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Development and Implementation of a Healthcare Based Standardized Economic Evaluation Methodology

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Administrators and engineers use various methods to assess the economic impact of implementations as compared to the cost of intervention. These techniques, typically referred to as Return on Investment (ROI) models, vary with complexity and comprehensiveness depend on the application and strategic objectives of the analysis. ing Additionally, ROI techniques are typically tailored for use within different industries and organizations based on current business practices. Formulas can be as straight forward as a simple breakeven analysis or more complex when accurately taking into account the time value of money. The variations of these methods are typically taught in most Engineering Technology curriculums under an Engineering Economics course.

The modern TQM methodologies, such as Lean and Six Sigma, require economic analyses to assess implementation impact. However, the inherent complexity and variability present within economic evaluation models often limits practical use for assessment of the economic impact of field implementations as well as within Total Quality Management (TQM) curriculums. In response to the limitations of traditional accounting and engineering economics methods, Engineering Technology faculty at IUPUI and other Purdue regional campuses have created an Excel-based spreadsheet model for evaluation of the economic impact of quality improvement projects thro ughout the implementation cycle. Although this tool was specifically developed for use within healthcare, we have found this methodology to be invaluable for supporting project initiation and assessment of field projects within our undergraduate and graduate quality curriculum.

This paper will present work conducted by Purdue faculty in collaboration with the Sisters of Saint Francis Healthcare Systems (SSFHS) at statewide hospitals and healthcare facilities to develop and implementthe standardized economic model for use within healthcare implementations. This collaborative work focused on training and implementation of a healthcare based economic assessment model within the framework of a Lean Six Sigma (LSS) program. As part of this effort, customized Excel-based ROI tool and supporting training documentation and hands-on exercises were developed to enable evaluation of project implementation throughout the Lean Six Sigma project cycle. The mechanism for applications of these tools and techniques within the healthcare industry will be presented as well as a discussion of application within Engineering Technology quality curriculum.

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Woodward-Hagg, H., & Suskovich, D., & Workman-Germann, J., & Scachitti, S. (2007, June), Development And Implementation Of A Healthcare Based Standardized Economic Impact Evaluation Methodology Paper presented at 2007 Annual Conference & Exposition, Honolulu, Hawaii. 10.18260/1-2--2608