Question

In: Economics

A study published in BMC Health Services Research in October 2008 considered the cost-effectiveness of assisting...

  1. A study published in BMC Health Services Research in October 2008 considered the cost-effectiveness of assisting general practitioners in management of patients with diabetes by use of a centralized database of clinical data to coordinate care. Based on five years of data a simulation model was used to predict patient outcomes and complications up to the time of death.

The per-patient increase in costs due to the program were estimated to be $3,000. Quality-adjusted life years were calculated to be 8.5 years for those in the program and 8.2 years for those not in the program. A year of perfect health is felt to be worth $50,000.

(a) Perform a cost-benefit analysis of the program. What do you conclude? i.e is the program worthwhile or not ? (Hint MB Vs MC)

(b) Perform a cost-utility analysis of the program. What do you conclude? i.e is the program worthwhile or not?

Solutions

Expert Solution

a) On performing Cost - Benefit Analysis we know per patient cost ( MC) or marginal cost = $ 3,000

Quality life adjusted for those in program = 8.5 years

Quality life for those not in the program = 8.2 years

Marginal benefit of the intervention = 8.5 - 8.2 = 0.3 years

A year of perfect health is felt to be worth = $50,000

Marginal benefit interms of money from program = 0.3 * $50,000 = $ 15,000

Comparing the marginal cost versus the marginal benefit ( MC ($3,000) < MB ( $15,000)) , we can say participants of program enjoy more marginal benefit thus the program is worth while.

b) Cost - Utility analysis  is a financial assessment used to guide procurement decisions applicable in health technology assessment.

Quality life adjusted for those in program = 8.5 years

Quality life for those not in the program = 8.2 years

the net benefit of the intervention = 8.5 - 8.2 = 0.3 years for participants

Thus the program is worthwhile from CUA perspective as it gives participants an increase in the quality adjusted life years.


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