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A risk-adjusted approach to comparing the return on investment in health care programs.
| Content Provider | CiteSeerX |
|---|---|
| Author | Al, Maiwenn J. Zimmermann, Heinz |
| Abstract | The league table approach to rank ordering health care programs according to the incremental cost-effectiveness ratio is a common method to guide policy makers in setting priorities for resource allocation. In the presence of uncertainty, however, ranking programs is complicated by the degree of variability associated with each program. Confidence intervals for cost-effectiveness ratios may be overlapping. Moreover, confidence intervals may include negative ratios and the interpretation of negative cost-effectiveness ratios is ambiguous. We suggest to rank mutually exclusive health care programs according to their rate of return which is defined as the net monetary benefit over the costs of the program. However, how does a program with a higher expected return but higher uncertainty compare to a program with a lower expected return but lower risk? In the present paper we propose a risk-adjusted measure to compare the return on investment in health care programs. Financing a health care program is treated as an investment in a risky asset. The risky asset is combined with a risk-free asset in order to construct a combined portfolio. The weights attributed to the risk-free and risky assets are chosen in such a manner that all programs under consideration exhibit the same degree of uncertainty. We can then compare the performance of the individual programs by constructing a risk-adjusted league table of expected returns. |
| File Format | |
| Access Restriction | Open |
| Subject Keyword | Health Care Program Risky Asset Risk-adjusted Approach Confidence Interval Expected Return Risk-adjusted League Table Incremental Cost-effectiveness Ratio Uncertainty Compare Negative Cost-effectiveness Ratio Negative Ratio Consideration Exhibit Cost-effectiveness Ratio Risk-adjusted Measure Risk-free Asset Resource Allocation Policy Maker Individual Program Combined Portfolio Exclusive Health Care Program Net Monetary Benefit Common Method Present Paper League Table Approach |
| Content Type | Text |
