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Alcohol Treatment ROI Calculator Report

Although there is substantial evidence that preventing and treating alcohol problems produces a wide range of benefits for employers, the tools to estimate an employer's return on investment have not been readily available. Recently, research into healthcare quality and alcohol screening has provided new approaches to estimating the potential return on investment that could be produced by treating alcohol problems.

One example is the National Committee for Quality Assurance (NCQA) Quality Dividend Calculator. The NCQA calculator estimates the financial benefits for employers in reduced absences and increased productivity that comes with quality health care — including treatment for alcohol problems.

Compelling evidence that investment in alcohol treatment produces a positive return has also been provided by a recent study published in the British Medical Journal. A research team from the University of York found that investment in treatment for alcohol problems reduced one-year health care costs by $2.30 for every $1.00 invested: a 2.30/1 benefit/cost ratio. Similarly positive ROI estimates have been reported in careful research studies of screening and brief alcohol treatment in primary care physicians offices (Fleming & French), hospital emergency services (Gentillelo), and hospital medical/surgical inpatients (Storer).

Ensuring Solutions developed the Alcohol Cost Calculator in 2003 to provide employers with a tool to estimate the impact that alcohol has on business costs. The ROI Calculator combines estimates of the number of employees and family members of workers who are likely to have serious alcohol problems in a company from the Alcohol Cost Calculator with the results from research about the costs and savings associated with alcohol screening and brief treatment. Together, these two sources of information make it possible to estimate the one-year return on investment a company is likely to realize through increases in the treatment of alcohol problems.

Return on Investment (ROI) compares the magnitude and timing of expected financial gains to the investment costs. A formula for simple ROI would be:

Simple ROI = (Gains – Investment Costs) / Investment Costs

The Ensuring Solutions ROI Calculator estimates the potential one-year return on investment a company is likely to experience from increased alcohol screening and brief treatment delivered in outpatient health care settings such as a physician’s office or occupational health clinic. To do this, the ROI Calculator estimates:

  • The total cost of the screening and brief intervention for an employer.
  • The total one-year healthcare savings associated with screening and brief intervention for an employer.

Total Costs

There are four components to estimating the total cost of screening and brief intervention in primary care for an employer:

  1. The total number of individuals (both employees and their dependents) who have an alcohol use problem.
  2. The percent of these individuals who will receive alcohol treatment.
  3. The cost of screening and brief intervention in a doctor’s office.
  4. The employer's contribution to healthcare premiums.

The Ensuring Solutions ROI Calculator estimates total costs to an employer in the following way:

Total Employer Costs of SBI = # of employees and dependents with alcohol problems* X 50%** X $255*** X Company contributions to healthcare premiums.

* Number of employees and dependents with alcohol problems is based on a company’s industry sector, total number of employees, and geographic location, as described in Ensuring Solutions research for the Alcohol Cost Calculator.

** The proportion of employees and dependents who have an alcohol problem and who receive screening and brief treatment at their doctor’s office. The ROI Calculator produces results at 10 percent intervals from 10 percent to 100 percent, although it is unlikely that levels beyond 80% can be reached without extraordinary efforts.

*** The 2004 annual cost of SBI per intervention patient in 2004 dollars identified by Fleming et al, in 2000.

Total Savings

There are four components to estimating the total one-year savings that an employer can achieve through increased alcohol screening and brief intervention:

  1. The dollar amount of savings from reduced emergency and hospital utilization per patient who receives the intervention.
  2. The total number of individuals (both employees and the employee dependents) who have an alcohol use problem.
  3. The percent of these individuals who will receive this care.
  4. Your company’s contribution to healthcare premiums.

The ROI Calculator estimates total savings to an employer as follows:

Total Employer Costs of SBI = $804.42* X # of employees and dependents with alcohol problems X 50% X Company contributions to healthcare premiums.

* $804.42 is the estimated savings due to reduced ED and hospital utilization following this intervention. The dollar amount is in 2004 dollars and is based on a 12-month follow-up (Fleming et al, 2000). Health care cost reductions after brief alcohol treatments by substance abuse counselors (UK study), hospital emergency services (Gentilello) and consulting substance abuse counselors in hospital med/surgical wards (Storer).

Documentation:

The concepts and default values in this application are supported by peer-reviewed published literature on alcohol screening and brief treatments. The following list contains all articles which are used in the ROI Calculator.

Fleming MF, Mundt MP, French MT et al (2000) Benefit-Cost Analysis of Brief Physician Advice With Problem Drinkers in Primary Care Settings. Medical Care. 38(1):7-18

Patient and health care costs associated with brief advice were compared with economic benefits associated with changes in health care utilization, legal events, and motor vehicle accidents using 6- and 12-month follow-up data from Project TrEAT (Trial for Early Alcohol Treatment), a randomized controlled clinical trial. 482 men and 292 women who reported drinking above a threshold limit were randomized into control (n = 382) or intervention (n = 392) groups. The total economic benefit of the brief intervention was $423,519, composed of $195,448 in savings in emergency department and hospital use and $228,071 in avoided costs of crime and motor vehicle accidents. The average (per subject) benefit was $1,151. The estimated total economic cost of the intervention was $80,210, or $205 per subject. The benefit-cost ratio was 5.6:1, or $56,263 in total benefit for every $10,000 invested.

Fleming MF, Mundt MP, French MT et al (2002) Brief Physician Advice for Problem Drinkers: Long-Term Efficacy and Benefit-Cost Analysis. Alcoholism: Clinical & Experimental Research. 26(1):36-43.

This report describes the 48-month efficacy and benefit-cost analysis of Project TrEAT (Trial for Early Alcohol Treatment), a randomized controlled trial of brief physician advice for the treatment of problem drinking. Subjects in the treatment group exhibited significant reductions (p < 0.01) in 7-day alcohol use, number of binge drinking episodes, and frequency of excessive drinking as compared with the control group. The effect occurred within 6 months of the intervention and was maintained over the 48-month follow-up period. The treatment sample also experienced fewer days of hospitalization (p = 0.05) and fewer emergency department visits (p = 0.08). Seven deaths occurred in the control group and three in the treatment group. The benefit-cost analysis suggests a $43,000 reduction in future health care costs for every $10,000 invested in early intervention. The benefit-cost ratio increases when including the societal benefits of fewer motor vehicle events and crimes.

Gentilello LM, Ebel BE, Wickizer TM et al (2005) Alcohol Interventions for Trauma Patients Treated in Emergency Departments and Hospitals: A Cost Benefit Analysis. Annals of Surgery. 241(4):541-550.

This was a cost-benefit analysis. The study population consisted of injured patients treated in an emergency department or admitted to a hospital. The analysis was restricted to direct injury-related medical costs only so that it would be most meaningful to hospitals, insurers, and government agencies responsible for health care costs. Underlying assumptions used to arrive at future benefits, including costs, injury rates, and intervention effectiveness, were derived from published nationwide databases, epidemiologic, and clinical trial data. Model parameters were examined with 1-way sensitivity analyses, and the cost-benefit ratio was calculated. Monte Carlo analysis was used to determine the strategy-selection confidence intervals. An estimated 27% of all injured adult patients are candidates for a brief alcohol intervention. The net cost savings of the intervention was $89 per patient screened, or $330 for each patient offered an intervention. The benefit in reduced health expenditures resulted in savings of $3.81 for every $1.00 spent on screening and intervention. This finding was robust to various assumptions regarding probability of accepting an intervention, cost of screening and intervention, and risk of injury recidivism. Monte Carlo simulations found that offering a brief intervention would save health care costs in 91.5% of simulated runs.

Storer RM (2003) A simple cost-benefit analysis of brief interventions on substance buse at Naval Medical Center Portsmouth. Military Medicine, 168(9), 765-71.

To determine the impact of brief interventions on substance abuse at the Naval Medical Center Portsmouth, a retrospective review of all admissions in fiscal year 2001 was conducted. Patients receiving brief interventions had significantly lower readmission rates (12.6%) than those not receiving interventions (29.4%). For Internal Medicine patients, this difference was most pronounced: 15.4% as opposed to 40.0%. The average cost of a second admission was 17,834.31 dollars overall but 23,690.78 dollars for Internal Medicine specifically. The lower readmission rate associated with brief interventions represents a benefit of 606,366.54 dollars saved at a cost of 31,508.50 dollars for a cost-benefit ratio of 19:1.

D’Onofrio G, Degutis LC (2002) Preventive Care in the Emergency Department: Screening and Brief Intervention for Alcohol Problems in the Emergency Department: A Systematic Review. Acad Emerg Med Volume 9 (6): 627-638.

Systematic review the medical literature inorder to determine the strength of the recommendation for screeningand brief intervention (SBI) for alcohol-related problems inthe emergency department (ED) setting. Twenty-sevenarticles were identified and reviewed, in addition to the 14 primary articles included in the 1996 U.S. Preventive ServicesTask Force Report. The study populations were diverse, including inpatient,outpatient, and college settings, with ages ranging from 12to 70 years. Four studies were ED-based and two included EDs as one of multiple sites. Thirty-nine studies on SBI, 30 randomizedcontrolled and nine cohort, were used to formulate the currentrecommendation. A positive effect of the intervention was demonstrated in 32 of these studies.

Holder HD, Cisler RA, Longabaugh R et al (2000) Alcoholism treatment and medical care costs from Project MATCH. Addiction. 95(7) 999-1013.

This paper examines the costs of medical care prior to and three years following initiation of alcoholism treatment as part of a study of patient matching to treatment modality. Participants were two hundred and seventy-nine patients randomly assigned to one of three treatment modalities: a 12-session cognitive behavioral therapy (CBT), a four-session motivational enhancement therapy (MET) or a 12-session Twelve-Step facilitation (TSF) treatment over 12 weeks. Total medical care costs declined from pre- to post-treatment overall and for each modality. Matching effects independent of clinical prognosis showed that MET has potential for medical-care cost-savings.

Holder HD, Blose JO (1992) The reduction of health care costs associated with alcoholism treatment: a 14-year longitudinal study. J Stud Alcohol. 53(4): 293-302.

This study utilized two separate research designs to examine whether the initiation of alcoholism treatment is associated with a change in overall medical care cost in a population of alcoholics enrolled under a health plan sponsored by a large midwestern manufacturing corporation. In the longest longitudinal study of alcoholism treatment costs to date, a review of claims filed from 1974 to 1987 identified 3,729 alcoholics (3,068 of whom received treatment and 661 of whom did not). In one design, a time-series analysis found that following treatment initiation the total health care costs of treated alcoholics — including the cost of alcoholism treatment — declined by 23% to 55% from their highest pretreatment levels. Costs for identified but untreated alcoholics rose following identification. In a second design, analysis of variance was used to control for group differences including pretreatment health status and age. This analysis indicated that the post-treatment costs of treated alcoholics were 24% lower than comparable costs for untreated alcoholics.

Parthasarathy S, Weisner C, Hu TW, Moore C (2001) Association of outpatient alcohol and drug treatment with health care utilization and cost: revisiting the offset hypothesis. J Stud Alcohol. 62(1): 89-97.

Adult patients (N = 1.011; 67% men) entering the outpatient chemical dependency recovery program at Sacramento Kaiser Permanente over a 2-year period were recruited into the study. Medical utilization and costs were examined for 18 months prior and 18 months after intake. The treatment cohort was less likely to be hospitalized (odds ratio [OR] = 0.59; p < .01) and there was a trend for having spent fewer days (rate ratio [RR] = 0.77; p < .10) in the hospital in the post-treatment period compared to pretreatment period. These patients were also less likely to visit the emergency room (ER) (OR = 0.64; p < .01) and had fewer ER visits (RR = 0.81; p < .01) following treatment. Inpatient, ER and total medical costs declined by 35%, 39% and 26%, respectively (p < .01). Reductions in cost were greater for the treatment cohort when compared with the matched sample (p < .05).