Cost-benefit analysis

A cost-benefit report is done on each client to formally document saving related to Case Management involvement. There are two types of savings, hard cost savings and soft cost savings. Savings that are directly related to the case manager’s actions are hard savings. Examples of hard savings include:

  • Transfer to a lower level of care
  • Decrease in length of stay
  • Negotiation to a lower rate for a service
  • Change to an in network provider

Soft cost savings are those that are potential savings, and are harder to measure than hard savings. Soft cost savings are costs that are avoided because of case management intervention. These may include:

  • Avoided hospital readmission’s
  • Prevention of medical complications
  • Avoided ER visits

To calculate the cost savings, the cost of service with case management involvement (Actual cost) is added to the cost of the case management service, this number is subtracted from the cost of intervention without case management involvement (Potential cost). That number is the cost savings associated to case management involvement.

              Cost savings = Potential costs – (Actual cost + cost of Case Management)