ROI calculations
help to:
- Determine the ROI of current and new programs, considering both the economic and medical cost savings, customized to the demographics of each employer.
- Support the approval of prevention program budgets using a format familiar to financial decision makers.
- Determine the minimum (breakeven) effectiveness rate of each program, given the cost of the program.
- Determine the maximum (breakeven) cost of each program, given the actual or estimated effectiveness rate.
- Establish minimum effectiveness/outcomes rates for external vendors, given their price quotes.
- Show that the lowest cost vendor is not necessarily the best choice in purchasing programs, as outcomes are considered.
- Conduct “what if” scenarios to determine required minimum employee participation and success rates to justify programs.
- Convert health care data into information that is needed to make decisions.
- Support the development of strategic plans for the prevention of physical, behavioural, and occupational health programs.
Why is ROI analyses important?
- Select and compare Wellness Program vendors (measure outcomes/effectiveness versus price)
- Compare with alternative investments in healthcare programs (e.g., exercise vs. smoking cessation)
Why are ROI calculations needed? An example (EAP)
- Show the ROI you are obtaining on your Employee Assistance Programme (EAP), given the per employee per month (PEPM), utilization rate, and actual effectiveness rates.
- Justify the PEPM and utilization rates (show that the PEPM rate together with the utilization rate, results in an attractive ROI for your company).
- Educate management and staff on the value of EAP´s by identifying and quantifying the types of savings generated by the EAP (economic/productivity, medical/premium, and for employees in reduced out of pocket costs).