Understanding both the amount of money that can be saved and the health outcomes that can be used to understand the return on investment from Public Health interventions. This allows state and local public health departments to calculate their implicit return from investing in prevention and control efforts, and to identify which conditions they should focus on, in which areas, and for which populations. In short, information on the economic burden of chronic diseases at the local level provides policy makers with information needed to develop interventions and prevention programs.
The Return on Investment (ROI) of a project is calculated by dividing the net savings by the amount of the investment:
ROI = Net Saving/Investment
For Chronic Disease Prevention Programs (CDPP), ‘Investment’ refers to the cost associated with starting up and maintaining the program over time, and ‘Net Savings’ is the cost savings from the program. Unlike other types of economic evaluations, such as Cost Effectiveness or Cost Utility, the ROI does not incorporate health outcomes directly. Rather, any changes in health outcomes, whether it be changes in life expectancy, quality of life, or other measurable outcomes, must be represented in monetary units and included in the Net Savings. In this way, the ROI is closer to another type of economic evaluation – Cost Benefit analysis – than to other types of economic evaluations.
In the explanation of the methodology of ROI portion of the TOOL below:
The ROI portion of the TOOL uses the following methodology:
The number of cases without the CDPP is determined using the initial population of the target group (at the start of the CDPP), and the rates of the chronic disease(s) that would be expected in each of X years. The rates in each subsequent year is estimated using the rate in year t that the target group will be in year t+1. That is, if the CDPP targeted a group of 1000 40 year old males in year 1 and the program was expected to followed over X years, then the expected rates of the target group in year t+1 (when they would be 41) would be the rates of the 41 year old males in year t. Similarly, the rates of the target group in year t+2 (when they would be 42) would be the rates of the 42 year old males in year t. The rates of the target group in year X would then be the rates of the corresponding group (40 + X-1) in year t.
The methodology described above for estimating the number of cases without the Chronic Disease is amended to estimate the number of cases with the chronic disease. Using the same methodology, the impact of the CDPP is shown through the reduction in the rates (and therefore the number of cases) in ‘Y’ years (as entered by the TOOL user). The percentage of reduction ‘Z’ is then used to adjust the rates between years Y and X, so that a 100% effectiveness of the program (‘Z’ = 100%) will mean there is no increase in the chronic disease after year Y, which an effectiveness of 0% means that the rates of chronic disease after year Y is the same as the rate without the CDPP.
The number of cases for years t to t+X are multiplied by the cost-per-case (described in the Cost methodology of the TOOL) both with and without the CDPP. The difference is the Net Savings from the CDPP (not including the value of the QALYs).
The number of cases for years t to t+X are multiplied by the utility losses (described in the Cost methodology of the TOOL) both with and without the CDPP. The difference is the total QALY savings from the CDPP.
The investment cost is the cost associated with starting and maintain the CDPP. The aim is to include only the additional cost of the investment, so it is assumed that the user has identified:
The total investment cost is the sum of these two activities.
The ROI calculation without QALYs is:
Net savings = Total Cost without CDPP – Total Cost with CDPP
ROI = Net Saving/Investment
The ROI calculation with QALYs is:
Net savings = (Total Cost without CDPP – Total Cost with CDPP) + (Total utility loss without program – Total utility loss with program ) × Value of a QALY
ROI = Net Saving/Investment
In developing the ROI TOOL, there is a tradeoff between ease of use and the flexibility of the TOOL. While it is, in theory, possible to alter the ROI TOOL to allow users more flexibility, the tradeoff would complexity.
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In the results below:
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