6. Adding An Equation To Your Valuation

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6. Adding An Equation To Your Valuation

Your sense is that, by doing a few of the above behaviors (exercise, get clinical exam, and eat more healthfully) you can change several indicators. But the value equation helps you apply real numbers to the efforts.

On a level of 1-5, you will assign values to the behavior; these values will allow you, personally and subjectively (after all, you are the CEO, so you bring both quantitative and personal experiences to the board room), to evaluate how to spend your health resources to achieve better outcomes.

Return to the idea of “BMI is too high.” You have decided to consider “getting more exercise, eating more healthfully, and get clinical exam” as your investments in your health improvements.

In this exercise, there are 5 “dimensions” for you consider. These are Quality, Risk, Reward, and Time, and, by following the equation, you will see how much they are really worth in effort and resources.

For Quality of improvement, rate the impact of the behavior change (the investment) by scoring: 1= low change in quality of life; 3= medium change; 5= substantial change
As an example, for “eating better” you might score this as “3” for a medium change in quality of life

For Price, consider the cost of making the behavior change. Again, score it on a scale of 1= low cost to achieve goal; 3= medium cost; 5= high cost.
Example: eating better is a “3” as it's a bit more expensive, but not cost-prohibitive

For Risk, consider the total risk to your health if you don't make the change. 1= low risk, 3= med risk, 5= high risk on future health and health costs
Example: if you don't change your eating patterns, will this be a low, medium, or high risk to your health and future health costs? You might decide to score this as a “5.”

For Reward, consider how much the change will improve more than one health indicator, or be increased over the years because you made the change early. 1= low reward or impact; 3= medium reward or impact; 5= high reward including quality of life, impact on future health
Example: you may decide that changing your eating patterns has a high reward on future health costs “5.”

Finally, consider the Time it will take for you to make the change. Actually, you can start eating better right now; no need to wait for Monday, as many folks do! 1= less than 30 days to achieve goal; 2= less than 90 days to achieve goal; 3= 6 months to goal; 4= 9 months to goal; 5= 1 year or lifetime commitment (such as taking a prescription for life)
Example: the change is made easily, but sustaining over time may take more effort, so you might rate this as a “2.”

Now apply the equation
V= (Q/P) x (Risk x Reward)/Time
Entering the values you've assigned above, you get the following valuation of you effort in changing eating behaviors to reduce BMI
V= (3/3) x (5 x 5) / 2= 1x 25/ 2= 12.5
Now then, if you use this equation to value your other potential behavior changes, you'll be able to get a prioritized look at where your dollars/time/efforts will deliver the best return on your investments. REMEMBER: this is one way, but not the only way, to consider your intended investments. Always consider your clinician's advice, your other conditions, and your ability to follow through; set yourself up to win both short-term and long-term advances!



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