Introduction to Discounted Cash Flow Analysis and Financial Functions in Excel

The financial and economic analysis of investment projects is typically carried out using the technique of discounted cash flow (DCF) analysis. This module introduces concepts of discounting and DCF analysis for the derivation of project performance criteria such as net present value (NPV), internal rate of return (IRR) and benefit to cost (B/C) ratios. These concepts and criteria are introduced with respect to a simple example, for which calculations using MicroSoft Excel are demonstrated.

Cost-Effectiveness of Palliation of Unresectable Esophageal Cancer

Introduction Different modalities of palliation for obstructive symptoms in patients with unresectable esophageal cancer (EC) exist. However, these therapeutic alternatives have significant differences in costs and effectiveness. Methods A Markov model was designed to compare the cost-effectiveness (CE) of self-expandable stent (SES), brachytherapy and laser in the palliation of unresectable EC. Patients were assigned to one of the strategies, and the improvement in swallowing function was compared given the treatment efficacy, probability of survival, and risks of complications associated to each strategy. Probabilities and parameters for distribution were based on a 9-month time frame. Results Under the base-case scenario, laser has the lowest CE ratio, followed by brachytherapy at an incremental cost-effectiveness ratio (ICER) of $4,400.00, and SES is a dominated strategy. In the probabilistic analysis, laser is the strategy with the highest probability of cost-effectiveness for willingness to pay (WTP) values lower than $3,201 and brachytherapy for all WTP yielding a positive net health benefit (NHB) (threshold $4,440). The highest probability of cost-effectiveness for brachytherapy is 96%, and consequently, selection of suboptimal strategies can lead to opportunity losses for the US health system, ranging from US$ 4.32 to US$ 38.09 million dollars over the next 5-20 years. Conclusion Conditional to the WTP and current US Medicare costs, palliation of unresectable esophageal cancers with brachytherapy provides the largest amount of NHB and is the strategy with the highest probability of CE. However, some level of uncertainly remains, and wrong decisions will be made until further knowledge is acquired.

Cost-effectiveness analysis of routine rotavirus vaccination in Brazil

Objective. The objective of this study was to conduct a cost-effectiveness analysis of a universal rotavirus vaccination program among children : 5 years of age in Brazil. Methods. Considering a hypothetical annual cohort of approximately 3 300 000 newborns followed over 5 years, a decision-tree model was constructed to examine the possible clinical and economic effects of rotavirus infection with and without routine vaccination of children. Probabilities and unit costs were derived from published research and national administrative data. The impact of different estimates for key parameters was studied using sensitivity analysis. The analysis was conducted from both healthcare system and societal perspectives. Results. The vaccination program was estimated to prevent approximately 1735 351 (54%) of the 3 210 361 cases of rotavirus gastroenteritis and 703 (75%) of 933 rotavirus-associated deaths during the 5-year period. At a vaccine price of 18.6 Brazilian reais (R$) per dose, this program would cost R$121 673 966 and would save R$38 536 514 in direct costs to the public healthcare system and R$71 778 377 in direct and indirect costs to society. The program was estimated to cost R$1 028 and R$1 713 per life-years saved (LYS)from the societal and healthcare system perspectives, respectively. Conclusions. Universal rotavirus vaccination was a cost-effective strategy for both perspectives. However, these findings are highly sensitive to diarrhea incidence rate, proportion of severe cases, vaccine coverage, and vaccine price.

A cost-minimization analysis of the societal costs of realtime teledermatology compared with conventional care: results from a randomized controlled trial in New Zealand

A randomized controlled trial was carried out to measure the societal costs of realtime teledermatology compared with those of conventional hospital care in New Zealand. Two rural health centres were linked to a specialist hospital via ISDN at 128 kbit/s. Over 10 months, 203 patients were referred for a specialist dermatological consultation and 26 were followed up, giving a total of 229 consultations. Fifty-four per cent were randomized to the teledermatology consultation and 46% to the conventional hospital consultation. A cost-minimization analysis was used to calculate the total costs of both types of dermatological consultation. The total cost of the 123 teledermatology consultations was NZ$34,346 and the total cost of the 106 conventional hospital consultations was NZ$30,081. The average societal cost of the teledermatology consultation was therefore NZ$279.23 compared with NZ$283.79 for the conventional hospital consultation. The marginal cost of seeing an additional patient was NZ$135 via teledermatology and NZ$284 via conventional hospital appointment. From a societal viewpoint, and assuming an equal outcome, teledermatology was a more cost-efficient use of resources than conventional hospital care.

Analysis of the return on preventive measures in musculoskeletal disorders through the benefitecost ratio: A case study in a hospital

Work-related musculoskeletal disorders (WMSDs) are among the most costly health problems that society is facing today. Prevention involves investments and it is important for organizations to make a cost ebenefit analysis of ergonomic projects. Return on prevention is a recent concern in the domain of occupational safety and health (OSH). There are many studies concerning the return on the prevention of WMSDs, in terms of the benefits for the organization in which the preventive measures are implemented. However, it is also important to perform an analysis of the impact of each measure on society (externalities). A model to perform a financial and economic costebenefit analysis related to OSH projects was developed and it was applied in the case of the prevention of WMSDs in a Portuguese hospital. An analysis of the accidents and corresponding costs has been made in six of the services of the hospital. Financial and an economic costebenefit analysis have been made and the benefitecost ratio (B/C) has been calculated. While the B/C financial ratio, considering only the benefits to the hospital, is around 2, the economic B/C ratio, taking into account all the external benefits that have been quantified, is higher than 14. Relevance to industry: Both the economic and the financial B/C ratio are important support tools for decision makers in public and private organizations, helping them to define which preventive measures should be implemented, taking into account the costs involved and the resulting quantified benefits, for the organization, for the workers and for the society.

On the economic analysis of response to preventive measures

There are many circumstances in which the effectiveness of preventive measures depends to a large extent on the compliance of the patient in changing his or her behavior or lifestyle. It is shown how economic techniques can be used (i) to describe the rationale of individuals and predict their behavior (Section 2); and (ii) to assess preventive measures that, by requiring a change of conduct, imply "costs" to the individual due to a decline in the quality of life (Appendix). Cigarette smoking and coronary heart disease are used as an illustration. While the analysis of Section 2 uses graphical techniques, a simple textbook-type of lifetime utility model with a mathematical emphasis is used in the Appendix. It is also shown that techniques often used to assess health care programs such as the QALYs (Quality-Adjusted Life Years) are inappropriate to the evaluation of preventive programs aiming at behavioral changes. Finally, topics that call for further research are indicated.

Municipal solid waste management system: decision support through systems analysis

Thesis submitted to the Universidade Nova de Lisboa, Faculdade de Ciências e Tecnologia for the degree of Doctor of Philosophy in Environmental Engineering

Cost-Effectiveness of Non-Vitamin K Antagonist Oral Anticoagulants for Atrial Fibrillation in Portugal

INTRODUCTION AND OBJECTIVES:Recently, three novel non-vitamin K antagonist oral anticoagulants received approval for reimbursement in Portugal for patients with non-valvular atrial fibrillation (AF). It is therefore important to evaluate the relative cost-effectiveness of these new oral anticoagulants in Portuguese AF patients. METHODS: A Markov model was used to analyze disease progression over a lifetime horizon. Relative efficacy data for stroke (ischemic and hemorrhagic), bleeding (intracranial, other major bleeding and clinically relevant non-major bleeding), myocardial infarction and treatment discontinuation were obtained by pairwise indirect comparisons between apixaban, dabigatran and rivaroxaban using warfarin as a common comparator. Data on resource use were obtained from the database of diagnosis-related groups and an expert panel. Model outputs included life years gained, quality-adjusted life years (QALYs), direct healthcare costs and incremental cost-effectiveness ratios (ICERs). RESULTS:Apixaban provided the most life years gained and QALYs. The ICERs of apixaban compared to warfarin and dabigatran were €5529/QALY and €9163/QALY, respectively. Apixaban was dominant over rivaroxaban (greater health gains and lower costs). The results were robust over a wide range of inputs in sensitivity analyses. Apixaban had a 70% probability of being cost-effective (at a threshold of €20 000/QALY) compared to all the other therapeutic options. CONCLUSIONS:Apixaban is a cost-effective alternative to warfarin and dabigatran and is dominant over rivaroxaban in AF patients from the perspective of the Portuguese national healthcare system. These conclusions are based on indirect comparisons, but despite this limitation, the information is useful for healthcare decision-makers.

Improving contact center cost efficiency and customer experience in a retail company

A Work Project, presented as part of the requirements for the Award of a Masters Degree in Management from the NOVA – School of Business and Economics

Spatial analysis of new cases of leprosy in the State of Espírito Santo, Brazil, between 2004 and 2009

INTRODUCTION: Leprosy in Brazil is a public health issue, and there are many regions in the State of Espírito Santo with high endemic incidence levels of leprosy, characterizing this state as a priority for leprosy programs. The aim of this study was to determine the spatial distribution of coefficients of new cases of leprosy in the State of Espírito Santo, Brazil. METHODS: We conducted a descriptive and ecologic study based on the spatial distribution of leprosy in the State of Espírito Santo between 2004 and 2009. Data were gathered from the available records of the Espírito Santo State Health Secretary. The global and local Bayesian empirical methods were used to produce an estimate of leprosy risk, smoothing the fluctuation effects of the detection coefficients. RESULTS: The study resulted in a coefficient adjustment of new cases in 10 towns that changed their classification, among which, 2 went from low to medium, 4 from medium to high, 3 from high to very high, and 1 from very high to hyper-endemic. An average variation of 1.02, fluctuating between 0 and 12.39 cases/100,000 inhabitants, was found in a comparative calculation between the Local Ebest value and the average coefficient of new leprosy cases in the State of Espírito Santo. CONCLUSIONS: The spatial analysis of leprosy favors the establishment of control strategies with a better cost-benefit relationship since it reveals specific and priority regions, thereby enabling the development of actions that can interfere in the transmission chain.

ACL injuries identifiable for pre-participation imagiological analysis: Risk factors

Identification of pre-participation risk factors for noncontact anterior cruciate ligament (ACL) injuries has been attracting a great deal of interest in the sports medicine and traumatology communities. Appropriate methods that enable predicting which patients could benefit from pre- ventive strategies are most welcome. This would enable athlete-specific training and conditioning or tailored equipment in order to develop appropriate strategies to reduce incidence of injury. In order to accomplish these goals, the ideal system should be able to assess both anatomic and functional features. Complementarily, the screening method must be cost-effective and suited for widespread application. Anatomic study protocol requiring only standard X rays could answer some of such demands. Dynamic MRI/CT evaluation and electronically assisted pivot-shift evaluation can be powerful tools providing complementary information. These upcoming insights, when validated and properly combined, envision changing pre-participation knee examination in the near future. Herein different methods (validated or under research) aiming to improve the capacity to identify persons/athletes with higher risk for ACL injury are overviewed. 

Analysis of energy management in GMIT

Energy management is the process of monitoring, controlling and conserving energy in a building or organisation. The main reasons for this are for cost purposes and benefit to the environment. Through various techniques and solutions for lighting, heating, office equipment, the building fabric etc along with a change in people’s attitudes there can be a substantial saving in the amount spent on energy. A good example o f energy waste in GMIT is the lighting situation in the library. All the lights are switched on all day on even in places where that is adequate daylighting, which is a big waste o f energy. Also the lights for book shelves are left on. Surely all these books won’t be searched for all at the one time. It would make much more sense to have local switches that the users can control when they are searching for a particular book. Heating controls for the older parts o f the college are badly needed. A room like 834 needs a TRV to prevent it from overheating as temperatures often reach the high twenties due to the heat from the radiators, computers, solar gains and heat from users o f the room. Also in the old part o f the college it is missing vital insulation, along with not being air tight due to the era when it was built. Pumped bonded bead insulation and sealant around services and gaps can greatly improve the thermal performance o f the building and help achieve a higher BER cert. GMIT should also look at the possibility o f installing a CHP plant to meet the base heating loads. It would meet the requirement o f running 4500 hours a year and would receive some financial support from the Accelerated Capital Allowance. I f people’s attitudes are changed through energy awareness campaigns and a few changes made for more energy efficient equipment, substantial savings can be made in the energy expenditure.

Cost-Effectiveness of High, Moderate and Low-Dose Statins in the Prevention of Vascular Events in the Brazilian Public Health System

Background:Statins have proven efficacy in the reduction of cardiovascular events, but the financial impact of its widespread use can be substantial.Objective:To conduct a cost-effectiveness analysis of three statin dosing schemes in the Brazilian Unified National Health System (SUS) perspective.Methods:We developed a Markov model to evaluate the incremental cost-effectiveness ratios (ICERs) of low, intermediate and high intensity dose regimens in secondary and four primary scenarios (5%, 10%, 15% and 20% ten-year risk) of prevention of cardiovascular events. Regimens with expected low-density lipoprotein cholesterol reduction below 30% (e.g. simvastatin 10mg) were considered as low dose; between 30-40%, (atorvastatin 10mg, simvastatin 40mg), intermediate dose; and above 40% (atorvastatin 20-80mg, rosuvastatin 20mg), high-dose statins. Effectiveness data were obtained from a systematic review with 136,000 patients. National data were used to estimate utilities and costs (expressed as International Dollars - Int$). A willingness-to-pay (WTP) threshold equal to the Brazilian gross domestic product per capita (circa Int$11,770) was applied.Results:Low dose was dominated by extension in the primary prevention scenarios. In the five scenarios, the ICER of intermediate dose was below Int$10,000 per QALY. The ICER of the high versus intermediate dose comparison was above Int$27,000 per QALY in all scenarios. In the cost-effectiveness acceptability curves, intermediate dose had a probability above 50% of being cost-effective with ICERs between Int$ 9,000-20,000 per QALY in all scenarios.Conclusions:Considering a reasonable WTP threshold, intermediate dose statin therapy is economically attractive, and should be a priority intervention in prevention of cardiovascular events in Brazil.

Price competition under cost uncertainty: A laboratory analysis

We study the relation between the number of firms and price-cost margins under price competition with uncertainty about competitors' costs. We present results of an experiment in which two, three and four identical firms repeatedly interact in this environment. In line with the theoretical prediction, market prices decrease with the number of firms, but on average stay above marginal costs. Pricing is less aggressive in duopolies than in triopolies and tetrapolies. However, independently from the number of firms, pricing is more aggressive than in the theoretical equilibrium. Both the absolute and the relative surpluses increase with the number of firms. Total surplus is close to the equilibrium level, since enhanced consumer surplus through lower prices is counteracted by occasional displacements of the most efficient firm in production.