Across the country, more healthcare
facilities are adopting safe patient-handling programs to reduce the risk of injuries to workers and patients. Besides compromising patient care outcomes, patient-handling injuries imperil a facility’s financial status and the integrity of its care process. A safe handling program can significantly reduce injuries and decrease the direct and indirect costs of injuries.If you’re trying to persuade your facility to implement such a program, you’ll need to build a solid business case to justify the cost and show that it would reduce expenses significantly. Whether you’re an individual stakeholder, such as a nurse-manager, or the chairperson of your facility’s safety committee, you’ll need to “run the numbers” by calculating return on investment (ROI)—an analysis that considers start-up costs, equipment purchase, and personnel training. This article explains how to calculate ROI.
Understanding expenditure decisions
Administrators must weigh each proposed expenditure in light of competing expenditures. To decide whether to spend money for a safe patient-handling program, they’ll want to know:
• How much are handling-related injuries and lawsuits costing us now?
• Can we do anything to reduce these costs without additional spending?
• Does the problem affect other areas of our business, either directly or indirectly?
• How much would it cost to reduce or eliminate the financial losses?
• If we invest nothing, what would be the anticipated costs for the next 5 years?
• If we do invest in the program, what would be the anticipated costs over that same period?
• How soon would we see reduced losses and injuries once the program is implemented?
• When would the project break even and achieve positive cash flow?
To analyze ROI, you’ll need to determine the impact of patient-handling injuries on your facility’s finances and operations. Start collecting data as soon as possible, because some required data may not be readily available. Interdepartmental communication is essential, as some of the data you’ll need may come from departments outside your normal purview.
Next, you’ll need spreadsheet software (such as Microsoft Excel) and injury cost information. On the spreadsheet, plot the relationship between injury costs and spending over a time line of 3 to 5 years. On top of that, plot projected savings expected from injury reduction, taking into account both direct and indirect costs. From this, you can determine when your facility will start to see a decrease in current losses and at what point savings will be realized to offset spending on a safe handling program.
In other words, you’ll be plotting out the cash flow: Injuries represent cash outflow, reduced injuries represent cash savings, and program expenditures represent cash outflow. Completing this analysis is an important step toward getting “buy in” from decision makers.
In your ROI analysis, identify all costs (both direct and indirect) associated with patient-handling injuries, as well as program expenditures. In an Excel spreadsheet, a good way to do this is month by month. Your goal is to determine at what month and year the program will break even (in other words, when the savings will pay for program costs). For a floor lift-based solution, breakeven typically occurs within 1 to 2 years.
Direct costs of patient-handling injuries
Direct costs related to patient-handling injuries include worker’s compensation payments and legal and medical expenses. The largest single expenditure—the cost of mechanical devices, such as lifting equipment—is a once-only cost. (Recurring costs for equipment maintenance and replacement in subsequent years are minimal.) Personnel training also is a once-only cost, with minimal ongoing expenses to train new hires. To justify not spending on equipment and training, administrators would have to show that the cost of the solution (equipment and training) is grossly disproportionate to (several times greater than) the cost of the problem (unsafe handling and resulting injuries to staff and patients).
Of course, the initial capital investment required to purchase equipment may be substantial. If budgeting constraints make it impossible to install a complete program, consider a prioritized program rollout in the higher injury-prone clinical areas to stay within budget.
Indirect costs of patient-handling injuries
Indirect costs of patient-handling injuries often go unrecognized. These are real costs that affect the bottom line; they would have been avoided if the injury hadn’t occurred. If you ignore indirect costs, you’ll grossly underestimate the true total cost of such injuries. For patient-handling injuries, indirect costs generally are three to five times as much as direct costs.
Think of the costs of a safe patient-handling program as an iceberg: Direct costs, like the iceberg’s tip, are easy to see. Indirect costs, like the iceberg below the surface, are much harder to see and assess. Although direct upfront costs of a safe patient-handling program may seem high, in the long run, the investment will not only reduce injuries but also decrease the indirect costs that pose more harm to financial and operational performance.
Here are examples of indirect costs to include in your ROI analysis:
• sick pay and disability benefits for injured staff
• locating and paying temporary staff
• recruiting full-time replacement staff, if necessary
• training temporary and replacement staff
• paying overtime staff to cover injured or limited-duty employees
• legal costs to defend against lawsuits
• recruitment and retention impact. (Many nurses prefer to work at facilities with safe patient-handling programs, rather than those still using manual lifts.)
Test your logic with colleagues first
To help justify your proposal, use your ROI analysis to show important factors in the final purchase decision. List all the assumptions that drive an attractive ROI, and get agreement from colleagues on these. Then test your logic with a trusted colleague before approaching administrators, to help determine which assumptions they’d consider most relevant and valid.
Don’t include “soft” assumptions (those that can’t be quantified), such as productivity improvements and increased efficiency, because this could incur criticism. Stick to tangible, uncontestable assumptions, such as monthly savings and recruitment cost avoidance.
Also avoid evaluating options or advancing arguments that administrators won’t realistically consider. One of their options is to do nothing, and the more frivolous your arguments, the less likely they are to approve the program. Once administrators discuss realistic options, your ROI analysis is likely to become a pivotal tool in the decision process.
Spotlighting the problem and the solution
Can you prove that patient-handling injuries will occur unless a safe patient-handling program is implemented? Maybe not. But your ROI can make administrators aware of the financial and operational consequences of not having an effective solution in place—and of the benefits of implementing such a solution. O
American Nurses Association. Handle with Care Fact Sheet. http://
nursingworld.org/MainMenuCategories/OccupationalandEnvironmental/occupationalhealth/handlewithcare/Resources/FactSheet.aspx. Accessed October 17, 2007.
Masimore L. Proving the value of safety: justification and ROI of safety programs and machine safety investments [white paper]. Rockwell Automation; 2007.
For a complete list of selected references, and a sample spreadsheet for a safe patient-handling program, visit www. AmericanNurseToday.com.
Dan Roberts, MBA, RN, CLNC, is a certified legal nurse consultant and Vice President of Sales at Liko North America in Franklin, Mass.