For years here at Policy Medical, we have talked about how our policy management technology will save your hospital money and generate an enterprise-wide ROI. As you might imagine, everyone else in the healthcare policy management space does this. But a recent conversation I had with a long-term client made me take a serious look at this subject of “ROI”. Here are her thoughts, and they are quite telling:
“Listen. I want to keep using your company’s policy management system, but I need to justify not just your policy management software but I need to justify just having any policy management system. They are thinking of going the Microsoft SharePoint route and I don’t want that at all. To be honest with you I have been all over the internet to see what the return on investment is for policy management software and I can’t find anything. All I find are marketing brochures and sales collateral that are masked as healthcare ROI white papers, healthcare policy management analyses and healthcare policy management ROI calculators. I need something that paints the picture of the ROI of a healthcare policy management system from our side of the table.”
She is not the only one in this position. If you are pitching your hospital’s Board of Directors for capital dollars to purchase a policy management software solution, you will need to confidently outlining the real values and benefits your hospital will yield within a maximum of twelve months. Here are some of the key values and benefits of having a hospital policy management software solution and how you can achieve a return on investment with each one of them.
The Benefits of Healthcare Policy Management Software and How that Impacts ROI
We have seen many hospitals try to calculate basic and highly subjective figures to determine how much time is wasted looking for policies and procedures. Examples of typical calculations include:
“If your facility has 100 employees searching for policies, and each employee searches for 5 policies per month, with each policy taking 50 seconds to find, then the amount of time your organization as a whole spends searching for policies is 6 hours and 57 minutes each month.”
— or —
“If you have about 35 departments, with an average of 7 binders per department and an average of 250 pages in each binder, you will have around 61,250 pieces of paper. “
It is this type of data that is essentially sales fluff in a slick PDF with the word “whitepaper” or “calculator” bolded at the top of the page. Here is an unbiased look at the ROI of healthcare policy management software.
Reduce Operational Costs By Improving Staff Efficiency
There is no doubt that a significant return on investment can be found in the operational efficiency of your healthcare and corporate staff through time savings, resources and materials. Here are some general rules of thumb for you to use to determine your own operational efficiency savings:
- Hospital staff can reduce their effort by 25-50% per employee in the time it takes to manage and retrieve policies and procedures.
- Saved resources can be applied to other functions such as patient care or generating additional revenue.
- An electronic policy management system includes enhanced workflow management to address regulatory and procedural compliance. This is an additional 15-25% reduction in effort for updating documentation.
- Hospitals can reduce direct operational costs for producing printed policies and procedures by over 90% by reducing the cost of:
- Materials and shipping costs for updates to policies and procedures.
- Materials and shipping costs for binder “reorders”.
- Hospitals can reduce indirect operational costs by streamlining processes
- Policies and Procedures Management
- Legal Contracts
- … and more
Reduce Insurance Cost by Reducing Your Risk Exposure
Hospitals can add to their policy management ROI by proactively mitigating risk and reducing exposure during accreditation surveys by demonstrating employee adherence to regulations and standards. This will significantly reduce the cost of survey citations. Here are the general savings that can be achieved by the following risk mitigation steps that are possible with an electronic policy management system:
- Limiting your risk exposure will allow you to reduce your hospital’s risk reserve funds by 10-20%. Every year hospitals set aside funds for legal action based on their risk exposure. If a hospital can immediately prove that the policy in question was up-to-date, available, and read by the employee, the risk and cost of legal action is significantly reduced, thereby reducing the need for reserve funds.
- Maintain a continued state of readiness. The most current policies and procedures are readily accessible and available to staff, therefore reducing risk of patient safety and abiding by federal and payor regulations and standards.
- Reduce the risk of exposure to survey citations. Learning from the knowledge of prior citations will help hospitals prevent surveyors from imposing fines on citations that have not been mitigated and preventing new citations for the same observation.
- Greater control and management for team members allows everyone to stay on top of the latest policies which reduces risk exposure.
- Improve intangible items such as surveyor satisfaction, hospital brand protection, your reputation, and your credit rating and protection.
- Reduce errors by 30-40% on governance risk and compliance reports.
Effective Governance Increases Hospital Reimbursements by Medicare
When hospitals reduce their citations, they get a better rating from programs like Medicare which leads to increased reimbursements for all procedures. Policy management systems contribute to this ROI for all of the same reasons listed above.
- Immediate accessibility allows administrative departments to focus on improving policies and procedures and providing oversight rather than getting caught up in updating binders.
- Standardization of governance and best practices across the enterprise reduces risk exposure.
- Reduced cost of governance by always having the right policies in place rather than constantly updating binders and figuring out who needs which update.
- Increased business agility to accelerate on-boarding of new clinics and partners.
- Compliance agility to react more proactively to emerging risks and changes in regulatory compliance.
The Value of a State of Ready Compliance
There are many benefits to always being in a state of ready compliance. Not only do your hospital employees benefit from the knowledge they gain by always having the latest information, but whenever you are “tested” by either governing agencies or risk assessments, you will pass with flying colors. Some hospitals now welcome the opportunity to shine in the eyes of their surveyors. The cost savings associated with a state of continued readiness include:
- Reduce consultant costs to maintain regulatory compliance by more than 50%.
- Reduce compliance citations by a minimum of 20%.
- Decrease in the overall cost of surveys and spot checks by federal and state agencies because it doesn’t take as long to complete with an electronic policy management system as it does for a paper-driven system.
- Automatic policy crosswalk of practices across regulatory standards as it relates to each policy and procedure provides proven compliance to reduce risk exposure.
- Intangible benefits of an enriched environment for collaboration and sharing of knowledge amongst peers. The financial impact of this benefit is keeping good employees longer and reducing the cost of staff turnover.
- Reduce man-hour costs for compliance reporting by 15-25%.
- Reduce the cost of audits by 10-20%.
The ROI of Patient Safety
Increasing the knowledge and satisfaction of team members within your hospital does more than create a great working environment. It also creates a collaborative environment that fosters patient safety. There is no argument about the cost savings of patient safety, but here are a few things to consider when evaluating how a policy management system could improve both patient safety and costs at the same time.
- Ensure staff awareness to mitigate safeguards that enhance patient safety or prevent grievous or fatal patient harm. While the human factor alone should be enough to implement policy management software, nobody can argue with the value of reducing the cost of legal action.
- Health teams that have easy access to instructional videos, links, and tests are better equipped to serve their patients and ensure their safety. There is no better mitigating factor than a highly educated hospital staff.
Calculate The ROI For Your Hospital
In summary I hope this article has given you enough guidance to articulate and start compiling your own hospital’s return on investment for deploying policy management software. Use these general estimates to determine your own operational savings and you will have a much more accurate picture of the return on investment at your hospital for policy management software.
Many software companies will focus on uneducated figures based on data like how fast your hospital employees are leafing through manuals or are able to search your intranet. Those metrics are unique to each hospital and highly subjective. Here at PolicyMedical, my goal is to give you the average costs along with a map and compass of what areas to start analyzing for your own policy management software ROI. After all, only you and your policy team will know if investing tens to hundreds of thousands of dollars in a policy management system will be worth it for your healthcare organization.
If you would like assistance in determining your hospital’s return on investment, don’t hesitate to reach out to my team to ask for help. We would be happy to walk you through the process and then you can make an educated presentation to your hospital’s board of directors.