Return on investment (ROI) is not generally associated with the healthcare sector by-passing bystanders; however, it is increasingly being used as a tool to evaluate the value for money of health interventions. 

Given its high potential to inform and shape future health policies, a comprehensive understanding of ROI analysis and what constitutes an appropriate ROI in healthcare is vital to ensure an appropriate balance between economic requirements and compassionate, human-centric care. 

Essentially, oversight is required to ensure patient care is not compromised in favour of earnings, as the ongoing battle between necessary economic efficiency and the fundamental duty to prioritise patients over profit takes place.

The Impact Of Financial Performance Requirements On Private Healthcare

The pressure for financial performance in the private healthcare sector can lead to a complex array of issues. While more financially stable institutions are better positioned to invest in quality improvements, those under pressure are caught in a vicious cycle of cost-cutting that harms patient care. This can include:

• Compromised quality: Hospitals under financial duress may implement cost-cutting measures, such as reducing staffing levels or postponing investments in equipment or facilities. This can negatively impact patient care, as it often creates longer wait times and poorer quality of care. 
• “Time-starved” care: When staff levels are reduced, it often means less time is spent with patients. Rushed appointments can result in missed details or a failure to address all patient concerns, while also increasing the likelihood of healthcare worker burnout, which can also negatively impact patient outcomes. 
• Reduced access to services: To manage costs, private hospitals may close facilities or downgrade services in critical areas such as mental health, maternity, and reconstructive surgery, making it harder for patients to access required care. 
• Increased costs and public system strain: When private healthcare becomes less accessible or affordable, patients may elect to drop their cover and seek care via the public health system, increasing the burden on the already strained public infrastructure. For-profit hospitals also tend to focus on more lucrative services (such as elective surgeries) to ensure a higher ROI, and during a crisis, demand for these services often drops. This can put private hospitals at financial risk as well. 

On the flip side, when a positive ROI is reported, hospitals can improve the quality of patient care through new technologies, the recruitment of skilled staff, and the creation of reliable systems to enhance the patient experience. 

Is “Return On Investment” The Right Way To Approach Healthcare Review?

The primary concern with an ROI approach to healthcare review is that it often fails to acknowledge wider organisational benefits beyond the monetary.

Modifications to the ROI methodology have been attempted; however, it often details non-monetisable programme benefits as additional (not primary) benefits. This clearly demonstrates that, while only a small fraction of healthcare quality improvement (QI) initiatives are actually monetisable, there is still a general belief that only these should be seen as ROI. 

Non-monetisable, compassionate benefits that result in better patient outcomes and greater staff retention are highly valued by most organisations, so, unsurprisingly, many consider the current, prominent ROI approach an oversimplification. 

Many other industries have already rebranded ROI (marketing and commercial services often use “return-on-quality” or “value-on-investment”), and there are calls for a deeper understanding and reconciliation of healthcare views on ROI to better align with the realities of the sector.

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Interestingly, and despite current processes, compassionate care and ROI are not mutually exclusive. 

While metrics such as direct cost savings from reduced errors and litigation are readily apparent in the bottom line, compassionate care resulting from advanced technologies or well-supported staff can shorten patients’ length of stay and reduce the likelihood of readmission. These measures also save staff members time while avoiding overtime, improve employee retention, and increase patient morale. While not as tangible as errors or litigation nor as easily assigned a dollar amount, these returns are meaningful for patients and healthcare facilities.

Ultimately, both quantitative and qualitative, and financial and human impacts should be considered in equal measure when assessing ROI, alongside an “spend less but spend smarter” attitude. ROI needs to be considered through the logic of contextual appropriateness, and given healthcare’s complex social environment, consisting of actions and interactions from humans, technologies, processes, and systems, it can become tricky, fast. 

Future-Thinking: How To Set Up The System For Success

Alongside a review of how ROI is assessed in healthcare beyond monetary value, future-proofing the workforce is another key component to ensuring compassionate care is prioritized. Specialised training, such as that found in an accelerated nursing program, is evolving to teach emotional intelligence and patient-centred advocacy as core clinical skills for the modern era.

Education that deliberately focuses on compassion, empathy, communication, and ethical decision-making will ensure healthcare professionals view patients as people first, not a means to make a profit. It is linked to better health outcomes, increases patient satisfaction and trust, reduces stress for patients and professionals, and teaches holistic care that addresses emotional, social, and physical needs. 

For healthcare professionals, it reduces the risk of burnout through improved job satisfaction, which in turn reduces the likelihood of staff turnover – a more easily measurable ROI. 

By combining an ROI review with patient-centered education, the healthcare industry can reclaim compassion. ROI that recognises non-monetary benefits will improve outcomes for healthcare providers, healthcare professionals, and patients alike, while fostering the importance of compassionate care through education ensures that future generations of workers will embrace and advocate for the ideal. 

Together, these approaches can create a system in which economic sustainability and proper care are not competing priorities but mutually achievable goals. 

Disclaimer: The views in this article are based on the author’s analysis and industry observations. Claims regarding ROI in healthcare are theoretical and may vary depending on institutions, regulations, and market conditions. This article does not guarantee specific outcomes or financial performance and should not be considered professional advice.