• 10May

    Blog: Talking about the ‘return on investment of public health’: why it’s important to get it right

    Excerpts from a blog by David Buck for The King’s Fund:

    The increasingly common misunderstanding and misuse of the term ‘return on investment’ and its conflation with ‘cost saving’ to public services – usually the NHS – are a cause for concern.

    In recent years, there has been a welcome increase in the development of both economic evidence in public health and of tools to translate this evidence into useable insight for local systems and to inform national policy. This work has been led by the National Institute for Health and Care Excellence (NICE) through its ‘return on investment’ (RoI) tools on tobacco, alcohol and physical activity and continued by Public Health England through a wide range of tools (and summaries of evidence). NICE and PHE are clear about the strengths, weaknesses and caveats in the use of each.

    So, what’s my problem?  First, we need to be clear what ‘return on investment’ is and why it can be powerful. In brief, it’s a methodology that comes from the economics literature of project appraisal, and is closely related to cost-benefit analysis. It seeks to compare the cost and benefits of alternative actions to see whether the returns are worth the costs of intervening. The key word here is ‘return’.  Return on investment methodology moves beyond seeing this simply in terms of financial returns and cost savings to enable comparison between alternatives that provide different sources and types of ‘value’. It does this by monetising them. So, a public health intervention that saves the NHS cash but does little to improve health can be compared to one that doesn’t save the NHS cash, but improves health. The simplest way of doing this is to use the monetary value of a QALY  (a quality-adjusted life-year, the standard measure of health outcome which NICE uses to assess value for money in the NHS), which is roughly £20,000 judging by NICE’s decisions on whether the NHS should fund new treatments. Because, as a society, we place a high value on health when estimates of health gain are included in RoI estimates of effective public health interventions, results tend to be very favourable, demonstrating why such interventions can be a wise use of resources.

    So far so good. But this is where my concerns come in, because this understanding of RoI is not widely shared. In the public health debate, and particularly when public health interventions are proposed, the ‘return on investment of public health’ is increasingly seen as a synonym for ‘cost-saving’ (either as directly cashable savings or through demand reduction), often, but not exclusively, to the NHS. This ignores the whole point of RoI methodology.

    In the public health debate, and particularly when public health interventions are proposed, the ‘return on investment of public health’ is increasingly seen as a synonym for ‘cost-saving’ (either as directly cashable savings or through demand reduction), often, but not exclusively, to the NHS. This ignores the whole point of RoI methodology.

    All the studies showed public health is worth doing, and for most of them that is because of the large health gain they lead to. What a surprise! They are interventions which provide high net benefit to society, and are worth paying for. But if we slip into the trap of thinking the ‘RoI of public health’ is the same as cost savings to the NHS or wider system then we will also slip into setting far too high a bar for public health interventions to cross. Despite the clear net benefit to society, not all these interventions will cover their costs through short-term cost savings.

    But if we slip into the trap of thinking the ‘RoI of public health’ is the same as cost savings to the NHS or wider system then we will also slip into setting far too high a bar for public health interventions to cross.

    In conclusion, the bar for public health interventions should not be short-term cost saving to the NHS, it should be a cost-effective use of society’s funds that reflects the value society puts on health and other goals. That’s the bar for NHS treatment and drugs, it should be the same for public health interventions. That’s what RoI and the tools developed above, used and interpreted properly, help to do. Everyone, but especially those with control over what gets funded and prioritised locally and nationally, needs to stop conflating RoI and cost savings.  It’s a good sign that Public Health England are increasingly aware of this as a problem. When it comes to RoI, it’s time we got it right.

    You can read the full blog here: https://www.kingsfund.org.uk/blog/2018/04/return-investment-public-health