Hospital has the following treatment options to reduce the incidence of Ventilator-Associated Pneumonia: For Treatment X (status quo), it would cost 50,000 with 40 percent effectiveness, For Treatment Y, it would cost 100,000 with 85 percent effectiveness, For Treatment Z, it would cost 75,000 with 65 percent effectiveness, and For Treatment V, it would cost 80,000 with 68 percent effectiveness. Is there any treatment option that is not economically rational? Explain. If the hospital’swilling to pay is $1000, which treatment optionwould it choose? Explain With technical innovation, suppose Treatment V increased its effectiveness to 75 percent, would your answer to question (a) above change

Hospital has the following treatment options to reduce the incidence of Ventilator-Associated Pneumonia: For Treatment X (status quo), it would cost 50,000 with 40 percent effectiveness, For Treatment Y, it would cost 100,000 with 85 percent effectiveness, For Treatment Z, it would cost 75,000 with 65 percent effectiveness, and For Treatment V, it would cost 80,000 with 68 percent effectiveness. Is there any treatment option that is not economically rational? Explain. If the hospital’swilling to pay is $1000, which treatment optionwould it choose? Explain With technical innovation, suppose Treatment V increased its effectiveness to 75 percent, would your answer to question (a) above change

EBK HEALTH ECONOMICS AND POLICY

7th Edition

ISBN:9781337668279

Author:Henderson

Publisher:Henderson

Chapter5: Demand For Health And Medical Care

Section: Chapter Questions

Problem 9QAP

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Hospital has the following treatment options to reduce the incidence of Ventilator-Associated Pneumonia: For Treatment X (status quo), it would cost 50,000 with 40 percent effectiveness, For Treatment Y, it would cost 100,000 with 85 percent effectiveness, For Treatment Z, it would cost 75,000 with 65 percent effectiveness, and For Treatment V, it would cost 80,000 with 68 percent effectiveness. Is there any treatment option that is not economically rational? Explain. If hospital’s willing to pay is $1000, which treatment option it would choose? Explain. With technical innovation, suppose Treatment V increased its effectiveness to 75 percent, would your answer to question (a) above change?
You have been recruited as an expert in health economics to recommend what is the best therapy for a group of patients. In the image below you will find the decision tree showing the probabilities for different health states and outcomes for patients undergoing two possible treatments, No drug therapy and Drug therapy. Based on the expected cost, which therapy would you recommend as the least expensive? Explain how you arrived at your recommendation and show your calculations the space provided. No drug theraphy ? Drug theraphy ? HEALTH STATES PROBABILITIES Remain in Good Health 0.5 Develop disease A 0.2 Develop disease B 0.2 Die 0.1 Remain in Good Health 0.53 Develop disease A 0.16 Develop disease B 0.22 Die 0.09 OUTCOMES (Costs) $0 $400 $300 $200 SO $800 $500 $0
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