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Annual Industry Outlook: Exploring Investments and ROI

News  |  By Jonathan Bees  
   February 01, 2018

Financial conditions continue to be challenging for many providers.

This article first appeared in the January/February 2018 issue of HealthLeaders magazine.

With each passing year, incremental progress has been made in the healthcare industry’s move to a value-based model.

However, after years of investment in infrastructure, healthcare IT, and care delivery enhancements, it seems appropriate to ask whether providers are actually seeing a return on this investment.

There are several challenges when attempting to measure return on investment for value-based care, for both providers and researchers. Net patient revenue is still largely dominated by fee-for-service activities, and it can be difficult to isolate value-based revenue streams within provider organizations.

Further, investments in provider organizations often benefit both care models—for example, investments in infrastructure and healthcare IT—making it problematic to attribute return on investment to one model or the other.

Along with the question of whether providers are seeing return on investment for value-based care, an even broader set of questions relates to the industry’s overall financial health. What do current operating margins look like, and what is the outlook for the coming year? Where are providers investing to remain financially viable in the future? Which provider investments are producing the strongest returns? And last, which investments are producing no returns?

Jonathan Bees is a research analyst for HealthLeaders.

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