The Total Economic Impact™ Of Optum360 — Provider And Payer Collaboration

Selected Key Metrics

Revenue improvement:
5% of net patient revenue
Net revenue improvement:
$149.27 million
Guaranteed cost savings:
$28 million

Key Findings

459 rebadged employees
Net benefits of $177.27 million
Optum360 guarantees SLAs
Optum360 improves communication

How Optum360 Is Strengthening And Sustaining Provider And Payer Relationships

Forrester’s interviews with Optum360 customers confirmed that these healthcare organizations are experiencing a revenue cycle transformation with Optum360. Interviewed customers agreed that the revenue cycle can be a key funding source for care delivery. Previous to their investments in Optum360, interviewed organizations described their revenue cycles as outdated and siloed — and a drain on their operations, resources, and budget. They praised Optum360’s transformational approach: using its full outsourced, end-to-end solutions and a strategic partnership model, taking full responsibility for revenue cycle operations, and allowing healthcare organizations to focus on their critical missions.

Discussing their pre-Optum360 revenue cycle environments, interviewed providers and payers recalled significant redundancy and waste. Optum360 has brought providers and payers together and provides transparency and a conduit for two-way communication, which eliminates many revenue cycle administrative tasks through automation, reducing the costs of healthcare for both trading partners.

When Optum360 assumes responsibility for the revenue cycle, it promises to deliver predictable financial results through service-level agreements (SLAs). It aligns financial incentives to healthcare organizations’ performance, creating an operating partnership to address the following quantifiable benefits: revenue improvement, cost reduction, and cash acceleration. In addition, Optum360’s solutions:

Improved documentation standards.
Identified process and care gaps.
Strengthened payer-provider collaboration and transparency.
Reinforced talent retention.
Enhanced the patient financial experience.

Each interviewed customer agreed with the following statement: “Optum360 reduces the friction between providers and payers by harnessing the revenue cycle’s data-sharing power. Providers can work jointly with payers to strengthen front-end communication and back-end billing processes.”

One Composite Organization’s Financial Results

To better understand the benefits associated with an investment in Optum360, Forrester analyzed the data and information from interviews with four existing Optum360 clients.

We then created a separate composite Organization (provider) to tell the Optum360 end-to-end revenue cycle transformation story. The healthcare composite Organization comprises five hospital facilities and a physician group.

The Organization’s Benefits Attributed To Optum360

Quantified benefits. The Organization is projected to experience the following quantified benefits totaling $177.27 million (risk adjusted) over 10 years:

Guaranteed cost savings:

$28 million. Through a strategic partnership model, Optum360 has taken full responsibility for revenue cycle operations, allowing the Organization to focus on its critical mission.
Revenue improvement — Organization’s share:

$149.27 million (risk-adjusted) over 10 years. Optum360 is taking responsibility for improving the Organization’s revenue performance by impacting uncompensated care, administrative write-offs, documentation improvement, underpayments, and case utilization review.

Unquantified benefits. The Organization experienced important benefits, which were not quantified for this study. See section titled Unquantified Benefits for more information.

Cost categories. The Organization experienced the following costs categories over a period of 10 years:

Organization’s internal labor costs for Optum360:

$3.438 million (risk-adjusted). This includes the internal labor associated with the initial planning, deployment of Optum360, and training for ordering clinicians.
Optum’s fees:

Optum360 assumes full management responsibility for the people, vendor, real estate, and IT expenses that are required to operate the revenue cycle. Optum360 identifies the true cost to deliver the in-scope services and then offers a management fee below these costs, delivering guaranteed cost savings.

For confidentiality reasons and at the request of Optum360, its fees are not quantified in this case study. The cost categories are described above and in the Analysis Of Costs section. For more information regarding fees, please contact your Optum360 representative.

Summary. Forrester’s financial analysis found that the Organization experienced risk-adjusted benefits totaling $177.27 million over 10 years.

If risk-adjusted benefits still demonstrate a compelling business case, it raises confidence that the investment is likely to succeed because the risks that threaten the investment have been taken into consideration and quantified. The risk-adjusted numbers should be taken as realistic expectations, as they represent the expected value considering risk. Assuming normal success at mitigating risk, the risk-adjusted numbers should more closely reflect the expected outcome of the investment.

TEI Framework And Methodology

The TEI methodology helps companies demonstrate, justify, and realize the tangible value of IT initiatives to both senior management and other key business stakeholders.

From the information provided in the interview, Forrester has constructed a Total Economic Impact™ (TEI) framework for those organizations considering investing in Optum360’s solutions.

The objective of the framework is to identify the cost, benefit, flexibility, and risk factors that affect the investment decision. Forrester took a multistep approach to evaluate the impact that Optum360’s solutions can have on an Organization:

DUE DILIGENCE

Interviewed Optum360’s stakeholders to gather data relative to the Optum360’s solutions.
CUSTOMER INTERVIEWS

Interviewed four customers using Optum360 solutions to obtain data with respect to costs, benefits, and risks.
COMPOSITE ORGANIZATION

Designed a composite organization based on characteristics of the interviewed organizations.
FINANCIAL MODEL FRAMEWORK

Constructed a financial model representative of the interviews using the TEI methodology and risk-adjusted the financial model based on issues and concerns of the interviewed organizations.
CASE STUDY

Employed four fundamental elements of TEI in modeling the impact of Optum360’s benefits, costs, flexibility, and risks. Given the increasing sophistication that enterprises have regarding ROI analyses related to IT investments, Forrester’s TEI methodology serves to provide a complete picture of the total economic impact of purchase decisions. Please see Appendix A for additional information on the TEI methodology.

DISCLOSURES

Readers should be aware of the following:

This study is commissioned by Optum360 and delivered by Forrester Consulting. It is not meant to be used as a competitive analysis.

Forrester makes no assumptions as to the potential ROI that other organizations will receive. Forrester strongly advises that readers use their own estimates within the framework provided in the report to determine the appropriateness of an investment in Optum360.

Optum360 reviewed and provided feedback to Forrester, but Forrester maintains editorial control over the study and its findings and does not accept changes to the study that contradict Forrester’s findings or obscure the meaning of the study.

Optum360 provided the customer names for the interviews but did not participate in the interviews.

The Optum360 Customer Journey

BEFORE AND AFTER THE OPTUM360 INVESTMENT

Interviewed Customers

For this study, Forrester conducted interviews with four of Optum360’s customers described below, each requesting anonymity:

Customer Type	Region	Interviewee	Months Using Optum360
Payer	Located in southeastern US	Vice president of operations	30 months
Provider	Based in US with operations worldwide	Executive director	24 months
Provider	Located in midwestern US	Director, clinical and financial integration	60 months
Provider	Located in central US	Chief information officer (CIO)	65 months

“Optum360 helped us smoothly transition to ICD-10. The combination of the Optum Coding service, Optum Enterprise CAC [computer-assisted coding], and the Optum-led physician training program helped us avoid risks during the transition to ICD-10.”

An Optum360 managed service customer

The Composite Organization

To better understand the benefits associated with an investment in Optum360, Forrester analyzed the data and information from interviews with four existing Optum360 clients.

We then created a separate composite Organization (provider) to tell the Optum360 end-to-end revenue cycle transformation benefit story. The healthcare composite Organization comprises five hospital facilities and a physician group.

Before its partnership with Optum360, the Organization had struggled with changing Medicare reimbursements, an increase in patient financial responsibility, rising administrative burdens, and continuing regulatory shifts. The regulatory and industry changes created a challenge for the Organization in its continuing mission to serve the local community and remain independent.

In addition, prior to Optum360, the Organization had an ANSI messaging system that it found limiting and caused additional work. The system was rigid and unhelpful when the Organization made an error. Payers struggled to work with the Organization to remediate these issues given the limitations of their systems. With the previous system, when claims were denied, staff were so confused that they would call or file an appeal instead of attempting to work within the system.

The Organization sought a single vendor that could offer end-to-end integrated solutions to the myriad of revenue cycle challenges it was facing. After a long vendor review process, the Organization chose Optum360 because it shared Optum’s future vision of driving toward a revenue cycle so seamlessly interconnected that no claim is ever denied. It views Optum360 as strategically situated between payers, providers, and consumers of healthcare.

Through a strategic partnership model, Optum360 has taken full responsibility for revenue cycle operations, allowing the Organization to focus on its critical mission: excellent patient care.

Key Challenges In the Revenue Cycle

“The use of Optum360’s CDI led to an improvement of over $20 million, and we’ve seen an improvement in our accuracy rates and a decrease in denials for coding reasons.”

An Optum360 managed service customer

The composite Organization faced challenges similar to the interviewed healthcare companies:

Hiring and retaining staff across patient access, coding and health information management, and billing and collections functions.
Coding accuracy issues.
Stagnant revenue cycle administrative productivity.
Accelerating costs.
Undercompensated and unreimbursed care.
Denied claims.
High accounts receivables days sales outstanding (DSO).
The seemingly needless “back-and-forth” and administrative friction from payer-provider relationships.
Outdated billing system and lack of workflow and analytics tools.

Key Business Goals And Objectives

With its partnership with Optum360, the Organization believed it could satisfy business goals and objectives in the following categories:

Create a partnership to have predictable end-to-end performance.
Improve revenue performance including a reduction of bad debt.
Significantly reduce the “back-and-forth” and administrative friction between the Organization and payers.
Identify process and care gaps.
Improve documentation.
Remove system waste and costs.
Improve revenue integrity.
Grow patient loyalty.
Achieve higher quality measures.

Key Results

“Optum360 has so many different levels, and because of that, we are able to grow the partnership instead of just working with a coding company.”

An Optum360 managed service customer

The customer interviews revealed beneficial functionality attributed to their partnerships with Optum360. The composite provider Organization experienced the following results (specific financial benefit details are available in the Analysis Of Benefits section), as listed below:

Guaranteed cost savings:

$28 million. Through a 10-year strategic partnership model, Optum360 has taken full responsibility for revenue cycle operations, allowing the Organization to focus on its critical mission.
Revenue improvement — Organization’s share:

$149.27 million (risk-adjusted) over 10 years. Optum360 is taking responsibility for improving the Organization’s revenue performance by impacting uncompensated care, administrative write-offs, documentation improvement, underpayments, and case utilization review.

Analysis Of Benefits

QUANTIFIED BENEFIT DATA

Total Quantified Benefits (in millions, risk-adjusted)

Ref	Metric	Year 1	Year 2	Year 3	Year 4	Year 5	5 Year Total	10 Year Total
Atr	Guaranteed cost savings	$1.80	$1.90	$2.20	$2.40	$2.60	$10.90	$28.00
Btr	Revenue improvement — Organization’s share (risk-adjusted)	$6.26	$15.17	$15.98	$15.98	$15.98	$69.37	$149.27
	Total quantified benefits (risk-adjusted)	$8.06	$17.07	$18.18	$18.38	$18.58	$80.27	$177.27

Note: Atr and Btr refer to benefit totals in the tables below.

Guaranteed Cost Savings

Through a strategic partnership model, Optum360 has taken full responsibility for revenue cycle operations, allowing the Organization to focus on its critical mission. Savings from the revenue cycle can be a critical funding source for care delivery. The Organization’s pre-Optum360 revenue cycle processes were outdated and siloed — and an overall drain on resources, operations and budget. With its partnership with Optum360, the Organization sought the following high-level objectives:

Achieve predictable end-to-end performance for costs.
Identify process and care gaps.
Improve documentation.
Remove system waste and costs.
Grow patient loyalty.

The Organization and Optum360 worked together to define the partnership structure including the in-scope functions and FTE headcounts as follows:

Acute Front — central scheduling and admissions: 197 rebadged employees.
Acute Middle — coding, clinical documentation improvement (CDI), health information management (HIM): 78 rebadged employees.
Acute back — reimbursement, patient accounting: 87 rebadged employees.
Ambulatory administration — coding and patient accounting: 97 rebadged employees.

A total of 459 employees of the Organization are rebadged to become Optum360 employees. Optum360 guaranteed an immediate savings of $1.8 million in Year 1; a total of $10.9 million guaranteed savings in the first five years; and $28.0 million in savings over the 10-year life of the contract (see row A2 in the table below).

Modeling and assumptions.

Forrester has modeled the guaranteed cost savings based on a typical Optum360 customer and a 10-year contract. The composite Organization comprises five hospital facilities and a physician group. Five- and 10-year cost savings are outlined in the table below.

Investments.

Optum360 makes significant investments in the Organization to improve operational performance through technology, experienced staff, and workflow. Investments are made based upon the current operational challenges and to drive cost savings and revenue improvement.

Risks.

In long-term contracted partnerships, Optum360 guarantees costs savings over a 10-year period. Forrester feels there’s no need to risk-adjust benefits that are guaranteed; therefore, Forrester made no risk adjustments to this cost savings benefit.

Impact risk is the risk that the business or technology needs of the Organization may not be met by the investment, resulting in lower overall total benefits. The greater the uncertainty, the wider the potential range of outcomes for benefit estimates.

Guaranteed Cost Savings (In Millions): Calculation Table

Ref	Metric	Calc./Source	Year 1	Year 2	Year 3	Year 4	Year 5	5 Year Total	10 Year Total
A1	Organization’s budget outsourced to Optum360	Optum360	$35.6	$36.4	$37.1	$37.8	$38.6	$185.5	$390.6
A2	Total guaranteed cost savings	Optum360	$1.8	$1.9	$2.2	$2.4	$2.6	$10.9	$28.0
	Risk adjustment	0%
Atr	Guaranteed cost savings (no risk adjustment)		$1.8	$1.9	$2.2	$2.4	$2.6	$10.9	$28.0

Revenue Improvement — Organization’s Share

“Optum360 has brought us and payers together, providing transparency and a conduit for two-way communication. Optum360 has allowed us to eliminate many revenue cycle administrative tasks through automation.”

An Optum360 managed service customer

Through the strategic partnership, Optum360 takes responsibility for improving the Organization’s revenue performance, once again allowing the Organization to focus on and incrementally fund operations related to its critical mission.

The Organization and Optum360 worked together to define the revenue improvements including the following areas of opportunity (revenue dollar improvements reflect full annual run rates beginning in Year 3):

Uncompensated care improvement — $3.8 million annually.

Patient liability estimation to increase price transparency and collect preservice.
Improve registration quality and accuracy.
Automate patient access workflow to financially clear patient prior to arrival.

Administrative reduction in write-offs — $7.0 million annually.

Improve business office workflow by deploying technology and leveraging Optum360’s Learning and Performance solutions team to ensure proper account prioritization.
Implement denials workflow process redesign and enhanced claim edits.
And again, automate patient access workflow to financially clear patient prior to arrival.

Documentation improvement — $7.7 million annually.

Implement physician champion and education programs to enhance documentation capture.
Leverage natural language processing capabilities to improve coding accuracy, reduce audit risk, and improve revenue capture.

Underpayments — $6.7 million annually.

Review and appeal more commercial accounts for potential underpayments.
Implement management dashboard to enable weekly appeal creation staff accountability.
Create payer scorecard to track underpayment trends.

Inpatient/observation justification — $10.3 million annually.

Onsite physician advisor and technology to support chart reviews.
Audits to prevent revenue leakage in reimbursement.

Modeling and assumptions.

The Organization is projected to experience incremental revenue improvements of $331.6 million, which it shares with Optum360.

Risks.

The Organization’s revenue improvement savings are projections; they are not guaranteed by Optum360. To be conservative, Forrester risk-adjusted this benefit downward by 10%, yielding a 10-year risk adjusted revenue improvement of $149.27 million.

Revenue Improvement — Organization’s Share (In Millions): Calculation Table

Ref	Metric	Calc./Source	Year 1	Year 2	Year 3	Year 4	Year 5	5 Year Total	10 Year Total
B1	Revenue improvement	Optum360	$13.90	$33.70	$35.50	$35.50	$35.50	$154.10	$331.60
B2	Less Optum360 performance incentives	Optum360	$6.95	$16.85	$17.75	$17.75	$17.75	$77.05	$165.80
	Risk adjustment	-10%
Btr	Revenue improvement — Organization’s share (risk-adjusted)		$6.26	$15.17	$15.98	$15.98	$15.98	$69.37	$149.27

Note: Years 1 and 2 are benefit ramp years.

Unquantified Benefits

In addition to the benefits listed above, the interviewed customers discussed several features of Optum360 that were important to them, and either could not quantify the specific benefits or reported the features contributed to the quantified benefits above. Costs associated with the following features are included in the Optum360 fees. Feature descriptions are from Optum360.

Cash acceleration.

Optum360 customers reported reduced billing cycle times by delivering clean and accurate claims to payers. The result is faster adjudication and increased cash flow.
Best practice operations.

Streamline workflow to enhance registration and billing operations, deploy intuitive work-listing with prioritization of high-risk accounts, improve denial overturn/conversion rates, and avoid rework. Provides virtual support for resolution of revenue cycle questions and issues.
Patient experience.

Optum360 technology and services improve the patient experience by simplifying and adding clarity to every revenue cycle process a patient encounters, from registration and care delivery through billing and payment.
Learning and Performance solutions.

These programs help with scripting language for patient interactions and point-of-service (POS) collections, ensuring accuracy, compliance, and process standardization.
Business intelligence and analytics.

These enable key performance index (KPI) reporting, alerts, and analytics to drive performance improvement and hold Optum360 staff accountable to productivity metrics.
Onsite physician advisor.

Utilize onsite physician advisor and technology to identify cases where appropriate to appeal IP determination changes impacting reimbursement.
Underpayments Payment Integrity Compass (PIC) optimization.

Standardize account follow-up workflow to include underpayment recovery and hold team accountable to utilizing PIC.
Technology enablement.

Optimize and implement technology; implement change management processes to ensure staff is equipped with the right resources and information to reduce manual work and minimize inefficiencies.
Innovation.

Optum360 leverages industry-leading products and tools with smart integration points, designed to improve revenue cycle performance in an efficient, customer-focused, and cost-effective manner.

Flexibility

The value of flexibility is clearly unique to each customer, and the measure of its value varies across each healthcare company. There are scenarios in which a customer might choose to implement Optum360’s solution and later realize additional uses and business opportunities.

Interviewed customers agreed that building data-sharing power into the revenue cycle today improves transparency and efficiency across the entire healthcare system for years to come. For providers and payers alike, that means smoother transactions, increased claims accuracy, reduced rework, and predictable financial performance.

The value of flexibility would be quantified when evaluated as part of a specific project (described in more detail in Appendix A).

Flexibility, as defined by TEI, represents an investment in additional capacity or capability that could be turned into business benefit for a future additional investment. This provides an organization with the "right" or the ability to engage in future initiatives but not the obligation to do so.

Analysis Of Costs

Organization’s Internal Costs For Optum360

According to the interviewed customers, the internal labor associated with the initial planning, deployment of Optum360, and training for ordering clinicians included 8.33 FTEs for a period of six months at a fully loaded annual cost of $150,000. Individual job titles included: VP of operations, director of clinical financial integration, CIO, data analysts, training staff, system administrators, and a physician.

On an ongoing basis, 2.0 FTEs support the relationship with Optum360 and monitor quality and output, working with Optum360 on continuous improvements including future health information technology.

Modeling and assumptions. The table below includes fully loaded average labor costs associated with the various job titles listed above.

Risks. Forrester risk-adjusted costs upward by 10% reflecting variability in interviewed customer’s implementation and ongoing management requirements, and compensation varies across geographies.

The Organization’s total internal costs to implement, manage, and monitor Optum360 is a risk-adjusted $3.438 million.

Optum360 will make significant investments to customers’ infrastructure with technology, operational expertise, and experienced staff. It deploys transformational resources to address current operational challenges and adds value to the current infrastructure to drive improvement, while optimizing processes that enable maximum impact of technologies.

Organization’s Internal Costs For Optum360 (In Millions): Calculation Table

Ref.	Metric	Initial	Year 1	Year 2	Year 3	Year 4	Year 5	5 Year Total	10 Year Total
C1	Internal labor to plan and implement Optum360 (8.33 FTEs for initial six months)	$0.625	$0.0	$0.0	$0.0	$0.0	$0.0	$0.625	$0.625
C2	Monitoring and managing the partnership with Optum360 (2 FTEs)	$0.0	$0.250	$0.250	$0.250	$0.250	$0.250	$1.25	$2.50
Ct	Organization’s internal costs for Optum360	$0.0625	$0.250	$0.250	$0.250	$0.250	$0.250	$1.88	$3.125
	Risk adjustment +10%
Ctr	Organization’s internal costs for Optum360 (risk-adjusted)	$0.688	$0.275	$0.275	$0.275	$0.275	$0.275	$2.063	$3.438

Implementation risk is the risk that a proposed investment may deviate from the original or expected requirements, resulting in higher costs than anticipated. The greater the uncertainty, the wider the potential range of outcomes for cost estimates.

Optum360 Fees

Optum360 fees include assuming responsibility for the Organization’s end-to-end revenue cycle including rebadging 459 employees to become Optum360 employees. Performance incentives include sharing of revenue improvement opportunities were discussed previously.

Each interviewed customer incurred Optum360 fees associated with their investment in Optum360’s revenue cycle solutions. For confidentiality reasons and at the request of Optum360, these costs are not quantified in this case study. For more information regarding fees, please contact an Optum360 representative.

Summary Results

Quantified benefits. The Organization is projected to experience the following quantified benefits totaling $177.27 million (risk adjusted) over 10 years:

Guaranteed cost savings:

$28 million. Through a strategic partnership model, Optum360 has taken full responsibility for revenue cycle operations, allowing the Organization to focus on its critical mission.
Revenue improvement — Organization’s share:

$149.27 million (risk-adjusted) over 10 years. Optum360 is taking responsibility for improving the Organization’s revenue performance by impacting uncompensated care, administrative write-offs, documentation improvement, underpayments, and case utilization review.

Unquantified benefits. The Organization experienced important benefits, which were not quantified for this study. See section titled Unquantified Benefits for more information.

Cost categories. The Organization experienced the following costs categories over a period of 10 years:

Organization’s internal labor costs for Optum360

$3.438 million (risk-adjusted). This includes the internal labor associated with the initial planning, deployment of Optum360, and training for ordering clinicians.
Optum’s fees

Optum360 assumes full management responsibility for the people, vendor, real estate, and IT expenses that are required to operate the revenue cycle. Optum360 identifies the true cost to deliver the in-scope services and then offers a management fee below these costs, delivering guaranteed cost savings.

Summary

Forrester’s financial analysis found that the Organization experienced risk-adjusted benefits totaling $177.27 million over 10 years.

About Optum360: Overview

The following information is provided by Optum360. Forrester has not validated any claims and does not endorse Optum360 or its offerings.

Optum360 sits at the center of the healthcare financial exchange. Its revenue cycle solutions combine technology, methodology, and expertise to help payers and providers collaborate. Its seamless, transparent revenue cycle capabilities strengthen and sustain the payer and provider relationship.

The Optum360 flexible engagement model can adjust to match your organizational needs. Its end-to-end revenue cycle transformation solutions can create predictable performance.

Revenue Cycle Transformation Solutions

Patient financial experience.

Achieve early patient access, cost clarity, and satisfaction. For patients, this means accurate estimates of out-of-pocket obligations and easy payment options even before care is delivered. For health systems, it accelerates collection at the point of service, reduces denials, and improves patient satisfaction.
Coding and documentation.

Get smarter medical records using proven tools and services. Gain accurate quality reporting, improved medical necessity determinations, and reduced denials. By attaining complete and accurate documentation and coding, you reduce friction with payers, rework, and lost revenue.
Claims.

Proactive intelligence accelerates cash flow. This proactive approach improves claims integrity and boosts first-pass payment rates. This protects health organizations from avoidable rework, delays, and denials. And Optum360 service and support teams keep providers compliant with payer regulations and guidelines.
Reimbursement.

Drive revenue integrity with proven services and technology. Optum360 provides tenured, HFMA-certified resources that understand payer rules and regulatory guidelines. These services address immediate needs and lay the foundation for any potential technology implementation that can sustain stronger reimbursement.
Payer-provider connectivity.

Intuitive data dialogs create a smooth claims process. Optum360 supports real-time communication and financial exchange between health systems and the groups that reimburse them. Automated sharing of clinical and claims data eliminates needless “back-and-forth” and administrative friction from payer-provider relationships.

Appendix A: Total Economic Impact

Total Economic Impact is a methodology developed by Forrester Research that enhances a company’s technology decision-making processes and assists vendors in communicating the value proposition of their products and services to clients. The TEI methodology helps companies demonstrate, justify, and realize the tangible value of IT initiatives to both senior management and other key business stakeholders.

Total Economic Impact Approach

Benefits represent the value delivered to the business by the product. The TEI methodology places equal weight on the measure of benefits and the measure of costs, allowing for a full examination of the effect of the technology on the entire organization.
Costs consider all expenses necessary to deliver the proposed value, or benefits, of the product. The cost category within TEI captures incremental costs over the existing environment for ongoing costs associated with the solution.
Flexibility represents the strategic value that can be obtained for some future additional investment building on top of the initial investment already made. Having the ability to capture that benefit has a PV that can be estimated.
Risks measure the uncertainty of benefit and cost estimates given: 1) the likelihood that estimates will meet original projections and 2) the likelihood that estimates will be tracked over time. TEI risk factors are based on “triangular distribution.”

PRESENT VALUE (PV)

The present or current value of (discounted) cost and benefit estimates given at an interest rate (the discount rate). The PV of costs and benefits feed into the total NPV of cash flows.
NET PRESENT VALUE (NPV)

The present or current value of (discounted) future net cash flows given an interest rate (the discount rate). A positive project NPV normally indicates that the investment should be made, unless other projects have higher NPVs.
RETURN ON INVESTMENT (ROI)

A project’s expected return in percentage terms. ROI is calculated by dividing net benefits (benefits less costs) by costs.
DISCOUNT RATE

The interest rate used in cash flow analysis to take into account the time value of money. Organizations typically use discount rates between 8% and 16%. A 10% discount rate is used for this analysis.
PAYBACK PERIOD

The breakeven point for an investment. This is the point in time at which net benefits (benefits minus costs) equal initial investment or cost.

The initial investment column contains costs incurred at “time 0” or at the beginning of Year 1 that are not discounted. All other cash flows are discounted using the discount rate at the end of the year. PV calculations are calculated for each total cost and benefit estimate. NPV calculations in the summary tables are the sum of the initial investment and the discounted cash flows in each year. Sums and present value calculations of the Total Benefits, Total Costs, and Cash Flow tables may not exactly add up, as some rounding may occur.

Executive Summary

Table Of Contents

Selected Key Metrics

Key Findings

The Organization’s Benefits Attributed To Optum360

Guaranteed cost savings:

Revenue improvement — Organization’s share:

Organization’s internal labor costs for Optum360:

Optum’s fees:

TEI Framework And Methodology

The TEI methodology helps companies demonstrate, justify, and realize the tangible value of IT initiatives to both senior management and other key business stakeholders.

DUE DILIGENCE

CUSTOMER INTERVIEWS

COMPOSITE ORGANIZATION

FINANCIAL MODEL FRAMEWORK

CASE STUDY

DISCLOSURES

The Optum360 Customer Journey

BEFORE AND AFTER THE OPTUM360 INVESTMENT

Interviewed Customers

“Optum360 helped us smoothly transition to ICD-10. The combination of the Optum Coding service, Optum Enterprise CAC [computer-assisted coding], and the Optum-led physician training program helped us avoid risks during the transition to ICD-10.”

The Composite Organization

Key Challenges In the Revenue Cycle

“The use of Optum360’s CDI led to an improvement of over $20 million, and we’ve seen an improvement in our accuracy rates and a decrease in denials for coding reasons.”

Key Business Goals And Objectives

Key Results

“Optum360 has so many different levels, and because of that, we are able to grow the partnership instead of just working with a coding company.”

Guaranteed cost savings:

Revenue improvement — Organization’s share:

Analysis Of Benefits

QUANTIFIED BENEFIT DATA

Total Quantified Benefits (in millions, risk-adjusted)

Guaranteed Cost Savings

Modeling and assumptions.

Investments.

Risks.

Guaranteed Cost Savings (In Millions): Calculation Table

Revenue Improvement — Organization’s Share

“Optum360 has brought us and payers together, providing transparency and a conduit for two-way communication. Optum360 has allowed us to eliminate many revenue cycle administrative tasks through automation.”

Modeling and assumptions.

Risks.

Revenue Improvement — Organization’s Share (In Millions): Calculation Table

Unquantified Benefits

Cash acceleration.

Best practice operations.

Patient experience.

Learning and Performance solutions.

Business intelligence and analytics.

Onsite physician advisor.

Underpayments Payment Integrity Compass (PIC) optimization.

Technology enablement.

Innovation.

Flexibility

Analysis Of Costs

Organization’s Internal Costs For Optum360

Organization’s Internal Costs For Optum360 (In Millions): Calculation Table

Optum360 Fees

Summary Results

Guaranteed cost savings:

Revenue improvement — Organization’s share:

Organization’s internal labor costs for Optum360

Optum’s fees

Summary

About Optum360: Overview

Revenue Cycle Transformation Solutions

Patient financial experience.

Coding and documentation.

Claims.

Reimbursement.

Payer-provider connectivity.

Appendix A: Total Economic Impact

Total Economic Impact Approach

PRESENT VALUE (PV)

NET PRESENT VALUE (NPV)

RETURN ON INVESTMENT (ROI)

DISCOUNT RATE

PAYBACK PERIOD

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