ROI Calculation Framework
- 1Total program costs: Vendor fees + administration + incentives + staff time + technology
- 2Medical claims savings: Participant vs. non-participant cost difference (adjusted for selection bias)
- 3Absenteeism savings: Reduction in unplanned absences × average daily cost per employee
- 4Productivity savings: Reduction in presenteeism × estimated productivity value
- 5Turnover savings: Reduction in voluntary turnover × average replacement cost
- 6Total savings: Sum of all savings categories
- 7ROI: (Total savings - Total costs) / Total costs × 100
Conservative vs. Optimistic ROI
A conservative ROI calculation — using only the most defensible savings estimates and excluding hard-to-quantify benefits — is more credible than an optimistic one. A CFO who sees a 5:1 ROI claim will be skeptical; a CFO who sees a carefully documented 2.5:1 ROI with clear methodology will be persuaded. Credibility matters more than impressive numbers.
ROI Presentation
Pro Tip
Present ROI with confidence intervals and methodology disclosure. "Our diabetes management program delivered an estimated 3.2:1 ROI (range: 2.1:1 to 4.8:1) based on participant vs. non-participant cost comparison adjusted for selection bias using propensity score matching" is far more credible than "Our program saved $2.3 million." Show your work.