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In digital health technology (DHT) partnerships, return on investment (ROI) is an important metric that all digital health startups need to understand when communicating the value of their solutions increasing sales to payers. Payer partners also regularly use ROI to make better informed decisions. In the following case study, we will describe how a health plan used ROI to take strategic investment and partnership actions, and then discuss the core concepts behind ROI for DHT.
ROI from the Payer Perspective
Priority Health is a provider-sponsored health plan, which had over 600,000 members as of 2015. A large number of its adult members had diabetes. Priority Health’s leadership saw the need for improvements in self-management for its members with diabetes. Numerous initiatives and solutions existed for diabetes, and Priority Health was looking to determine how they could potentially leverage them to help improve health outcomes for its affected members.
From the payer perspective, there are several steps taken to determine the right care model to partner with and better serve its membership. To analyze which opportunities are best for them to launch, Priority Health took the following steps to identify the right strategies and solutions to deploy to their population:
Identified High-Risk Patients: They used a commercially available tool to segment their patient population, including those with type 2 diabetes, into risk categories. This segmentation helped them identify opportunities for interventions tailored to different risk levels.
Assessed Unmet Needs: Priority Health identified the need to improve self-management in patients with diabetes. This insight led them to explore opportunities for interventions and programs that address barriers to self-management, such as social determinants of health and patient activation.
Evaluated Medication Adherence: They assessed medication adherence rates among members with type 2 diabetes and found room for improvement. This prompted them to explore interventions and programs to improve adherence, such as Medication Therapy Management (MTM) initiatives and collaboration with pharmacists.
Explored Technology Solutions: Priority Health explored the use of digital health technology solutions to engage patients with diabetes. This involved evaluating the effectiveness and feasibility of various technology solutions in improving patient engagement and outcomes.
Considered Novel Delivery Devices: They expressed interest in a delivery device that could improve medication adherence. This involved evaluating the potential benefits and outcomes of such a device compared to existing standards of care.
Anticipated Future Trends: Priority monitored emerging trends and technologies to anticipate future opportunities in diabetes management. At the time, this included the use of wearable technologies for diabetes management.
One of the biggest deciding factors: Return on Investment (ROI) analysis. This approach helped them assess the potential financial benefits of each initiative and compare them on a standardized basis, ensuring they are making informed decisions based on cost-effectiveness and financial viability of each solution.
Priority Health analyzed both the hard and soft benefits of potential partnerships to determine which might be the best fit. In this case, they decided to launch three different programs and further build the business case for each.
Patient Population Management: Priority Health wanted to improve self-management in patients with diabetes. To do so, they focused on understanding the social determinants and barriers that their members faced in reaching health outcomes. They developed systems to assess why patients have difficulty reaching their health goals and what barriers they need to overcome. Assessing patient activation (knowledge, skills, and confidence) was a critical component of this initiative.
Medication Adherence Programs: Priority Health implemented interventions to improve medication adherence among members with type 2 diabetes. They used the Medication Possession Ratio (MPR) to assess adherence and analyze it across different drug classes. They aimed for a minimum MPR target of 80% to improve adherence through case management and Medication Therapy Management (MTM) initiatives.
Technology Solutions for Self-Management: Priority Health explored the use of digital health technologies to engage patients with diabetes and other chronic conditions. They are tailoring engagement to each patient's preferences, such as phone calls, in-person meetings, or digital communications. Wearable technology helps patients better manage their health conditions, including diabetes, on a daily basis, pending evidence of its impact on health outcomes and cost reduction.
These initiatives reflect Priority Health's comprehensive approach to managing type 2 diabetes, focusing on improving self-management, medication adherence, and leveraging technology to enhance patient engagement and outcomes.
So, what is ROI?
ROI, or Return on Investment, is a metric that can be calculated to demonstrate growth and revenue. These metrics are important when approaching B2B sales to provide evidence of the success of your company or solution. They can be used in marketing, employee training, and product development.
For digital health companies, ROI metrics can vary depending on the benefits being measured, which can be both monetary and non-monetary benefits.
Calculating ROI
Many firms believe that calculating ROI would help with raising money, determining a price or revenue model, and convincing someone to use or pay for it. It is important to consider what stage of value demonstration your company is in to determine what your ability is to calculate ROI metrics and value. ROI metrics refer to financial metrics whereas value can describe far more than that. It is important to “zoom-out” and understand all the aspects of both ROI metrics and value before trying to calculate it.
When attempting to calculate ROI and considering how a solution plays a role on the care pathway.
The following might be an example of how to describe how a solution fits into a care pathway.
Need help to illustrate how your solution fits into a care pathway. Akros Advisory can help your team!
There are various considerations to work through when understanding what makes a healthcare solution valuable. These considerations include location in the care pathway, scope and perspective, the potential impact of change, uncertainty, and level of disruption.
Demonstrating value can sometimes be met with skepticism or resistance. This push-back can manifest as disbelief in the proposed value, reluctance to accept the cost-benefit analysis, or doubts about the solution's practicality. It is important to view the quantification of a healthcare solution's value as merely the beginning of a dialogue and negotiation, rather than a conclusive endpoint.
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