, N. J., Wallbank, G. K., Tiedemann, A., Michaleff, Z. A., Howard, K., Clemson, L., Hopewell, S., & Lamb, S. E. (2019). Exercise for preventing falls in older people living in the community. Cochrane Database of Systematic Reviews, 2019(1), Article CD012424. https://doi.org/10.1002/14651858.CD012424.pub2

Szanton, S. L., Xue, Q.-L., Leff, B., Guralnik, J., Wolff, J. L., Tanner, E. K., Boyd, C., Thorpe, R. J., Jr., Bishai, D., & Gitlin, L. N. (2019). Effect of a biobehavioral environmental approach on disability among low-income older adults: A randomized clinical trial. JAMA Internal Medicine, 179(2), 204-211. https://doi.org/10.1001/jamainternmed.2018.6026