Question

Why is measuring return on investment (ROI) more of a challenge in healthcare than in other industries. Give an example in your discussion describing how a hospital would define ROI if they were implementing an outpatient project (e.g., wellness center, urgent care, physician practice, etc.).

Answer 1

Return on Investment is the indicator which is related to the performance of the company. It actually calculates the benefits in terms of values on the different investment made by the company. It shows that the how effectively the investments are made by the company. Every business estimates or calculates the performance indicator so as to make the decision making effective. But it is totally different in the healthcare industry case. It is more challenging because of the following reasons:

1. Stewardship: The health care industry has to mainly and truly focused on the safety, timely approach, appropriate or exact, specialist, 24/7 care-delivery of the services etc. This process generates the trust not the returns in financial terms. It varies from this industry to other industry. Healthcare does not need any strategy if they focused on above mentioned facts. The accounting here is just the end results.
2. Moral integrity: This industry has to follow the moral integrity that they have to rescue the patient. Life gives only one chance so here there is no options if the heath care fails to do.
3. Government Rules and regulations are strict.

For example, xyz is a hospital which provides the health care services to the customers. They have wellness center, urgent care, physician practice, etc. They do the business very fine way. They Take utmost care of the patient so that they may not feel ignored. The hospital is growing in terms of financials as they follow the procedures, rules of the government, focused on the safety, timely approach, appropriate or exact, specialist, 24/7 care-delivery of the services etc. So, they need not to prepare any strategy for the returns on the investment. When they have the financials at the end they open other centers for the outpatients where they got primary treatment. Thus the process of getting returns may be slower than other but there would be positive return always.