Return on Investment Research Paper

Download this Research Paper in word format (.doc)

Note: Sample below may appear distorted but all corresponding word document files contain proper formatting

Excerpt from Research Paper:

Return on Investment Health Management

Health Management and Services: Return on Investment Strategy,

Solutions and EMR as an Incentive for Increased ROI

As the medical field continues to grow and therefore continues to become more and more complex and complicated -- especially in viewing the integration of health services and cost analysis -- one can understand the need for critical improvements in the area of health management and services in order to ensure that companies receive the full benefit of the health management solutions which they employ. Healthcare organizations and the physicians they support are vital to the well-being of the human race, yet, when it comes to the balance sheet, many of these entities are facing real emergencies of their own, as costs for medicine, equipment, and indigent care are increasing -- all while reimbursements are going down (Mannino, 2009, p.2).

With increasing costs and diminishing profits, health systems have been forced to cut their expenses significantly, which makes the need for an increased return on investment absolutely vital not just to the success of these organizations, but to their continued existence within the medical landscape. In viewing the current literature available regarding the topic, one can begin to understand the strategies and solutions that may be employed in order for these medical organizations to properly invest their limited funds in a way that will secure their respective success in the future. Additionally, the basis for a strategically-implemented return-on-investment solution can be set forth as a guidepost for more specific health systems improvement on a wider scale.

Strategies for Health Systems Improvement

As the patient population continues to increase across the nation, the medical facilities which deal with these patients comparably deal with the same influx, increasing facility costs and delving into facility budgets. In understanding this basis, one can see that certain strategies and solutions must be found in order to resolve this issue, as well as other health system issues which deal with the patient population. There are many available solutions that have been proposed in the field to ensure that such medical facilities and organizations reap the benefits of their limited investments. However, the question arises as to which of these solutions appear to be the most profitable?

To begin viewing the proposed solutions to the return-on-investment issue within the medical field, one must first understand the basis of a "return-on-investment" as a concept. A return-on-investment (ROI) is the profit that is generated by the money a business owner puts into a business, and is usually expressed as a percentage return (Murray, 2010, p.1). In the healthcare setting, one can understand -- even with only a minimal knowledge of the field -- that the expenses accumulated to run such endeavors are exceedingly vast. Therefore, organizational budgets must be clearly analyzed, and areas of investment must be clearly and fully researched before any revenue is placed into an area of investment.

In order to more successfully serve a given patient population, many healthcare organizations and facilities have adopted an "ROI culture," which strategically employs solutions, suggestions, and business goals into a company's monetary decisions in order to cut waste and increase profits. One such strategy to improve the health systems issue of ROI maximization is the dissection of the benefits of workforce management systems (Mannino, 2009, p.2). Author William Mannino notes that the greatest amount of waste can often be found in the labor pool, as in most organizations, the largest internal cost -- is people (Mannino, 2009, p.2). He notes that even a one percent reduction in total payroll costs -- without layoffs -- would deliver significant financial benefits, at little cost to employees, which would free up significant funds to invest in other areas, such as updated software programs, which set place in organizations, have the ability to streamline costs and actions within that organization.

The implementation of recently-utilized and continuously-enhanced technology such as electronic medical records have proven vastly successful in many different organizations across the country, streamlining processes, decreasing time spent, and increasing accuracy. Such reporting systems are relatively inexpensive to implement, especially in viewing the significantly increased ROI figures that have been experienced by many institutions since implementing these features. Electronic Medical Records (EMR), which streamline medical records and eliminate the need for outdated paper recording systems, have in recent years, become adopted by many organizations who have cited both health and financial benefits stemming from the use of EMR and overarching health information technology (HIT). In 2005, Health Affairs, estimated that the potential savings and costs of widespread adoption of EMR systems count eventually save more than $81 billion annually, by improving healthcare efficiency and safety (Bigelow, et al. 2005, p. 1103). Such an estimation has yet to be seen to the level projected, but in viewing the implementation of the EMR systems in certain areas, one can see that the ROI is in fact much higher than could have been anticipated originally.

Return-on-Investment Solutions

A traditional ROI analysis weighs the financial impact of operating expenses with the revenue gains from service delivery, and as such, if projected revenue gains exceed costs, the investment is justified, and if funds are available, then capital is provided for the investment (HFM/JHIM, 2003, p.2). In the field of healthcare, benefits are usually found in cost avoidance rather than revenue enhancement (Rosenstein, 1999, p. 263). Comparably, the use of EMR in healthcare organizations and in overall health management and services have achieved and will continue to achieve significant returns on the investment placed in implementing such technology.

The implementation of information technology (IT) within the healthcare field has always been questionable, especially with so many varying products being placed on the market in competition with one another. This multitude of products along with lacking research as to the potential long-term benefits of such products made the implementation of such IT a total gamble. However, the inception of the EMR system has streamlined such IT systems and has continued to produce research that does nothing but promote the overall quality and benefits of such a system -- especially in the area of ROI figures.

In viewing this proposed solution, one must also view the cost analysis that comes with implementing such new strategies into pre-existing facility operations and procedures. The implementation of such IT solutions like EMR are certainly not inexpensive, but facilities with the means to implement the system stand a better chance of turning an increased ROI in the long-run, as seen by some of the available research. As touched upon, the costs are substantial, and include product costs, software costs, interfaces and conversion costs, hardware costs, services costs, installation costs, electronic billing costs, and recurring annual costs to stay connected, and this is just to name a few (Prasad, 2011, p.1). One study of 14 facilities instituting electronic medical records averaged a cost of $44,000 per full-time provider for initial setup and an additional $8,500 annually for the provider to maintain (Lawrence, 2011, p.1). On average, these practices recouped the cost of their EMR system in two and a half years and thereafter profited to the tune of about $23,000 per provider a year via improved efficiency (Lawrence 2011, p.1).

Strategic Plan

In beginning a strategic plan for implementing such strategy for increasing facility ROI, one must take into account the step-by-step approaches needed to ensure that investments will pay off in the end. Such planning is not merely a numbers game, despite the importance of measuring elements of preparedness to determine any return on investment (Jensen, 2011, p.3). Instead, it is more so a measure of the relevant elements of preparedness, encompassing a nearly endless list of the numbers of things that are actually relevant to any new endeavor.

The current economic environment has taken a significant toll on the ability of any entity to increase revenue, or engage in new investments. In recent years, even investments that would have proven to be foolproof in years past, under the overarching economic crisis, sent companies into ruin, forced to deal with new debt that in year past would have been new profit margins. As such, the current mood when surrounding the idea of investment continues to be one of uncertainty. This uncertainty has been escalated to an even higher level when looking into the medical field. The status of the American healthcare field has been comparably uncertain in recent years due to the economic recession. Healthcare has become more expensive, more and more patients remain uncovered by insurance, and medical facilities and medical corporations have been left to pick up the pieces in terms of continuing to operate with a far lower bottom line.

The implementation of an EMR system holds the ability to introduce significant and valuable measures of ROI including minimized costs over time and a plethora of other benefits including transforming the way care is delivered, reducing medical errors, increasing internal efficiencies for clinical and administrative users, improving revenue capture among a host of other critical benefits; the promise of…[continue]

Cite This Research Paper:

"Return On Investment" (2012, February 07) Retrieved October 25, 2016, from

"Return On Investment" 07 February 2012. Web.25 October. 2016. <>

"Return On Investment", 07 February 2012, Accessed.25 October. 2016,

Other Documents Pertaining To This Topic

  • Investment Portfolio

    Investment and Portfolio Analysis With the increasing economic downturn in the economy, the need of investment has increased considerable. The potential investors generally foregoes their current leisure and earnings and investment their earnings and expect to earn benefits in future for the same. For analyzing the investment, we have taken into consideration a hypothetical investor who has $50,000 which needs to be invested in different, in different assets. Investment is one of the

  • Investment Portfolio the Beta Coefficient for Google

    Investment Portfolio The beta coefficient for Google, Inc. is 1.03 using the Excel Slope function (Christensen). Using the S&P 500 as a benchmark, this beta coefficient has a higher risk than the market (Christensen, How to Interpret a Beta Coefficient). With this stock included in a portfolio, it would need to be diversified with less riskier investments in order to balance the overall portfolio risk and return on investment aspects of

  • Investment in Higher Education as a Tool

    Investment in Higher Education as a Tool for Promoting a Stronger Economy: Examining the Literature Reviews of Previous Dissertations The following research is an exercise where three dissertations under a similar topic were mined in order to better understand their organizational structure, thematic content, and approach to examining the current discourse. The primary topic here is going to highlight how reinvestment into higher education can help facilitate for a stronger, more

  • Investment in South Africa in Your Judgment

    Investment in South Africa In your judgment, were the possible utilitarian benefits of building the Caltex plant in 1977 more important than the possible violations of moral rights and of justice that may be involved? Justify your answer fully by identifying the possible benefits and the possible violations of rights and justice that you believe may be associated with the building of the plant, and explaining which you think are more

  • Investment Associates Identify Three Ways That the

    Investment Associates Identify three ways that the HR metrics can be used to justify the purchase on an HRIS. In the contemporary business environment, many organizations have identified that an effective Human Resources (HR) management enhances organizational effeciencies. To enhnace the functions of HR department, firms have realized that the integration of Human Resources Information System (HRIS) provides primary infrastrutures by which HR department performs effectively. Despite the benefits that an organization

  • Investment Opportunity Nowadays Organizations Strive

    83% in 2008 compared to 2007, but by 127.10% when compared to 2004. Shareholder equity is also included in the ascendant trend revealed by Apple for all financial highlights. By 2008, it had increased by 314.30% relative to 2004. Compared to the previous year, the growth was of 44.71%. The final row of the table deals with the net cash provisions used by the investing operations. These do not reveal a

  • Investment Decision Duncombe Village Golf

    Using values found in a table of factors for calculating the present value of a dollar; the periods one through four have the following present value factors: Year One= .9259 Year Two= .8573 Year Three= .7938 Year Four= .7350 Next these factors are multiplied individually by the net cash flow generated by the investment in each period. Year One= $500,000 Year Two= $450,000 Year Three= $350,000 Year Four= $320,000 The multiplication calculation reveals the discounted cash flow values: Year One= $500,000*.9259=

Read Full Research Paper
Copyright 2016 . All Rights Reserved