ROI for health investments

Let’s consider a fundamental business perspective – return on investment (ROI).  It almost goes without saying that the resources that we allocate to various health-producing and health-sustaining activities and capabilities absolutely must return greater value than your investment level.  Do you disagree that it would be a fundamental mistake to take hard-earned money and invest (spend) it on things that are known NOT to be valuable to the business?  This would be a kind of business malpractice, wouldn’t it?

It is clear that we need to be able to demonstrate business results in terms of the value that they deliver to individuals or organizational role-players.  At the same time, different people with different responsibilities in the business might evaluate the same result differently.  This leads to a simple accounting accounting framework that addresses investment in capabilities of business health on the one side, and value returned to the business on the other side. from the perspective of different stakeholders with specific responsibilities. 

On one side of the healthy-business investment and value ledger, when it comes to the business, everything that you provide comes at a cost in terms of some kind of investment.  This insight further leads to a reflection on the kinds of investment you make to acquire or establish these capabilities:

• Service provided:  What is it that the capability provides – some level of result (often internal to the business area, sometimes exposed or provided to external stakeholders)
• Roles involved in the capability:
• Who originally defines the capability?
• Who maintains the capability over time?
• Who provides the capability at the time it is actually required?
• Investment levels in the following categories:
• To develop:  How much is invested to develop the capability?
• To install: What is the cost to make the capability available?
• To maintain:  What is required to keep the capability relevant and useful over time?
• To invoke:  What is the cost to invoke the capability in each instance?

On the other side of healthy-business investment ROI framework are the kinds of value actually returned by the effort and resources expended:

• Value to:  Who receives the result?
• Value type:  Is value seen as:
• tangible?
• intangible?
• monetary?
• enhanced prestige?
• etc.
• Value units: 
• dollars?
• satisfaction of recipients?
• esteem of colleagues?
• etc.
• Value level: What is the desired level for this kind of result, within the type of value and measured by the appropriate units?
• Value realization timeframe: 
• days?
• months?
• years?

Finally, there may very well be dependency relationships among capabilities.  In other words, the ability to provide or produce some result depends on interim results from some other capability.  In turn, that capability may or may not be available at the time it is needed, which will obviously affect the ability to achieve the health-related result desired.

This value and investment viewpoint helps to isolate investment requirements.  It also focuses on the point that every health-enhancing capability actually produces some level of result, which can be subjected to value analysis.  Between the value view of results and the investment view of capabilities, the capability network provides a powerful way for the business to model cost/benefit tradeoffs.

To get back to the hub list of healthy business factors, click here.
To get back to the discussion of businesses as living systems, here.