We are rolling out a 3-part blog series on The Autoverification Return on Investment. Subscribe here so you don’t miss an article.

In the first part of a three-part series discussion of an autoverification ROI, we discussed the rationale of creating a ROI as a critical component of your autoverification business case. The benefits of a ROI are numerous and impactful to your overall strategy from the perspective of where you are today and where you want to go. Read our part 1 discussion here.

Our part 2 discussion will walk you through the specific steps of gathering benefit and cost inputs for the ROI calculations. Part 3 of this blog series will review how apply this data for the calculations steps required to arrive at a final ROI percentage.

ROI data Gathering Discussion

In review of part 1, the data input required for two parts of the ROI calculations are based on the following simple formula where we divide the benefits (return on investment) by the Investment or cost of the autoverification program. We will be discussing in this blog how to gather the data you need for the AV $ Return on Investment (numerator side of the calculation) and the AV $ Investment or Costs (denominator side of the calculation).

Diagram 1: AV ROI % Results

Before you calculate your ROI, you will need to estimate your numerator and denominator to complete the ROI calculation. In this phase of building your ROI, you will gather data and work with your best estimates of your benefit gains and the cost of the autoverification program procurement and implementation.

• ROI Numerator: Net returns (difference between current state vs. projected state) based on benefits and productivity improvements

• ROI Denominator: Overall project investments that include software procurement, implementation, service and support and other internal costs

The first 2 steps in the data gathering process are concentrated on obtaining information on cost reduction and efficiency gains as the result of implementing autoverification rules or upgrading your autoverification program.

Steps 3-5 focus on collating the investment costs that are attributed to the investment side of the ROI calculation or the cost of implementing your autoverification program or upgrading your current program.

Step 6 is based on capturing data metrics that are usually constant for any project such as cost of labor, overtime, working hours and days. These data inputs are important in the sub-calculations that are required to render the final $ AV ROI %.

Step 1: Cost Reduction Data Gathering

The ROI calculation for autoverification requires information that can be used for the $ AV Return on Investment (numerator side of the ROI calculation) that every laboratory can obtain through their lab system or other data management systems. These data elements are typically gathered on a routine basis anyway as part of each lab’s quality management system and key performance indicators.

Diagram 2: $ AV Return on Investment - $ Cost Reduction

The main component of the ROI is determining the expected reduction in manual review activities compared to your current manual review activities. First you will want to assess your current situation. Table 1 details the data you need to gather and where you can most likely locate this information in your laboratory.

Table 1: $ Cost Reduction– Assessing Your Current Condition

Notes:

• Manual review studies (minutes): The number of minutes dedicated to each type of manual review activity, the key component of the autoverification process may not be known or recently studied. The laboratory may need to conduct a simple time and motion study to determine the total review time in minutes of a sample result along with the rerun time of review. A simple study can be conducted over a 7-10 day period to collate your data points. In addition, time studies will need to be conducted for hematology or urinalysis smear and manual differential reviews for these specific disciplines to fully describe the activities. The test review process performed by a technologist in a manual environment should be expressed in minutes.

• Time and Motion Study Information (minutes): We recommend you record your result review activities in a worksheet that can be updated periodically if you are implementing autoverification in phases by discipline. Our Result Review Calculator is an easy to use tool to record your activities and estimate cost savings annually. Download our calculator here to assist you in gathering this data into one concise table.

• Error Rate Reduction (annualized dollars): If you have data on the number of patient reporting errors due to review issues, these costs can be calculated assigning an average cost on the testing re-work or the result correction activities. Most labs through their quality management system have data related to patient reporting issues that can be tapped to determine cost avoidance in the future.

Step 2: $ Cost Reduction - Assessing Your Future Condition

The benefits related to the productivity and efficiency gains are based on the future state of your autoverification program. The task of gathering future state data should be available from the vendor(s) supplying the autoverification software logic. They should be able to provide you a ball-park estimate of the expected improvement in your autoverification rate, rerun and other key measures. You will compare these planned improvements to the data you gathered from your current condition to determine the net impact that can be achieved from your new autoverification solution.

Diagram 3 : $ AV Return on Investment - $ Productivity/Efficiency Gains

Table 2: $ Productivity/Efficiency Gains – Future Condition

Note:

• Revenue Acceleration: If the addition of autoverification can improve capacity and efficiency, future revenue could be captured as an additional benefit of the autoverification program.  Leveraging the excess capacity to expand your testing menu or garner new markets helps amortize or offset the autoverification software cost.

Step 3: $ AV Return on Investment - $ Program Costs

Calculating the costs of an autoverification program depends on the phase of the lifecycle of the program. Typically for new autoverification programs the costs include the software, hardware, implementation and service and support costs. Your autoverification vendor will work with you to collate and calculate the costs based on the product that you purchase if you are implementing for the first time or expanding your autoverification program. In this section, we will explore the costs associated with implementing autoverification rules as a new organizational program. In step 5, we will review the incremental costs of upgrading or expanding an autoverification program and the costs that would apply to that scenario.

Diagram 4: $ AV Return on Investment on Investment Costs

The costs for a new autoverification program will include not only the software program and hardware associated costs, but the cost to define and create the rule sets for your instrument platform and discipline. Many AV projects fail to anticipate the time and effort required to create, configure and test the AV rules. The table below includes the activities that should be considered.

Table 3: $ AV Program Costs

Step 4: $ AV Return on Investment - $ Internal Costs

Typically, a ROI calculation is based on ‘hard-costs’, those that are measurable and quantifiable. However, there are internal costs that your organization may want to include in the overall ROI investment. These costs could include the cost of acquisition or evaluation of the software products under consideration, costs of saving old data or converting to the new system, IT costs of setting up security for the new vendor and other internal network configuration activities.

The examples of data inputs in Table 5 can be used as a template to record your internal costs. These broad categories are common IT costs associated with software program implementation. Not all costs will apply to all types autoverification programs. You may identify other costs applicable to your organization that should be included but are not shown here.

Diagram 5: $ AV Return on Investment - $ Internal Costs

Table 4: $ AV Internal Costs

Notes:

• Software acquisition costs: These costs are considered during the initial phases of the project selection. Typical activities that incur internal costs include assembling the project team, evaluating the vendors, and final selection and alternatives.

• Internal IT costs: The internal IT costs contained in the table above are common examples, but is not exhaustive. We recommend that you discuss with your IT departments before you start to project the internal costs or cost allowance that must be added to any organizational IT project. 

• Data conversion: There may be data conversion required from the current system to the new system for delta checks or other baseline patient data. The costs incurred during this stage may be required to be documented as a cost of the project.

Step 5: AV Program Expansion

The cost of expanding your current autoverification program may require a ROI business case if you are considering the purchase of additional software or if you plan to add features to the current program. These costs should be carefully considered as there could be unknown or hidden vendor costs when adding rules to your current rule system. Always discuss with your vendor the program costs to expand your autoverification rules.

Diagram 6: $ AV Return on Investment - $ AV Expansion Costs

Table 5: $ AV Expansion Costs

Note:

• Rule Inventory: We recommend also that you perform a result review inventory before beginning your ROI process. If you have multiple layers of rules across your organization, you should identify where they reside (what system or program) and what data is required for them to trigger. You might want to consolidate some or all of your autoverification rules or rule types into your current or new proposed solution. Refer to our blog, “Where are my Result Decision Rules,’ to explore how a rules inventory can be beneficial when implementing a new result review solution or expanding your current rules architecture. Your return on investment business case should reflect your current and proposed rule strategy.

Step 6: Data Gathering - Constants

An autoverification ROI is primarily based on reducing the technologist labor dedicated to manual result review and additional manual activities. In part 3 of our blog series, we will learn to calculate time and labor savings based on the on the cost of labor and laboratory working shifts (hours) and days. We will need to apply a series of simple calculations for all categories of cost and benefits using these metrics.

Data that supports your laboratory operations is usually retrospective data. You can obtain this information through your organization’s official accounting records, financial documents or systems used as sources of cost. Using organizational data will provide full transparency and accountability in the building of ROI calculations that will better support your business case.

Table 6:  Data Input - Constants

Autoverification Project Assumptions

It is always good practice to document your project assumptions. This is a written addendum to your ROI that details all of the assumptions of your autoverification project – narratives expressed as positioning statements and explanations that support your project caveats. This should include any description of the project risks such as project personnel resource availability, expertise, or implementation timelines.

Example 1: Your organization has 3 Med Techs (MT) per shift. By automating the workflow with auto-verification you can reallocate 1 MT per shift to other higher value testing. This will save 4 hours per week (for all shifts) in overtime x 52 weeks = 208 hours of overtime savings.

Example 2: It takes 4 minutes to perform a hematology manual differential (MDIFF) and the current MDIFF rate is 20%. The anticipated MDIFF rate will be reduced to 5% with standard rules.

Summary of Data Gatherings activities

Now you are ready to calculate your final ROI outcomes. Although the $ AV ROI % is a single number that will be calculated, the ROI has many subcomponents that should accompany the final $ AV ROI % to demonstrate how the value is derived. A ROI result presented out of context may require further explanation and justification.  The steps described in this blog with the related tables can be used as workflow templates to record your supporting data and assumptions.

The final blog in our three-part series will complete your autoverification ROI journey. You will learn how to assemble and interpret your ROI calculations using your current and future state data inputs.