What ROI Means in Rural Health Settings
Return on Investment (ROI) is a framework for assessing the value of a program. It compares what a program achieves to what it costs to run. ROI helps show how programs create financial, social, and health-related benefits for the community. Although ROI is commonly used in the private sector, it is increasingly applied in public health and healthcare to capture program outcomes.
Types of ROI in Rural Communities
In general, there are two types of ROI:
Financial ROI compares the financial benefits of a program to its costs. Results are shown as a ratio or percentage.
Financial ROI can answer this question: What is the financial value of the program?
This type of ROI usually focuses on financial savings, such as direct savings, due to the program.
Social ROI compares program costs to its benefits for the broader rural community. Benefits may include, for example, social, environmental, systems, and community-level benefits for rural residents.
Social ROI analysis can answer this question: What value does the program create for the rural community as a whole?
How ROI Relates to Other Methods
Both financial and social ROI are based on cost-benefit analysis (CBA). CBA compares total program costs and benefits by putting them in monetary terms (that is, monetizing them).
CBA helps answer this question: are the benefits of the program greater than the costs?
Another method often used alongside ROI is cost-effectiveness analysis (CEA). CEA compares program costs to outcomes, expressed as a cost per unit (for example, cost per hospitalization avoided or cost per life saved).
CEA can answer this question: How much does it cost to achieve one unit of benefit?
A key difference to remember is that CEA shows how efficient a program is in producing outcomes, while CBA shows whether the program's benefits are greater than its costs.
Variation in ROI Methods
ROI studies of health programs vary widely. Some focus only on financial savings (such as dollars per hospitalization prevented). Others consider broader health outcomes, quality of life improvements, or community‑level outcomes. This variation means that ROI studies are not always directly comparable.
When planning for ROI analysis, rural program leaders must consider:
- Which benefits and costs are included
- Whether and how those benefits can be translated into dollars
- The time horizon of the study
- The time value of future benefits because a dollar received today is generally worth more than a dollar received in the future. Future benefits and costs are commonly discounted to their net present value.
Why ROI Matters to Rural Programs
ROI can play an especially important role in rural health settings. Rural programs often operate with limited staff, funding, and infrastructure. To sustain or secure new funding, rural program leaders must clearly show the benefits of the program. ROI offers a straightforward way to connect those benefits to the costs of delivering critical services in rural communities.
ROI not only shows financial savings, but also how rural programs contribute to social value, improved health outcomes, and long‑term community well-being. In rural communities, these non‑financial benefits are especially important because programs often fill gaps in services and supports that would otherwise be unavailable.
Resources to Learn More
Cost-Benefit Analysis versus Cost-Effectiveness
Analysis from a Societal Perspective in Healthcare
Document
Explains the differences between cost‑effectiveness analysis (CEA), cost‑utility analysis (CUA), and
cost‑benefit analysis (CBA) in healthcare evaluation.
Author(s): Brent, R. J.
Citation: International Journal of Environmental Research and Public Health, 20(5), 4637
Date: 3/2023
Using a Tool to Measure Return on Investment
in Addressing Health-Related Social Needs: Learning to Promote Cross-Sector Partnership Formation
Document
Provides guidance on how to use an ROI calculator to estimate the financial value of interventions that address
health‑related social needs. Includes step‑by‑step explanations, case examples, and considerations for
translating health and social outcomes into monetary benefits.
Author(s): McCarthy, D. & Shah, T.
Organization: The Commonwealth Fund
Date: 12/2021