Health Economic Models

Health Economic Model

What is a Health Economic Model?

  • A Health Economic Model is a mathematical framework whose purpose is to estimate the effects of an intervention on valued health consequences and costs.
  • Models enable an evaluation to be extended beyond what has been observed in a study and can bring together data from a variety of different sources.
  • Data sources for model parameter estimates may include clinical trials, observational studies, insurance claim databases, case registries, public health statistics, and quality-of-life surveys.


What types of Health Economic Models does HEA develop?

  • Cost-Effectiveness Models:  Cost–Effectiveness Models assess the overall clinical and economic value of a new therapy in relation to therapies in the same class or in relation to other healthcare interventions.  Cost-effectiveness evaluations typically include impacts on patients or populations (i.e., morbidity and mortality) and on healthcare costs. Common approaches for constructing cost-effectiveness models may include decision tree and Markov (cohort) models.
  • Budget Impact Models:  Budget Impact Models estimate the impact of an intervention on drug costs, healthcare cost offsets, and adverse event costs, as well as the expected utilization in the healthcare system.  These models are useful for estimating system wide (i.e., pharmacy and medical) budget impacts, and are commonly used by managed care payers.  Budget impact models may utilize clinical data and have their results projected as cost per member per month.


Our Approach

  • Transparent: We design our models so that all calculations, data sources, and assumptions are clearly presented and described throughout the model.  We also include sensitivity analysis to explore the effects of alternative input values and assumptions on the results.
  • User-Friendly: We design customer-friendly graphical user interfaces (GUIs) for our economic models using a variety of platforms including Excel and Visual Basic for Applications so that the models can be shared externally or used for internal decision-making.
  • Methodologically Sound: We develop and validate our models based on the ISPOR principles of good research practice for modeling in health care evaluation.  Many of our models have been published in peer-reviewed clinical journals and health economics journals.

Our Experience

  • Clinical areas of model development have included oncology supportive care, diagnostic imaging, nephrology, neurology, obesity, ophthalmology, and orthopedics.
  • Several of our models have been presented at scientific conferences