The healthcare system has a crucial function in preserving and improving public health. According to WHO data for 2019, the average healthcare expenditure was 8.8% of GDP for all countries, while in developed countries, it can be as high as 12-16% of GDP. Mathematical economic models can help healthcare decision-makers optimise the use of resources and improve healthcare efficiency, resulting in lower healthcare costs.
Health economics modelling https://digitalho.com/health-economic-modelling/ is equally useful for clinicians and drug manufacturers.
What is healthcare modelling
Healthcare modeling is creating simulation models that describe the economic and health characteristics of the health care system, including health care costs, the clinical effectiveness of drugs or treatment protocols, financial sustainability of the health care system, etc. Modeling helps decision-makers evaluate various diagnostic options, medical interventions and rehabilitation, and their associated costs.
In other words, economic modeling allows us to calculate the costs needed to achieve the desired effect and to relate these costs to opportunities.
Such modeling can be conducted at the micro level (to assess the cost-effectiveness of specific medical technologies or treatment procedures) and at the macro level (to analyze the impact on the economy of a country or region of various health care reforms).
At the state level, the creation of models helps with such tasks:
1. Cost forecasting
Simulation models can forecast healthcare costs based on factors such as population, morbidity, availability of healthcare services, and others. Such models allow decision-makers to make informed decisions about healthcare costs and optimise the use of resources.
2. Optimize the allocation of resources in the health care system
For example, they can help determine which services should be prioritized and which services can be deferred. This can help reduce healthcare costs without compromising the quality of care.
3. Improving health care efficiency
Modeling can help identify processes that need optimization or automation. For example, modeling can show that using certain medical equipment or technology can reduce healthcare costs.
4. Determining Optimal Pricing
Simulation models can help determine optimal prices for medical services, drugs, and equipment. They can also help investigate the effect of price changes on the consumption of medical services and medicines.
For drug manufacturers and healthcare providers, modeling helps with these issues:
- Forecasting product demand. Models predict demand for drugs and medical devices based on various factors, such as demographic trends, morbidity, and changes in healthcare policies.
- Determining the optimal cost of drugs or medical services. Models for determining optimal cost are created based on an analysis of manufacturing costs, the competitive environment, and potential demand.
- Optimisation of manufacturing processes, such as inventory management, production planning, and production line optimisation.
- Evaluating the cost-effectiveness of investments in research and development of new drugs and medical devices.
- Forecasting the market share of products based on analyzing the competitive environment, potential demand and pricing policy.
Thus, simulation helps manufacturers of drugs and medical equipment and those responsible for healthcare in the country to make more informed decisions that allow payers to receive better treatment at an affordable price.
Types of economic evaluation using simulation models in health care
Today, manufacturers and others associated with health care most often use these types of economic studies using health care simulation models to make informed decisions and optimal pricing:
- “cost per disease” analysis;
- cost-effectiveness analysis;
- budget impact analysis;
- Cost-minimisation analysis;
- Cost-utility analysis;
- Cost-benefit analysis.
Each of these allows you to evaluate and compare several alternative drugs or treatment protocols and choose the best option regarding effectiveness and cost.
“Cost per disease” analysis
This model estimates the economic burden on society of a particular disease. It includes estimates of direct medical costs (e.g., costs of drugs, physician consultations, hospitalisations) and indirect costs, such as lost wages for the patient and their loved ones, reduced productivity, and general costs of maintaining the health care infrastructure.
Disease cost analysis can be used:
- to evaluate the effectiveness of medical technology;
- evaluating health care in general;
- budget planning and health care policymaking.
It can also help determine at what stages of treatment and disease management costs can be reduced without compromising the quality of care.
Cost-effectiveness analysis
Cost-effectiveness analysis compares the outcomes and costs of two or more medical technologies (health care programs, new drugs, diagnostic techniques, and treatments).
Evaluating cost-effectiveness may include:
- identifying targets, such as life expectancy, quality of life, number of complications, etc;
- assessing the costs of providing medical services, including the costs of equipment, personnel, drugs, and other costs;
- evaluating the effectiveness of medical technologies or health care programs by comparing their costs and outcomes with alternative methods or programs;
- determining economic indicators, such as cost per unit (e.g., cost per treatment or diagnosis), cost per unit of time (e.g., cost per day in a hospital), and others;
- determining the degree of improvement in public health and economic indicators related to the provision of health services, such as increased life expectancy, reduced complications, reduced time to treatment, etc;
- determining the impact of socio-economic factors on the health of the population, such as education, income, access to health services, and others;
- determining the optimal ratio of health care costs and health care outcomes.
The analysis of economic efficiency in healthcare helps to make informed decisions in the healthcare field, optimize the costs of medical services and improve the quality of medical care.
Budget Impact Analysis
Budget impact analysis in health care is assessing the economic impact of health care decisions and activities on the financial health of the budget. This analysis is conducted to determine the budgetary impact of changes in the health care system, such as:
- changes in spending patterns;
- increased funding levels;
- introduction of new technologies and methods of treatment and others.
Mathematical models for budget impact analysis include a variety of methods and techniques that are used to estimate the economic impact of healthcare decisions on the budget,
such as:
- cash flow modeling;
- cost-effectiveness modeling;
- risk modeling;
- forecasting modeling;
- optimization modeling.
Budget impact analysis is an important tool for healthcare decision-making because it assesses the economic impact of healthcare activities and decisions on the budget and determines the optimal cost-benefit ratio.
Cost-minimisation analysis
This is a variant of cost-effectiveness research, in which a comparative assessment is made of medical technologies characterized by identical effectiveness and safety but with different costs. Cost-minimisation analysis in health care is based on evaluating various strategies and methods aimed at reducing costs, such as optimizing the use of medical technologies and procedures, drug supply management, optimizing the structure of health care, etc.
This analysis includes the evaluation of economic and financial indicators, such as the cost of healthcare services, the value of the outcomes and cost-effectiveness, and social indicators, such as patient satisfaction, accessibility and quality of care.
Cost-minimisation analysis in health care helps improve healthcare efficiency, increase the availability and quality of care for more patients, and reduce the burden of healthcare costs on society.
Cost-utility analysis
Cost-utility analysis is a variant of cost-effectiveness research in which the results of medical technology are evaluated in units of utility from the perspective of the healthcare consumer, usually in terms of quality-of-life measures. The number of lives saved, reduction of symptoms and other indicators can also be compared. An obligatory requirement is the use of the same performance indicators (e.g., the method of quality of life assessment) and costs for all medical technologies analyzed.
Cost-utility analysis evaluates the social, economic, and financial impact of health interventions and their impact on public health and social well-being.
Cost-utility analysis helps assess which healthcare interventions are more efficient in using resources and achieving health care goals. It also helps to make decisions about budget allocations for certain programs and health services based on assessing their usefulness and costs.
Cost-benefit analysis
Another variant of cost-effectiveness analysis in which the results (effectiveness) are presented in monetary terms, which allows us to compare the cost-effectiveness of various, primarily administrative medical technologies.
In other words, it is a variation of clinical and economic analysis in which both costs and results are presented in monetary terms. This makes it possible to compare the cost-effectiveness of different interventions with outcomes expressed in different units.
Types of healthcare modeling
The types of healthcare modeling used today are:
- Computer-based – A type of modeling that uses computer programs and simulations to simulate processes and events in the healthcare system;
- Mathematical – Based on the use of mathematical equations and statistical methods to describe the health care system;
- Economic – To evaluate the economic aspects of the healthcare system, such as the costs of medical services, costs of medical equipment, etc;
- Socio-economic – Based on the use of socio-economic factors to assess the impact of the health care system on society;
- Statistical – Based on the use of statistical methods to analyze data and assess the relationships between various variables in the healthcare system;
- Simulation – A type of computer modeling which uses virtual simulation models to analyze the processes and events in the healthcare system.
Each type of healthcare modeling has its characteristics and is used in different situations to achieve other goals. Typically, however, the simulation process uses combinations of several kinds of models to achieve the best results.
Healthcare Modeling and Market Access
Healthcare modeling allows pharmaceutical companies and manufacturers to identify:
- target audience;
- the optimal cost range of the product or service;
- the competitiveness of the product in the marketplace;
- key benefits and clinical value of the new product.
The data obtained allow manufacturers or providers of medical products or services to form a value proposition to potential consumers and healthcare decision-makers. In addition, they are used in negotiations with government officials and in meetings with patients and health care providers.
In other words, economic modeling helps manufacturers and all stakeholders make more informed and informed decisions based on the analysis of clinical and economic data, which improves their competitiveness in the marketplace and their chances of commercial success.
Also read: 5 Healthcare Marketing Strategies to Grow and Retain Regular Patients
