What are some effective metrics to measure the impact of product innovation on healthcare costs?

1 Cost-effectiveness analysis

One of the most common and widely used metrics for measuring the impact of product innovation on healthcare costs is cost-effectiveness analysis (CEA). CEA compares the costs and outcomes of different interventions or alternatives, and calculates the incremental cost-effectiveness ratio (ICER), which is the ratio of the difference in costs to the difference in outcomes. The lower the ICER, the more cost-effective the intervention is. CEA can help you assess whether your product innovation provides better outcomes at a lower or comparable cost than the existing or competing options.

2 Return on investment

Another metric that can help you measure the impact of product innovation on healthcare costs is return on investment (ROI). ROI measures the profitability of an investment by dividing the net benefits by the initial costs. The higher the ROI, the more profitable the investment is. ROI can help you estimate how much value your product innovation generates for your stakeholders, such as customers, providers, payers, or investors. ROI can also help you justify your product innovation decisions and communicate your value proposition to potential partners or funders.

3 Quality-adjusted life years

A third metric that can help you measure the impact of product innovation on healthcare costs is quality-adjusted life years (QALYs). QALYs measure the health benefits of an intervention by combining the quantity and quality of life. QALYs are calculated by multiplying the number of years of life gained or lost by a utility weight, which reflects the preference or satisfaction of living in a certain health state. The higher the QALYs, the more beneficial the intervention is. QALYs can help you capture the impact of your product innovation on the health and well-being of your target population, and compare it with other interventions or alternatives.

4 Net promoter score

A fourth metric that can help you measure the impact of product innovation on healthcare costs is net promoter score (NPS). NPS measures the loyalty and satisfaction of your customers by asking them how likely they are to recommend your product or service to others. NPS is calculated by subtracting the percentage of detractors (those who give a score of 0 to 6) from the percentage of promoters (those who give a score of 9 or 10). The higher the NPS, the more loyal and satisfied your customers are. NPS can help you gauge the market acceptance and demand for your product innovation, and identify areas for improvement or expansion.

5 Balanced scorecard

A fifth metric that can help you measure the impact of product innovation on healthcare costs is balanced scorecard (BSC). BSC is a strategic management tool that helps you align your product innovation goals and activities with your organizational vision and mission. BSC uses four perspectives: financial, customer, internal process, and learning and growth, to measure and monitor your product innovation performance and outcomes. BSC can help you balance the short-term and long-term objectives of your product innovation, and ensure that you are delivering value to your stakeholders and fulfilling your social responsibility.

6 Here’s what else to consider

This is a space to share examples, stories, or insights that don’t fit into any of the previous sections. What else would you like to add?