Session Code: RPD-17

CAVIAR: A New ROI Tool to Promote Funding of AT Reuse Programs

Joy Kniskern

Carolyn Phillips

Liz Persaud

February 1, 2013 | 2:35 pm

Learning Objectives:

To identify why return-on-investment (ROI) research is a critical component of obtaining funding for assistive technology (AT) reuse, independent living and vocational rehabilitation programs in tough economic times

To identify the components of the Calculation of an Approximate Value of Investment in Assistive Technology Reuse (CAVIAR) as a tool to calculate costs, benefits and ROI for AT reuse programs

To learn how to apply the CAVIAR to data from two reuse models, one in Kansas and the other in Virginia

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Moving beyond anecdotal evidence

to make the business case for reuse

• The beginning: tracking volumes and equipment

values

• Adding business analysis: return on investment (ROI)

• Considering the value of avoided outcomes

• Calculating societal impacts

• Working toward a more comprehensive calculation

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Basic: Tracking volumes

AT Act Reuse programs track:

Number of usable devices donated

Value of donated devices based on MSRP or some percentage thereof

Number of devices reassigned

Number of individuals served

Value of reassigned AT

Most helpful tool: a good inventory system with flexible

reporting capabilities (Kansas, Paraquad, Project

MEND and others)

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Using business analysis

Kansas led the way in recommending that programs

apply a standard business practice and calculate

Return on Investment.

This calculation requires only the total program expenses and the value of equipment made available for reuse.

Calculation:

Divide NET value (value of reused equipment minus

total program expenses) by expenses to derive

return percentage or return for each dollar invested.

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Cost benefit vs. return on investment

Cost Benefit and ROI are similar but slightly different terms:

Cost Benefits – a general list

ROI – performance measure to compare efficiency of

different investments

ROI/Business Case – Has stated definitions and

assumptions, and yields some insights on how to

improve business in the future.

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Example of simple ROI

Application of business model of return-on-investment analysis

to Kansas AT reuse program in 2010:

ROI: (Value of donated equipment minus program expenses)

divided by program expenses

Example: $960,004 - $271,487 = $668,517

divided by $271,487 = 2.46

or a return of $2.46 for each dollar invested

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Using ROI to make program decisions:

Collection Drive ROI Collection Drive ROI

2 Rural & 2 Metropolitan

Costs

Personnnel 822

Travel 740

Supplies 75

Other Advertising 2,863

U-Haul & fuel 360

Volunteer gift cards 200 $3,423

$5,060

Assets

DME Medicaid N = 0 0

Private N = 137 151,663 $151,663

Collection Drive ROI $28.97

* ROI = Assets - Costs/Costs

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Collection Drive Adjusted ROI

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Collection Drive: Complex ROI

Intangible benefits of the collection drive: Increased DME provider and network partner involvement.

Increased public awareness of the program resulting in increased donations and requests.

ROI-based program decision: Accept only lightly-used, high-cost or bariatric DME.

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ROI is a useful tool for:

1. Making program decisions:

pickup and delivery,

shipping,

collection drives,

methods of cleaning and sanitization (volunteers, paid staff, contractor, purchase of sanitizing equipment)

2. Measuring the impact of the use of taxes and

public donations for reuse.

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DEMONSTRATING VALUE

THROUGH AVOIDED OUTCOMES

Virginia Assistive Technology System (VATS)

and its AT reuse partner,

Foundation for Rehabilitation Equipment and

Endowment (FREE Foundation)

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Identifying avoidable healthcare costs

What does the availability of an AT device avoid?

FREE Foundation of Virginia examined what the

availability of an AT device avoided in healthcare

outcomes.

(More about that methodology shortly)

Healthcare costs related to avoided falls:

Physician office visits, ER visits

Stays in skilled nursing or assisted living facilities

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FREE assesses avoidable outcomes

Problem

• 20% of Virginians were uninsured persons, no access to healthcare or needed AT

• Some insured persons unable to get needed equipment or get in a timely manner

Consequences

• Unable to recover fully

• Falls

• Repeated hospital stays, Dr. visits

• ER visits

• Stays in SNFs and ALFs

• Lost wages of patient and caregivers

Measurable Costs

• Typical office visit

• Average daily cost of hospital stay

• Average cost of an ER visit

• Cost of typical stay in SNF for recovery

• Financial impact of a job loss

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FREE’s methodology

Objectives in collecting data:

Show equipment donors the therapeutic and financial impact

Show financial supporters the impact of funding

Test and monitor the service model

Surveyed AT recipients to determine if they:

Had become more independent

Had fewer falls

Reduced number of medical visits, services

Been able to remain at home

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Examples of FREE survey questions

Yes/No and Open-Ended Questions:

• How is the equipment working for you?

• Do you feel this equipment has increased your independence when used?

• Were you mobile (able to walk) before receiving this equipment?

• Are you mobile (able to walk) with the use of this equipment?

Quantitative Responses:

• How many falls a week did you have before receiving the equipment?

• How many falls a week are you having since you received this equipment?

• How many Emergency room visits per month did you have before receiving this equipment?

• How many Emergency room visits have you had per month since you received this equipment?

• How many Hospital stays per month did you have before receiving this equipment? 16

Calculating the cost of avoided outcomes:

• Average cost of ER visit = $1,896

• Typical doctor’s visit = $155

• Average daily cost of hospital stay = $1,149

(Typical stay is five days = $5,745.)

• Average annual of cost of stay in SNF = $74,095

(Average stay for recovery is 50 days = $10,150.)

• Average annual cost of stay in ALF = $35,616.

(Average stay for recovery is 50 days = $4,879.)

• Financial impact of a job loss to a family of three at the poverty level =

$17,170.

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Analysis of Cost Savings

For every 100 persons served: 26 hospital stays were avoided.

26 (average 5 days x $1,149) = $149,370

29 Emergency Room visits were avoided.

29 x $1,896 = $54,984

11 moves to skilled nursing facilities were avoided.

11 (average 50 days) x $10,150 = $111,650

11 moves to assisted living facilities were avoided.

11 (average stay 50 days) x $4,879 = $53,669

112 falls were avoided (1 in 4 falls results in doctor’s visit)

28 x $155 (average cost doctor’s visit ) = $4,340

16 family members avoided quitting jobs to stay home and care for

recipients.

16 x $5,723 = $91,573

TOTAL SAVINGS FOR EACH 100 PERSONS SERVED: $465,586

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Virginia: No data. No money. No mission! Statistics:

– Demographics, Number of Persons Served, Devices Gifted,

Savings, Diagnoses, etc.

– Who we were NOT serving (or underserved) and why?

• Children, Vocationally Oriented, Less Complex – More

Complex Diagnoses,

• OPPORTUNITY!

Outcomes:

– FREE’s Outcome Survey

• Cost Savings, Therapeutic Benefits, Quality of Life,

Opportunity Cost, etc.

Compared Virginia to AT Act Programs Nationally:

– 2008 Virginia Reuse Network:

• 2,534 Individuals, 3,548 Devices, $1.2 Million

– 2008 AT Act Programs:

• 24,805 Individuals, 31,069 Devices, $17.3 Million

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Virginia Reuse Network Incorporated ROI

Data into its Sustainability Approach:

In Legislative “Fact Sheets” to show the return on

investment for AT reuse

To secure state funding for the Virginia Assistive

Technology System (VATS)

To partner with Virginia Medicaid

To secure short-term grants

To secure long-term grants

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Statistics and outcomes data

tell the story better! Acceptable:

• In FY 2010, the Virginia Reuse Network served 502 individuals.

• The Virginia Reuse Network is a good steward of its money.

• The Virginia Reuse Network helps individuals with disabilities to be more independent.

Better!

• Since 2006, Virginia’s formal network of reuse programs served 6,882 Virginians with disabilities, gifting 8,585 AT devices valued at $3,208,922.

• For every $1.00 spent by FREE on its mission, $33.40 is returned to the community.

• Recipient outcome surveys show 80% -100% decrease in falls, ER visits and hospitalizations. 21

Using Data Is Powerful

Virginia General Assembly / Governor’s Budget “Fact Sheets”

– DME reuse benefits individuals statewide

– DME reuse provides significant cost savings to communities (decreased falls, ER visits, unnecessary hospitalizations, etc.)

– Reuse programs are highly effective and provide significant Return on Investment

Virginia Medicaid (DMAS) – Members of AT Advisory Council

– DME Pilot Program • Collaboration among VRN, DME Vendors, DMAS • Educate Medicaid Recipients about benefits of reuse • Increase inventory of gently used equipment; DME vendors

apply equipment stickers with 1-800 number for return when no longer needed

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American Recovery and Reinvestment Act

(ARRA)

VR Pilot Program

– Market and educate VR staff about the benefits of reuse

– Provide VR participants access to “back-up” DME to support employment goals

– Formalize the process of VR clients or heir families donating gently used AT/DME to reuse programs

– Streamline the application process to better facilitate services to VR program open cases

Preliminary Results (First 8 Months): – $20K Annual Funding

– 22 VR Participants served by Reuse Programs

– Cost Savings to VR Participants = $16,500 (value of equipment)

– Increased donations from VR Participants and VR Field Offices

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Commonwealth Neurotrauma Trust Fund

Board (CNI)

Virginia General Assembly (1997) established the Commonwealth Neurotrauma Initiative (CNI) Trust Fund to support research, education, and treatment for spinal cord injury (SCI) or traumatic brain injuries (TBI) resulting in loss of physical and cognitive functions.

Code of Virginia authorized the Virginia Dept. of Motor Vehicles to collect an additional fee of $30 for reinstatement of an operator’s license for persons whose licenses were suspended or revoked upon conviction for specified dangerous driving offenses.

Data Demonstrated: – Across the Network, serving mostly clients 55 years or older – Opportunity to build capacity to better serve persons with SCI and TBI – Large numbers of persons served; need to automate and upgrade from

cleaning to sanitization of durable medical equipment (DME)

End Result: $416,000 (3 years)

-- $300K for operations, $100K for five HUBSCRUBS (automated cleaning machines for DME)

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SEEKING A BETTER MEASURE

OF ROI FOR AT REUSE

Building on Our Experiences:

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We need to

show the

real value

of AT reuse

• Volume tracking (donations, devices

assigned, value of donated devices) –

AT Act Programs

• Use of business tools, from cost-

benefit to ROI analysis (Kansas)

• Calculation of avoided costs (e.g., lost

work time avoided, healthcare

expenses avoided, environmental

impact minimized) based on customer

follow-up: FREE Foundation/VATS

• Combining those and more to identify

a more accurate calculation of the

financial impact of reuse

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Proposing a more comprehensive

calculation of value

Value of Reusable

Equipment

Value of Avoided

Healthcare Costs

Environmental Impact

Savings

Economic Value of Work

CAVIAR

1. Sum

values

2. Subtract

program

expenses

3. Divide

result by

program

expenses

Improved ROI

KS: ROI VA KS, GA VA PIOC 27

Calculation of an Approximate Value of Investment in AT Reutilization

Compiling Values for CAVIAR

Value of Reusable AT

Track value of donated AT devices in a standardized manner (e.g., MSRP or a percentage thereof)

Value of Prevention

Use specific healthcare costs for customer population

Collect survey data to show avoided expenditures

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Compiling values for CAVIAR, cont.’

Environmental Impact Savings Track the weight

(use some standard tables for simplicity and ease of calculation) of AT diverted from landfill (that is, reused)

Determine cost (per ton) of landfill disposal in program area

Economic Value of Work

Determine number of lost work days avoided

Use minimum wage for the state or use federal poverty guideline to be conservative

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Identifying avoidable societal impact

What other costs does reuse of AT avoid?

Lost income due to missed work for customer or caregiver

Landfill costs for disposal

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Calculating Environmental Impact

• Determine average

weight of items kept

from landfills

• Identify landfill costs

in your area

• Calculate savings for

tonnage kept from

landfills

• Add the landfill

savings to the value

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Recalculating for Kansas

Original ROI

Using only the value of the

donated equipment:

FY 2011 data resulted in a

Return on Investment

(ROI) of $3.49 for each

dollar invested.

Adding conservative

avoided healthcare costs

For FY 2011, assuming

that only one percent of

Kansans who received DME

delayed or avoided a move

to assisted living (versus 8%

in found in Virginia), the

ROI increased to $4.13 for

every dollar invested.

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What Pass It On Center plans to do:

• Design a limited formal research study for data collection with

three reuse programs in 2013 to validate the proposed

calculation.

• Analyze and publish the results of the trial.

• Encourage more programs to engage in this more extensive

calculation of return on investment.

• Educate in the use of data, as Virginia has done, to secure

additional funding and build partnerships that result in

sustainable reuse programs.

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PASS IT ON CENTER

Take advantage of our free resources to

support AT Reuse

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Questions?

Thank you for attending this session

• CEUs – Session Code: RPD-17 • More info at: www.atia.org/CEU

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• Handout link remains live for three months after the conference ends.

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Contact us

Joy Kniskern Joy@passitoncenter.org

Carolyn Phillips Carolyn@passitoncenter.org

Liz Persaud Liz@passitoncenter.org

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DISCLAIMER

Pass It On Center is supported under cooperative agreement #H235V060016 awarded by the U.S. Department of

Education, Office of Special Education and Rehabilitative Services, and is administered by Tools for Life, Georgia’s

Assistive Technology Act Program, a program of the Alternative Media Access Center of The Georgia Institute for

Technology (Georgia Tech.) However, the contents of this publication do not necessarily represent the policy or

opinions of the Department of Education or Georgia Tech, and the reader should not assume endorsements of this

document by the Federal government or Georgia Tech.