Two Bucks for a Slipper?

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Hospitals invest considerable time, effort and even cash in patient safety and performance improvement projects. But evaluating the financial impact of such initiatives can be difficult. In many cases, clinicians’ improvement projects have helped save lives and reduce medical errors, but the finance suite knows there’s a limited pot of money to pay for these initiatives—many of which cost hospitals significant cash in the short run.

“They simply can’t do all of them,” says Ken Smithson, M.D., vice president of research with VHA Inc., in Irving, Texas, “and clinicians often can’t make a compelling financial case.”

Now a new tool developed by VHA, a healthcare provider alliance with more than 2,400 nonprofit members, with the aid of a grant from Indianapolis-based pharmaceutical firm Eli Lilly & Co., is helping clinicians present compelling ROI proposals to senior financial leaders. Available free at, the tool is essentially a souped-up Microsoft Excel spreadsheet for clinicians to use in meetings with the finance suite.

While chief financial officers have an array of tools to help them analyze the cost impact of buying, for example, $1 slippers versus $2 slippers for ICU patients, they often have less insight into what that project might save in terms of length of stay. Such an initiative might cost more in the short run, but save cash by opening up space for new patients and, thus, create new revenue, says Smithson.

Using the tool, clinicians can connect the dots financially, says Bill Ward, an associate professor of health policy and management at the Johns Hopkins Bloomberg School of Public Health in Baltimore. “Then my pitch says I’m going to invest $25,000, but it will return $250,000 in added revenue.” Clinicians can use the tool, for example, to demonstrate ROI in making their case for buying the $2 slippers because patients are likely to slip less often, causing fewer patient injuries and thus reducing length of stay to make room for a new patient.

Ward, a former hospital chief operating officer, stresses that the tool isn’t the type of sophisticated financial analysis software many finance executives are used to working with, but it’s more applicable in translating operational improvements, equating the difference between global positioning systems and reading landmarks. “You don’t need GPS with this,” he says. “You need to know if you’re in Baltimore or Philadelphia.”

—Philip Betbeze




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