MEASURING THE ECONOMIC BENEFIT OF CASE MANAGEMENT

In today's cost conscious health care environment case management must prove its economic value as well as its impact on clinical outcomes. A cost benefit analysis is a tool that can be used to judge the economic value of case management activities. Cost benefit analysis is a method for measuring the net benefit of an intervention in which costs and benefits are both expressed in the same monetary terms (dollars), allowing comparison of different interventions or decision alternatives. In this model, the financial return of a case management program is equal to benefits ($) minus costs ($).

Case Management Benefits

The benefits of case management are both tangible and intangible. Tangible benefits may include:

Reduction in service cycle time through more coordinated scheduling.
Reduction in quality defects (known as rework in manufacturing) with its attendant readmissions, prolonged length of stay, repeat surgery and other costs of correction.
Improvement in the clinician's ability to make choices concerning interventions, based on cost effectiveness and cost utility information provided by the case manager.
Improvement in management's ability to assess the cause of adverse outcomes and inefficient processes, and the degree to which treatments, devices, procedures, and interventions are comparatively effective.
Elimination of health care delivery service redundancies by improving labor efficiency, through enhanced information at the point of care.
Reduction in the use of more expensive interventions to achieve the same expected outcome.
Redesign of inefficient processes to optimize personnel, space, and materials.
Enhancement of clinical quality through continuous management of process variation, feedback, group process, ownership, and delivery system coordination.
Work place harmony and professional satisfaction through better communication and collaboration, which results in less personnel and professional turnover.
Intangible benefits may include:
Improvement in accuracy of bid proposals for managed care contracts through more accurate assessment of costs of providing services.
Improvement in reporting of credible performance measures.
Improvement in patient service and satisfaction, leading to new and retained customers and contracts.
Flexibility in the design of patient services to encompass customer demands.

Case Management Costs

Costs are usually recognized as direct costs (those directly associated or required to produce a service or under the direct control of the case management department) and indirect costs (those beyond the department's direct ability to influence). Costs also may be regarded as fixed (those that do not vary depending on volume or activity, generally thought of as overhead) and variable (those that change with volume and activity, i.e. labor, materials). With increased volume, fixed costs may also increase, if capacity is exceeded and more capital expenditure is required for space, equipment, etc.

Costs associated with case management may be divided into pre-implementation costs (planning, analysis), implementation costs (project management, training), and post-implementation costs (review, ongoing operations). Pre-implementation costs involve primarily labor and possibly expenses for space, software, and hardware. These costs include the efforts involved in planning the initiative and gathering baseline data about current clinical, financial and satisfaction outcomes for comparison later on. Labor expenses are frequently the most costly aspects of a case management program and can be substantial throughout the life of the initiative.

Implementation costs also include education expense, as buy-in and ownership of all participants is necessary. In addition, new operational costs may be required in the redesigned process. While not absolutely required, optimum use of information technology is certainly viewed as one of the significant enablers of case management and should be considered in the costs of cost management initiatives. Since a major component of case management is information processing, a systems approach, utilizing information tools, is a critical factor for success. Post-implementation costs include ongoing operational costs and periodic analyses of benefits. Personnel costs, associated with performance measurement and feedback to users, may be significant.

Once a dollar amount has been determined for case management benefits and costs, a net cash flow statement over the reasonable life of the project can created. This simply measures the economic value of the case management initiative, which is benefits minus cost, per unit of time.

A new book authored by Patrice L. Spath, "How to Measure and Improve Case Management Performance," includes a step-by-step model for selecting performance measures that can be used to judge the value of case management services. In this 134-page book, you'll learn how to identify critical case management tasks that impact attainment of your organization's patient care management goals. You'll also learn how to gather the data that is needed to measure the value of case management interventions and what to do when the data reveals an improvement opportunity. To order "How to Measure and Improve Case Management Performance" call Brown-Spath & Associates at 503/357-9185 and ask for product #PI-205. Or you can order the book online at: http://www.brownspath.com.

To Learn More: Patrice L. Spath is available for inhouse presentations on this and other health care quality and resource management topics. For further details, visit Brown-Spath & Associates on the web at: http://www.brownspath.com or write to: Brown-Spath & Associates, PO Box 721, Forest Grove, OR 97116.

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