A New ROI Calculator to Support Clinical-Community Partnerships

We live in an exciting moment in the evolution of our understanding and collective will to achieve better healthcare outcomes by moving upstream to address health-related social needs in concert with providing the best health care. And we now have new incentives and tools to do so through value-based payment models and health plan benefit designs.

The engine of this growing, integrated approach is healthcare-community partnerships, in which health systems, health plans, and other providers contract with community-based organizations (CBOs) to provide the social services that can help patients with unmet social needs improve and sustain their health. Evidence shows that these partnerships have the potential to deliver improved health outcomes, reduced utilization, and cost savings. But creating the financial models that enable such partnerships to launch and thrive is complicated and challenging—sometimes so challenging that it can derail partnerships altogether.

This month, HealthBegins is proud to launch a newly expanded and improved Return-on-Investment (ROI) Calculator, created in collaboration with the Commonwealth Fund and the SCAN Foundation, to help partners successfully navigate this challenge.


ROI Calculator

The primary innovation of the relaunched calculator is a
Quick-Start Mode that allows users to gain quick insights on potential ROI for specific social services for which there is compelling evidence about impacts on healthcare utilization. This new version of the calculator makes it easier for CBOs and healthcare partners to calculate the ROI of social needs interventions using pre-populated data drawn directly from national averages, benchmarks, and research. 

For example, using this tool, a health system might partner with a CBO to provide case management by community health workers for pregnant patients with chronic health conditions, supporting them to secure needed social services and reduce barriers to timely care. A Medicare Advantage plan could contract with a partner to provide home-delivered medically-tailored meals to ensure consistent nutrition for patients undergoing cancer treatment. A medical clinic could team up with a legal-aid organization to help patients stay safely housed by fending off evictions and holding landlords to account for unhealthy housing conditions.

The new calculator enables users to choose from a menu of social services provided, estimate service frequency/intensity and costs, leverage national data on baseline utilization rates and costs, and input the likely impact of the social services on medical care utilization. The tool then calculates the potential resulting savings or returns. Users can explore different possible payment models between healthcare and CBO partners (such as capitation, case rate, or fee-for-service), as well as gain-sharing ratios, to find an optimal model for an equitable and sustainable financial partnership.

In addition to its primary function of estimating returns, the calculator creates an awareness of the opportunities and benefits of health and social care integration for both healthcare and community partners. It provides a common financial language, promotes a more equitable and sustainable division of returns, drives data collection and analysis for the business case, reduces uncertainty by helping to quantify financial risk, and supports a structured approach for partnership development.

Robust partnerships are urgently needed as policymakers and practitioners look “upstream” to address root causes of poor health and high, avoidable healthcare spending. A growing body of evidence shows that meeting health-related social needs can benefit patients and reduce healthcare utilization and costs—particularly for people with complex health and social needs, the elderly, and dually eligible populations.

But to be effective, these partnerships must be designed effectively and structured for sustainability on all sides. Shreya Kangovi, a University of Pennsylvania physician and CEO of the community health worker program IMPaCT, writes in Health Affairs, “Light-touch programs with insufficient infrastructure can appear cheaper initially but ultimately waste resources.”

As partners embark on new collaborations to address health-related social needs, we urge them to look beyond the inherent limitations of ROI, which tends to focus on short-term financial returns of programs and investments, and seriously consider VOI—value on investment—which requires us to define and evaluate the broader value that can be generated by social needs and healthcare equity interventions. By this we mean the potential benefits, from financial to institutional to social, that range beyond the direct effect of social interventions on healthcare utilization and can prove profoundly important. These valuable benefits could include improved patient satisfaction and engagement, employee satisfaction and retention, fulfillment of regulatory and accreditation requirements, alignment with organizational mission, strengthened community connections, improved sustainability for CBOs, gains accrued to partners and other institutions, and broader impacts on equity. (See this post for a more detailed discussion of VOI.)

In developing the calculator, we updated a review of 82 published studies on the impact of social services on healthcare utilization and costs. For example, we found moderate to strong evidence that nutrition (home-delivered meals) and supportive housing can reduce healthcare utilization and costs. Several rigorous studies have found that a variety of care management models—which link high-risk patients to needed medical and nonmedical community supports—reduce utilization of costly health care services and lower costs of care.

We also created this tool using a deep familiarity with the strengths and needs on both sides of a health-and-social-care partnership—as well as a deep commitment to making such partnerships equitable and sustainable for all parties. And we plan to support the courageous leaders entering these partnerships through upcoming training and technical assistance programs, because we want, above all, scalable and sustainable collaborations to improve health and advance equity. (See note below for deeper insights on the challenges CBO partners face and how this tool can help.)

In sum, the newest version of the ROI Calculator was made with a lot of literature, math, and our hopes and dreams for clinical-community partnerships. We plan to wrap this tool in technical assistance and support, through an upcoming VOI accelerator and other programs, because we want, more than anything, scalable and sustainable community services for vulnerable communities. (Stay tuned by signing up here.)

As you reach across sectors to establish or strengthen clinical-community partnerships, we applaud your efforts and look forward to supporting you at each stage.

A Note for CBOs from HealthBegins Senior Associate Kathryn Jantz

We know that relationships between community organizations and healthcare organizations are complicated by deep inequities in power, resources, and influence. While healthcare organizations expect clear revenue sources to support the “business of medicine,” community organizations survive on volatile and lean funding. This difference in financial assets (which translates into differences in political influence, human capital, and other manifestations of power) has created environments where fair negotiations are challenging. Lest this ROI Calculator distract from such fair negotiations, we would like to share how we tried to guard against those risks. 

Our commitment to CBOs is embedded in the calculator, and you can see it most clearly in the following places:

  • Variable Cost Estimates: Many of the studies that we used to populate the estimate of social service costs were several years old. With inflation we recognize that the cost of delivering services, especially certain services like meals, have increased significantly. We decided to apply an inflation adjustment to better estimate the current costs. All of the prepopulated fields are editable, so we urge you to input your own data about variable costs. 
  • Administrative Percentage: We set an automatic 10% administrative cost percentage and then baked that into most reimbursement models on the summary page. Administrative cost percentage, sometimes referred to as indirect costs, are the overall costs of doing business that can’t be allocated directly to a specific project or activity. Organizations have a range of indirect costs. Entities such as universities often have indirect rates that are at 50% (or even higher).
  • Shared Savings: We set the default shared savings amount at 50%. For healthcare entities who have many different strategies to achieve shared savings, this split may not make sense, but for organizations and populations for whom the social care strategy is the primary avenue for saving costs, a 50% split may be the minimum appropriate division of savings. 

The end result is that our estimate of CBO costs is higher than many users might have calculated in the original calculator. The benefit is that this modeling is intended to ensure adequate reimbursement for CBOs. The risk is that there is a lower chance of seeing a strong ROI. We hope that this data will then be paired with a broader VOI framework to create financial arrangements that adequately reimburse community services for their incredible work and create a thriving and growing network of community resources.