Return on Investment (ROI)

Return on investment (ROI) is a financial performance measure used to evaluate and determine the efficiency of an investment on a number of different measures. The ROI is calculated by examining the benefit (return) of an investment divided by the cost of the investment. The result of this calculation is a percentage or a ratio. For example, the formula for ROI is as follows: ROI = (Gain from the investment – Cost of the investment) / Cost of the investment It should be noted that there is more than one way healthcare organizations may compute and calculate the ROI for a new service or product line. The ROI is not always calculated in direct dollars, but it may be calculated as the ability to contribute to the organizational mission and philosophy. For example, a nonprofit healthcare organization may want to partner with a local community endeavor and establish a free clinic with low-dollar ROI but with a tremendous feeder of new patients to primary care services within the organization. Using the readings for the week, the South University Online Library, and the Internet, respond to the following: Develop an ROI for a new project (such as the implementation of a new Level 3 neonatal intensive care unit [NICU]). Summarize the issues and challenges in formulating an accurate ROI for a new product or service line. Identify two major challenges and two major barriers for unit managers or the CNO accountable for ensuring ROI on a new product or service line. Comment on the postings of at least two peers. Evaluation Criteria: Developed an ROI for a new project (such as the implementation of a new Level 3 neonatal intensive care unit [NICU]). Summarized the issues and challenges in formulating an accurate ROI for a new product or service line. Identified two major challenges and two major barriers for unit managers or the CNO accountable for ensuring ROI on a new product or service line. Justified your answers with appropriate research and reasoning. Commented on the postings of at least two peers.