Thinking about Benefits
How to Identify Benefits
You are putting together your proposal for a reason(s); those reasons are likely the
benefits of the proposal.
Like costs, benefits are either tangible (can be measured) or intangible (you know they
exist but you cannot measure them easily). The Nurse Consultant gives some examples of
intangible and tangible benefits.
Important point: In your individual assignment you will figure the benefit of your
proposal.
Considerations for Calculating Benefits
So ask yourself what you are trying to do with your proposal, the answer is likely the
“benefit” of the proposal.
Typical examples of benefits of patient care unit proposals or agency proposals are:
Increase in positive patient outcomes
Improved patient safety
Decrease in a wide variety of nosicomial events.
Decrease in costs to hospital for having to treat the results of those nosicomial events.
Improved communication
Decreased conflict
Increased patient satisfaction
Increased physician satisfaction
Increased staff satisfaction
Decreased staff absenteeism
Decreased staff turnover
Increased productivity
Decreased waste
Increased reputation in community
Improve Medicare reimbursement
Plus others
Now all of these benefits result in either more money coming in or less money going out.
For some of them (the tangible ones) we can know pretty closely the exact amount of
money. For example: we can figure how much staff turnover costs us in one year, and if
the next year we have decreased it by 50% then we know how much we saved. For
another example: the industry knows how much cost a typical pressure ulcer adds to
treatment; and if the pressure ulcer occurred while the person was a patient then Medicare
and most insurance companies won’t pay for it, so the hospital has to. If we know how
many pressure ulcers a hospital typically has in a year, and we know how much added
cost the treatment for them is, then if our proposal is able to decrease the occurrence of
pressure ulcers by say 50%, we will know almost exactly how much money we saved.
For some of these other benefits (intangible ones) it is harder to pinpoint the precise
dollar amount, for example, decreased conflict or improved communication. We don’t
know how much of a dollar benefit they are, but we do know that they result in all the
other benefits and probably increase productivity so we do know that they benefit the
budget.
For your assignment, you are supposed to figure the costs and also the benefits of your
proposal. Benefits, like costs, will depend on what your proposal is. For whatever it is,
you should list what the benefits are, and for the ones that you can calculate a number,
you should. You can obviously calculate the benefit to attaining the Medicare bonus!
You completed that in Week 1!
Where to get the numbers for the benefits you can calculate:
Remember, to figure what the benefit will be, you must know what the cost is. So when
you search the literature, look for the “cost of XXX” not the benefit of it. The Illinois
Report Card has a wealth of data to help you find values as well as use data to calculate
values.
For the individual assignment, you are required support you work with sources. You can
search nursing, medical, hospital, and healthcare literature. Search for your t proposal
topic and use key terms like “cost of”, costs savings, prevention, reduction, and many
other possibilities you might imagine. Help one another out with this, if necessary in your
team discussions.
Use the data to determine the number of events and the cost of an event to obtain the total
cost. Find out how much it costs a hospital to deal with one negative event and multiply
by the reduction in events your project will achieve (check the literature).
Then determine by how much your proposal is going to decrease the negative event. You
can guess; just be able to support your estimates.
In summary: if you know the number of events and know the cost of one of those events,
then you can multiple those two numbers and get total cost of the events. Next because of
your proposal you are going to have 50% fewer of those events next year, so then you can
figure how much you are saving the company by implementing your proposal.
So please note: often times to figure the actual dollar amount of the benefit, you first have
to figure the cost; and then the benefit is how much of that cost will be saved by the
proposal.
Benefit Calculations
Once you have benefit/cost information you simply have to do the calculations. For
benefits that you are able to calculate, you need to show “your work”. In other words
“What numbers are you using and how did you come up with them?” You will show your
work by completing the Cost-Benefit Analysis Template specific to your project
strategies.
Remember that to calculate benefits you often have to calculate the cost of something,
and then determine how much of that cost will be saved by implementing the proposal.
The savings is the benefit.
Regarding Cost numbers found in the literature (you have to find cost
numbers in order to figure the benefit)
Review all the cost and benefit numbers in your CBA to determine if they are “per”
something (for example, per patient, per day, per year, per case, per bed, per nurse, per
unit, per admission, per surgery, per error, etc.). If they are, then the calculations will
have to include the average estimated number of those entities times the cost or benefit.
For example: Say your proposal goal is to decrease falls by 75%.
Well again to figure the benefit of implementing the proposal, we need to figure how
much falls are costing the facility per year. So if the literature says or your facility has on
average 3 falls per every 1000 admissions to a hospital, you will need to know the total
number of admissions per year, divide it by 1000, and then multiple that number by 3 to
know how many falls occur per year at your facility.
Next you need to be sure you know what is included in the cost number. If an article says
“falls add an extra $15,000 in cost per patient”; that number is helpful because the
$15,000 tells you the total costs (cost of extra nursing care, cost of extra hospital days,
cost of extra supplies and medicine, etc); therefore you do not need to figure each of
those costs individually.
Also note, that if the article says $15,000 per patient, it probably means per patient that
falls and gets hurt from the fall. Therefore, you cannot simply take $15,000 times the
number of admissions (not every admission falls, and not every fall results in further
injury). Read the whole article, it probably says something like: of the X number of
hospital admissions per year, X% of those fall; and of those falls X% has an injury.
Once you know how many falls happen per year and what each one costs, then you can
easily figure the total costs of falls. And thus if you are going to decrease the number of
falls by 75%, then take the total cost of falls times .75 and you will have figured the
benefit of the proposal.
What to do about intangible benefits that are harder to calulate:
You should name the benefit(s) and describe how/why it is a benefit;
Research the literature on the topic and look for numbers that you can present, then
indicate whether the benefit is small or large (for example, even if you cannot find the
exact amount that improving patient satisfaction so patients recommend a facility to
friends and family you can estimate the potential for increased patient days and arrive at
an estimate).
Remember in a proposal you are presenting your idea for acceptance and implementation,
you absolutely must be able to make a persuasive argument that the benefits (long term or
short term) outweigh the costs. Even if you cannot do that with precise numbers, you still
have to make the case that the benefits are there and are worth it. That is what you are
doing in this part of the assignment. You also have to support that your project will have
the impact required to net the bonus so the facility has positive ROI because the project
was implemented.