An iron triangle ROI model for health care

Figures & data

Figure 1 Theoretical model.

Notes: The first section begins by describing the empirical design of the iron triangle ROI model. In this section, an empirical framework for incorporating gains in patient access is proposed. The first section concludes by outlining all the variables that the “user” (the person performing an economic analysis using the model) can input and select for analysis. The second section of the article then describes a case study of the model using New Mexico Medicaid data and two proposed initiatives – a statewide HIE and a CHW program focused on chronic disease patients.
Abbreviations: CHW, community health worker; HIE, health information exchange; ROI, return on investment.

Figure 2 Conceptual model of the effects of the HIE and CHW programs on ROI.

Abbreviations: CHW, community health worker; HIE, health information exchange; ROI, return on investment.

Table 1 Program costs

Program	Year 1	Year 2	Year 3	Year 4	Year 5	Year 6	Year 7	Year 8	Year 9	Year 10
HIE	$847,000	$847,000	$847,000	$835,000	$835,000	$835,000	$835,000	$835,000	$835,000	$835,000
CHW	$970,610	$970,610	$970,610	$970,610	$970,610	$970,610	$970,610	$970,610	$970,610	$970,610
Total	$1,817,610	$1,817,610	$1,817,610	$1,805,610	$1,805,610	$1,805,610	$1,805,610	$1,805,610	$1,805,610	$1,805,610

Abbreviations: CHW, community health worker; HIE, health information exchange.

Table 2 Model baseline estimates

Program effects	Baseline estimate	Source(s)
CHW Savings effect	5.0%	34–36
CHW Health effect	1.0%–3.4%	35,37,38
CHW Access effect	5.0%	34
HIE Savings effect	0.5%	12,39,40
Outreach effect	20%–50%	41,42

Abbreviations: CHW, community health worker; HIE, health information exchange.

Table 3 Effect sizes – weighted average effect across all four priority disease areas

	Year 1	Year 2	Year 3	Year 4	Year 5	Year 6	Year 7	Year 8	Year 9	Year 10
CHW Savings effect	1.0	2.0	3.0	4.0	5.0	5.0	5.0	5.0	5.0	5.0
CHW Health effect	1.0	1.6	2.2	2.6	3.0	3.4	3.0	2.8	2.8	2.8
CHW Access effect	5.0	5.0	5.0	5.0	5.0	5.0	5.0	5.0	5.0	5.0
HIE Savings effect	0.5	0.5	0.5	0.5	0.5	0.5	0.5	0.5	0.5	0.5
HIE Health effect	0.0	0.0	0.0	0.0	0.0	0.0	0.0	0.0	0.0	0.0
HIE Access effect	0.0	0.0	0.0	0.0	0.0	0.0	0.0	0.0	0.0	0.0
Outreach (both programs)	20.0	25.0	30.0	35.0	40.0	45.0	50.0	50.0	50.0	50.0

Note: Data shown as %.

Abbreviations: CHW, community health worker; HIE, health information exchange.

Table 4 Iron triangle ROI model results

Model variable output	Year 1	Year 2	Year 3	Year 4	Year 5	Year 6	Year 7	Year 8	Year 9	Year 10
Costs
HIE costs	$847,000	$822,330	$798,379	$764,143	$741,887	$720,278	$699,299	$678,931	$659,157	$639,958
CHW costs	$970,610	$942,340	$914,893	$888,245	$862,374	$837,257	$812,870	$789,195	$766,208	$743,892
Access costs	$122,766	$268,178	$433,945	$617,915	$818,069	$1,032,515	$1,259,478	$1,472,344	$1,671,741	$1,858,274
Total costs	$1,940,376	$2,032,848	$2,147,216	$2,270,304	$2,422,330	$2,590,050	$2,771,648	$2,940,470	$3,097,106	$3,242,124
Cases avoided, cumulative	3.74	10.90	22.23	37.16	56.01	79.05	100.18	118.47	135.61	151.66
Cost per case avoided	$518,894	$363,872	$273,892	$223,520	$189,905	$165,536	$156,241	$154,614	$155,311	$157,398
Gains in access, cumulative	19.26	43.33	72.22	105.92	144.44	187.77	235.91	284.06	332.20	380.35
HIE Savings effect	$1,035,255	$1,294,069	$1,552,883	$1,811,697	$2,070,511	$2,329,324	$2,588,138	$2,588,138	$2,588,138	$2,588,138
CHW Savings effect	$158,816	$397,039	$714,671	$1,111,710	$1,588,157	$1,786,677	$1,985,197	$1,985,197	$1,985,197	$1,985,197
CHW Health effect	$143,054	$286,354	$472,668	$651,240	$858,325	$1,093,923	$1,070,453	$997,945	$997,945	$997,945
Reduction in cost of care, cumulative	$1,298,180	$3,162,128	$5,669,818	$8,845,846	$12,742,244	$17,105,474	$21,694,390	$26,092,410	$30,362,332	$34,507,887
Return on investment	−33.10%	−20.26%	−6.86%	6.50%	19.80%	30.73%	38.61%	42.45%	44.16%	44.56%

Abbreviations: CHW, community health worker; HIE, health information exchange.