Part III – ROI Calculation Formulation

We are rolling out a 3-part blog series on The Autoverification Return on Investment. Subscribe here  so you don’t miss an article.

An effective autoverification ROI should reflect your current and future state. The final step in any ROI design is to estimate your autoverification program benefits and costs to win approval and link it to your program’s overall value. We show you how to lay out your autoverification ROI in a wholistic approach to bridge the clinical with the financial and to secure stakeholder approval.

In part 1 of our auto-verification series, we reviewed the goals, benefits, and basics of how to calculate an autoverification ROI. Read part 1 here.

Part 2 addresses the detailed inputs of the ROI calculation and the data you will need to collect to support the savings and investment side of the ROI equation. Read part 2 here.

In this Part Three of our autoverification ROI blog series we discuss how to assemble a ROI with the appropriate inputs into a spreadsheet format with guidelines on how to interpret the final ROI values

Assembling your ROI

In part 2 of our series we discussed how to gather and calculate the in dollars: 1. the anticipated cost reductions and 2. planned program costs for your autoverification project, otherwise known as ‘Input Data’ of our ROI calculation (see figure 1 below). Now it is time to transfer your Input Data to the ROI Calculation Worksheet.

Figure 1: Input Data

• Total $ Cost Reduction – Assessing your current condition

• Total $ Cost Reduction – Assessing your future condition

• Total $ AV Program Costs

• Total $ AV Internal Costs

• Total $ AV Program Expansion

The ROI Calculation Worksheet can be formatted any number of ways to highlight your benefits and costs over the time frame you choose. It is always a great idea to contact your finance department to discuss a standard format for your ROI analysis.

Following are two Chemistry discipline ROI use cases.

Use Case #1 - Implementing Autoverification for the first time

No autoverification is currently in place and all chemistry results are manually reviewed by the bench technologists. The goal is to implement rules that will reduce the manual review rate so that 95% of the chemistry results are verified by software rules logic.

Assumptions:

• 800 samples per day for a 13 chem panel

• All results were previously manually validated with 3 minutes allocated per sample and reduced to 1 minute in this use case

• Results review reduced to 1 minute with rules logic for 40 samples (0.05 review rate with autoverification) that required technologist intervention due to operator alert technology

• Rerun rate estimated reduction from 20% to 5% based on software rules logic

• All sample results were printed and archived in manual result review mode. The use of autoverification eliminates 95% of the printing and paper archiving costs.

  Diagram 1: Use Case 1 ROI Spreadsheet

Use Case # 2 - Replacement Autoverification Program

An autoverification program is currently in place with a 60% autoverification rate. The customer has purchased a new autoverification program to improve their autoverification rate from 60% to 95%. There will be an incremental change in benefits (savings) that will be realized when improving the autoverification rate.

Assumptions:

• 800 samples per day for a 13 chem panel

• 40% of the results were previously manually validated with 3 minutes allocated per sample and reduced to 1 minute

• Results review reduced to 1 minute with software rules logic for 40 samples (0.05 review rate with autoverification) that required technologist intervention due to operator alert technology

• Rerun rate reduced from 20% to 5% based the enhanced software rules logic. The paper usage was decreased when going from 60-95% autoverification rate

  Diagram 2: UseCase 2 ROI Spreadsheet

General Notes

• The elimination of manual review will always be more efficient than manual review. Expect high AV ROI percentages because you are eliminating 95% of the labor previously used for result review.

• A lower autoverification ROI % is expected when previously some of the results were autovalidated under the previous software vendor rules logic.

• The return on investment will be positive even if you are improving your autoverification rate. You will see a healthy AV ROI% when you optimize your autoverification from a 50-60% rate to the 85%-95% range. However, a gain in efficiency is much harder to achieve when you want to improve a starting autoverification rate that’s 85% or greater.

Interpreting your Autoverification ROI

Once you have calculated your ROI, it is time interpret the results. The following guidelines can be used to understand the meaning of your auto-verification ROI.

ROI = positive percentage. This means that your cost savings and efficiency gains are equal to or greater than the investment in the project. The higher the percentage the higher return.

ROI = negative percentage. This means there is a net loss between your savings and investment. A negative ROI means that your total costs exceed your total return, and the profitability of the project is negative. This is generally not a desirable outcome.

Key Takeaways

• Return on investment (ROI %) for an autoverification project is based on the incremental benefit difference manual review of results in time and effort compared with your current review process and the proposed new solution.

• ROI % is calculated by dividing net benefits (the net benefit return) by the cost of the investment and other internal costs.

• ROI % is easy to display in a spreadsheet style and can be easily interpreted by all levels of stakeholders.

• The data inputs necessary to perform your autoverification calculations are based on data you already have in your laboratory or can be easily obtained or calculated from existing data.

• Frame your autoverification business case around your data and the on-going benefits of the autoverification program. You may need funding in the future for expansion or improvements and your baseline assumptions will be needed to justify any further funding requests.

• Stay on top of your data and respond to any shifts you might find so you can quickly pivot to maintain your expected ROI%.

Autoverification ROI Summary

Your final ROI is the culmination of your hard work and logical analysis that proves that the  the investment in autoverification will result in a net return for the organization. It is always good practice to include all stakeholders in the building of your ROI for your autoverification project to capture all viewpoints. There could be downstream impacts of your autoverification implementation or program expansion that could be captured as a positive benefit. The ROI calculation is a simple and effective methodology for comparing your current and future state for results review. Your chances of funding are greater if you take the time to understand your laboratory metrics that will help justify an autoverification program initiation or change. A ROI is a powerful tool to accompany your business case because it is a universally accepted tool for gaining approval for crucial investments.

Want to know more? Contact us and we will help you with your autoverification business case and ROI preparation. There is no reason for you to delay your autoverification project - we have you covered.