Streamlining Healthcare ROI Measurement for DPC: A Win for Employers

In the evolving landscape of healthcare, Direct Primary Care (DPC) is emerging as a beacon of hope for employers seeking to offer their teams not just healthcare, but a more qualified and personalized healthcare model. This approach translates into happier, healthier employees for businesses.

At the same time, partnering with an employer requires a commitment from your Direct Care Practice to demonstrate the Return on Investment (ROI) to them. This ability is a crucial element in highlighting the benefits of DPC for both employers and employees, ensuring they see the value of the services offered.

But how can you effectively track and measure this ROI? In this post, we will delve deeper into that question, drawing insights from the panel “DPC’ing Ain’t Easy” at the You Powered Symposium 2024. The panel featured Nathan Houghton, Manager of DPC Solutions at One Medical; Dr. Mark Tomasulo, Head of DPC Strategy and Innovation at One Medical; Bryce Heinbaugh, CEO at IEN Risk Management Consultants; and Kasha Ozog, CEO at Coastal Administrative Services.

First of all: What Is ROI in Healthcare?

Return on Investment (ROI) in healthcare can be defined as a measure of the financial return on investments made in healthcare initiatives relative to the costs of those initiatives. This concept is crucial for healthcare providers and organizations, as it helps them evaluate the efficiency and effectiveness of their healthcare investments, whether in wellness programs or various patient care models.

The general formula to calculate ROI is:

ROI = Net Return on Investment / Cost of Investment × 100

In the context of healthcare, this calculation can be adapted to measure the financial impacts of healthcare services and interventions. It takes into account not only direct financial gains or savings but also qualitative outcomes that may have economic implications, such as improved patient health outcomes, reduced hospital readmissions, and increased patient satisfaction. These factors can indirectly influence the financial health of a healthcare entity by affecting revenue, reducing costs, or both.

The Challenge of Measuring ROI in Healthcare

Traditionally, quantifying the ROI of healthcare plans has been a Herculean task for employers, benefit advisors, and healthcare providers alike. Between fluctuating insurance premiums, varying employee health needs, and the opaque costs of services, pinpointing the financial return of health benefits has often felt like chasing a moving target.

The simplicity of the DPC model, coupled with the right technological and reporting tools, can change this narrative. However, this process will not be straightforward; you will encounter some dilemmas. Want an example? We often say that Direct Care aims for Preventive Medicine, which helps employers save money by avoiding sickness and major healthcare costs in insurance plans. But how do you measure how much has been saved in this scenario?

Making It Easy to Track and Measure ROI for DPC Plans Focused on Employers

Here, we will cover some key considerations for each side of the ROI formula.

Cost of Investment

Let's suppose you are partnering with an employer who has 10,000 employees, and 10% of them, which is 1,000, usually seek your healthcare assistance. This assistance could be in the form of virtual or face-to-face appointments, or inquiries via email, chat, etc.

Here are two possibilities for how to charge for your services:

• Option A: You could charge a reduced flat monthly fee for all 10,000 employees.
• Option B: You could charge a flat fee, already considering the fact that only a part of the employees access your services monthly, though everyone is allowed to do so.

Trying to put yourself in the shoes of an employer: which model would you prefer? There is no right or wrong answer, but it might be interesting to explore both scenarios and analyze your own experience. You may find that in some scenarios, Option B can help prevent the employer from feeling like they are paying 10 times more for what is actually consumed by their employees.

Return on Investment

As we mentioned earlier, it can sometimes be challenging to measure the money that you help your partner employer save. However, there may be different leading indicators that can be very strategic and support you in demonstrating patient satisfaction. Consider three main categories:

Track Employee Health Outcomes: 

By monitoring health improvements and the frequency of primary care visits, employers can see the direct impact of DPC on employee well-being.

According to the report 'Direct Primary Care: Evaluating a New Model of Delivery and Financing', organized by Milliman, DPC enables employers to experience reductions in healthcare claims costs, attributed to the accessibility of primary care and improved employee health. Some notable findings include:

• A 12.6% reduction in claims costs.
• A 40.5% reduction in emergency department visits.
• A 19.9% reduction in inpatient hospital admission rates.
• A 6.1% reduction in outpatient surgery spending.

Analyze Healthcare Savings

Platforms can compare the costs of DPC plans against traditional health insurance plans, highlighting savings on premiums, out-of-pocket expenses, and the reduced need for specialist and emergency room visits.

Apply Patient Satisfaction Survey

Conducting a patient satisfaction survey for every patient you attend to can help you showcase metrics such as the Net Promoter Score (NPS) of your services.

Depending on the relationship you have with the HR or Benefits departments within companies, it may be beneficial to ask them if they are noticing or are able to measure any productivity gains according to the internal indicators they have. This communication with the employer's team can also help to uncover internal indicators to quantify the positive impact of DPC on the overall performance of the team.

Check out other related articles focused on Partnering with Employers on the SigmaMD Blog.

• The Direct Care Benefits for Employers and Employees
• Implementing Direct Primary Care for Employers: Overcoming Challenges to Improve Employee Health‍
• Crafting Wellness Programs for Employers: A Guide to Including These Services in Your Direct Care Practice