THE BUSINESS CASE FOR QUALITY - IN MEDICAID MANAGED CARE - Using the Return on Investment Template - May 2007

Sep 12, 2026

This instructional manual explains why a compelling business case is essential for sustaining quality enhancing interventions (QEIs) in Medicaid managed care and how to quantify their value. It introduces the concept of a health care business case from an investor’s perspective, including direct financial returns, avoided costs, and potential indirect benefits. It also provides step-by-step guidance for using a Return on Investment template to collect and display the required data, acknowledging the need for customization across settings and interventions.

LanguageEnglish

CategoryPresentations

FormatPDF

Pages15

Reading Time5 min

AccessFree to download

Introduction

Why Care About the Business Case?

What is a Business Case?

The Components of the Payer Business Case Analysis

Things to Consider Before Undertaking a Business Case Analysis

Instructions for Using the Return on Investment Template

Proposed Use

Design of the ROI Template

The Data Entry Spreadsheets

The Output Spreadsheets

References

Appendix A – Sample Business Case Analysis

THE BUSINESS CASE FOR QUALITY IN MEDICAID MANAGED CARE Using the Return on Investment Template Developed in collaboration with: The Center for Health Care Strategies May 2007 Kristin Reiter, PhD 1 Kerry Kilpatrick, PhD 1 Sandra Greene, DrPH2,1 Sheila Leatherman, MSW 1 1 Department of Health Policy and Administration, University of North Carolina at Chapel Hill 2Cecil G. Sheps Center for Health Services Research, Chapel Hill, NC Acknowledgements The development of the return on investment template and the related supplemental instructional manual were supported by a grant from The Commonwealth Fund. The authors gratefully acknowledge the valuable input of Stephen Somers, Melanie Bella and Allison Hamblin at the Center for Health Care Strategies, and the excellent research assistance of Emily Keyes. TABLE OF CONTENTS Introduction 4 Why Care About the Business Case? 4 What is a Business Case? 4 The Components of the Payer Business Case Analysis 5 Things to Consider Before Undertaking a Business Case Analysis 5 Instructions for Using the Return on Investment Template 7 Proposed Use 7 Design of the ROI Template 7 The Data Entry Spreadsheets 7 Tab 2. Initial Investment Cost Data 7 Tab 3. Operating Cost Data 9 Tab 4. Paid Claims Data – Intervention 9 Tab 5. Paid Claims Data – Control 10 The Output Spreadsheets 10 Tab 6. Paid Claims Data – Incremental 10 Tab 7. Return on Investment Analysis 11 Tab 8. Incremental ROI Analysis 12 References 13 Appendix A – Sample Business Case Analysis 14 Using the Return on Investment Template The purpose of this instructional manual is to introduce the rationale for establishing a business case for implementing quality enhancing interventions (QEIs) in health care, and to present step by step instructions for using the return on investment template to collect and display the required data. The template is intended to provide a general starting point for retrospectively analyzing the business case; however, no two settings or QEIs are precisely the same. Therefore, users need to be mindful that some customization of methods may be required in any application. INTRODUCTION Why Care About the Business Case? 1. Absent a convincing business case it is unlikely that quality interventions will be sustainable over the long run. While commendable, good intentions can only go so far toward convincing providers (and payers) to adopt QEIs. 2. In cases where an organization has determined that the evidence base warrants the adoption of a QEI, having information about the business case provides a more complete picture of the overall consequences of the intervention for the organization. 3. If the ultimate goal is to attempt to align financial incentives to pay for quality, organizations investing in QEIs need to explicitly measure the costs and savings attributable to the interventions. To recognize the importance of having a strong business case, one has only to look at the fact that deficiencies in the quality of health care remain prevalent despite an increasing body of evidence to guide the implementation of proven quality interventions [1-3] . Policymakers, payers, and employers continue to express their frustration that QEIs of demonstrated effectiveness are not being implemented on a broad basis. Even after decades of careful evidence-based practice research, one of the principal reasons that hospitals, health care delivery systems, and individual providers in the United States give for not implementing promising health care QEIs is that no “business case” for quality can be made. Recent case studies confirmed that, in the absence of a convincing business case, quality interventions have a low probability of widespread adoption and a lower probability of being sustained over time [4] . What is a Business Case? The general notions encompassed in the development of a business case for quality are mostly drawn from non-health care i

FAQs

Why is a business case important for quality enhancing interventions (QEIs)?

Without a convincing business case, QEIs are unlikely to be sustainable in the long run. Good intentions alone are not enough to persuade providers and payers to adopt them.

What constitutes a business case for a health care improvement intervention?

A business case exists when the investing entity realizes a financial return within a reasonable timeframe using a reasonable discount rate, such as profit, reduced losses, or avoided costs. Indirect organizational benefits and sustainability impacts can also support a business case.

How do users apply the Return on Investment (ROI) template?

The manual provides step-by-step instructions to collect and display required data. It supports retrospective analysis but cautions users that customization may be needed because settings and QEIs differ.

Sep 12, 2026

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