The New ROI: Building An Innovation Portfolio

Originally posted April 23, 2014

By Molly Joel Coye, MD, MPH

Consider your personal investment portfolio. You invest in a combination of vehicles:  some solid, low-risk stocks, perhaps an annuity, and a few high-risk gambles. If you’re smart, your investment portfolio reflects your own long-term goals and your propensity for risk – a rule that applies equally to investments in healthcare innovation. Right now, the propensity of health executives to select high-risk is at an all-time high, but danger lies in equating innovation with risk.  Building a balanced innovation portfolio that’s right for your delivery system, or your health plan, is the best way to end up with a positive return for the “new ROI”:  the Return on Innovation.

This is the new form of accountability in healthcare innovation.

It is useful in explaining to your organization that you can take risks, “fail fast” on some low- and high-risk gambles, and still deliver a net positive contribution to your strategies for transformation. You are delivering results, and with them, a way for your colleagues on the leadership team to hold you accountable.

So how do you calculate the Return on Innovation, and more importantly, how do your build an investment portfolio that will drive this positive contribution?

This will be one of the key questions at the upcoming Second Annual National Healthcare Innovation Summit in Boston on May 13-15. Following on our successful first Summit last June, our speakers this year will focus on a range of innovations demonstrated to deliver outstanding value for health systems – and on approaches to use in assembling your portfolio of innovations, and optimizing your deployment for success.

Calculating a Return on Innovation is relatively straightforward, starting with clear definitions of your organization’s key transformation objectives. What must be accomplished:

  1. Reduce readmissions?
  2. Leverage physician panel size to care for a larger population?
  3. Build value-based episodes of care for bundled payments?
  4. Engage patients?
  5. Reduce “leakage” of referrals?

For each objective, begin by laying out your organization’s current approach, and estimate the likelihood of eventual success and the time required. Your opportunity is to use innovation to accelerate this strategic transformation.

Your Return on Innovation will be measured as increased progress toward one or more strategic objectives, within a certain number of months or years, divided by the required investments in capital, human resources, and leadership commitment (often translated as the allocation of change management “bandwidth” within the organization). You are not trying to come up with an absolute number, but to compare the potential impact of an innovation with your organization’s current approach to this transformation.

Equation

At UCLA Health, one of our strategic goals is to free beds for elective admissions because we typically run at 110% of capacity and are frequently on diversion. This means reducing avoidable admissions, and reducing ED visits that could be handled by primary care.

We designed a new program that uses non-clinically licensed health workers, based in our 33 primary care clinics, to team with physicians and target the “hot spotters” most at risk for admission or readmission among our 250,000 primary care patients. Within 6 months, we reduced the rate of hospital admissions by one fifth, and ED visits by even more. The reductions are holding, and physician satisfaction exceeds 90%.

Since then, we have implemented a second innovation for care transitions of all hospitalized patients, and achieved a 50% reduction in readmissions across that broader population.

Both of these innovations were high risk, because they required intensive change management, redesign of workflows, hiring and training new types of care coordinators, and physician engagement – and they paid off.  The bed days freed up are extremely valuable, even net of the investments. And the Return on Innovation has been remarkable.

I hope you’ll join us at the Second Annual National Healthcare Innovation Summit in Boston – we’ll be hearing from the top innovators in the country, about innovations that are driving the rapid transformation of healthcare in the U.S.

Molly Joel Coye, MD, MPH, is Chief Innovation Officer, UCLA Health, and Co-Chair, National Healthcare Innovation Summit.

Leave a Reply

Your email address will not be published. Required fields are marked *