Healthcare Economic Week 4 Project
2-3 pages
Week 4 Project
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Instructions
Before beginning work on this assignment, please review the expanded grading rubric for specific instructions relating to content and formatting.
Part I
Consider the four health plans below with an eye to choosing one to offer to the company’s employees. Assume that the health plans and their annual per employee premiums are as follows:
|
Health Plan |
Premium, Individual |
Premium, Family |
|
Aetna Health |
$4,555 |
$11,428 |
|
MetroPlus |
$4,267 |
$10,540 |
|
Empire |
$4,217 |
$10,767 |
|
Oxford |
$6,029 |
$13,417 |
The employer will pay 80% of the premium for individual coverage, and the employee will pay the remaining 20% as well as the entire additional premium for family coverage. (The premiums listed above, while realistic in magnitude, are hypothetical and computed solely for the purpose of this project.) All of the plans are managed care plans. Assume that the benefit package is the same across all plans, so t
here
is no difference between them in what services are covered.
In addition to the above data, click here to access the latest report for ‘Health Plan Comparison in New York State’. Review the online report and incorporate relevant information into your evaluation.
You can view the various categories of measures on which health plans are rated (e.g., Access to Care, Adult Living with Illness, etc.). Click each link for a summary chart that presents the performance (usually as a percentage score) of each plan in the group on the relevant measures and how each plan compares to regional and statewide scores.
Provide an analysis that outlines the plan you selected and why. Generally, you would select the plan with the highest score, but if you chose a plan with a lower score, explain why. Include the following elements in your analysis:
· Explain which factors (e.g., price and/or performance measures) were most important to your choice of plan and how you derived the weights for each factor you used.
· Indicate, on a scale of 1 to 10, how comfortable or confident you are that you made the right choice, with 10 being most confident.
Part II
You need to use the multi-attribute utility (MAU) technique to respond to the following questions. Although the technique can be performed with pencil and paper, it is recommended you use a Microsoft Excel to do the various calculations involved.
Click the following links to access the information on using the MAU technique:
·
MAU Model
– Attached
· MAU Example- Atttached
· Compare your level of confidence at the time you completed Part I to your confidence level for Part II, when you used this decision aid.
· Was it helpful? What were its advantages and disadvantages?
Did it make the decision harder to make or easier to justify?
Resource:
Hahn, W.J., Seaman, S.L., & Bikel, R. (2012). Making decisions with multiple attributes. Retrieved from http://gbr.pepperdine.edu/2012/08/making-decisions-with-multiple-attributes-a-case-in-sustainability-planning/.
To support your work, use your course and textbook readings and also use the South University Online Library. As in all assignments, cite your sources in your work and provide references for the citations in APA format.
Submission Details:
· Your assignment should be addressed in a 2- to 3-page docume
Sheet1
| HCM3 | 0 | ||||||||||
| Choose a Health Plan (Part 2) | |||||||||||
| Example of using the MAU model for choosing an office site | |||||||||||
| Criteria | Weights | Sites | |||||||||
| Raw | Sum to | 10 | Site A | Site B | Site C | Site D | |||||
| Cost per square foot | 40 | 28 | 7 | 100 | 50 | ||||||
| Located where service is needed | 30 | 21 | |||||||||
| Accessible by public transportation | 80 | ||||||||||
| Handicap accessibility | 20 | 14 | 60 | ||||||||
| Room for expansion | |||||||||||
| Close to medical center | 15 | ||||||||||
| Totals | 145 | 57.24 | 195.00 | 176.00 | 114.00 | ||||||
| This is an example of using the MAU model for choosing among several sites for a medical office, considering such factors or criteria as rent, location, and space. Both raw weights and normalized weights are given. Normalized weights sum to 100. All the calculations are done by formula. When you place the curser in a cell, you will see the formula in the Formula Bar. |
Sheet2
Sheet3
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HCM3002 Economics of Healthcare
© 2013 South University
Multiattribute Utility (MAU) Model
Some decisions are complex, and using a decision aid is often helpful. Described here is one
such aid, which involves creating a multiattribute utility model or MAU model. Despite its
somewhat scary name, the process of building such a model is not a difficult one, and it can help
a decision maker structure a problem or decision. Once the alternatives have been identified, the
process involves determining the appropriate criteria (i.e., the attributes which give the model its
name) on which to judge the alternatives, how important these criteria are in relation to each
other, and how well the alternatives stack up against these criteria. The model then brings all this
information together into a single score (that measures the overall utility of each alternative) so
that the decision maker can make appropriate recommendations. In this way, using the model can
either aid in making an initial decision or reinforce a decision that has already made.
Building the model and making the appropriate calculations can be done with pencil, paper, and
calculator. However, it is recommended that you construct a spreadsheet to organize your input and
perform the requisite calculations. Read through these instructions completely before proceeding so
that you will have a better idea about how to set up your worksheet. The process follows these five
steps:
Step 1: Define the alternatives and the attributes or criteria on which you choose to evaluate
the alternatives.
For this project, the alternatives are the various health insurance plans that you can contract with.
As you are dealing with a relatively small number of plans, all of which serve the geographic area
in which you are located, you can evaluate all of them unless you have a reason to eliminate one
or more of the plans from consideration. (If this is the case, include in your write-up which plan(s)
and why.) Regarding the attributes or criteria, you will need to choose a subset of the performance
indicators or measures presented in the report card as it would be too difficult and time-consuming
to include the full set of items in your model. Choose 6-8 items included in the report, perhaps
creating a set of items from across the major performance categories (e.g., Women’s Health,
Access and Service, etc.) rather than choosing all your criteria from one performance category. If
the amount of the premium is important, include that as well. (Hint: It will make your task easier if
you choose indicators on which all or most of the plans have been scored. However, if an indicator
is important to you and a particular plan has not been scored on that indicator, you may choose to
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HCM3002 Economics of Healthcare
© 2013 South University
keep the indicator and impute some value for that plan’s performance. If you do so, note in your
write-up how you accommodated this.)
Step 2: Evaluate each alternative separately on each attribute.
The intent of this step is to evaluate the extent to which an alternative (here, an insurance plan)
“satisfies” or performs on an attribute (here, a performance indicator or measure). There are
different ways to accomplish this. You can use a direct rating method to evaluate each plan on
each attribute. Each plan receives a rating for each performance measure. The first step is to give
100 points to the plan with the highest rating and 0 points to the plan with the lowest score. Then
you can assign points to the remaining plans that express each of these plan’s performance
relative to the best and worst scoring plans. Another method is to try to use the ratings in the
report card that each plan receives for each performance measure. You can use either the actual
performance score provided or create some proxy based, for example, on plan performance
relative to statewide average. If cost is important to you, use the premium information provided
and create some proxy measure to express the differences between plans. The important thing is
to be consistent so that all the measures are evaluated in the same way. Whatever approach you
choose, describe it in your write-up.
At this point, your worksheet (electronic or otherwise) should have the plan names as column
headings across the top, the various performance indicators (your attributes) down the rows to
the left, and your numerical measure of performance in each box corresponding to each plan
and the attribute of interest. Go on to the next step.
Step 3: Assign relative weights to the attributes.
To complete this step, you need to assess the relative importance of each of the attributes (the
performance indicators) you have included in your model. There are several methods that can
be used to accomplish this. For our purposes, it is recommended you do this in two steps:
1. Rank order the performance measures in order of importance to you, from most to least
important.
2. Assign a weight to each performance measure that reflects its importance relative to the
others and so that the total weights sum to 100. The key is to create relative weights, so
that if measure A is assigned a weight of 30, measure B a weight of 10, and measure C a
weight of 10 you are saying that measure A is three times as important as measures B
and C and that measure B and measure C are of equal importance. (If it’s too difficult to
keep the sum of the initial weights to 100, proceed with your weighting using whatever
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HCM3002 Economics of Healthcare
© 2013 South University
values it’s easiest for you to work with and then normalize by adding the weights
together, summing them, and dividing each individual attribute weight by the sum to get a
final relative weight for each attribute.)
Note these final relative weights on your worksheet for each of the attributes. These weights will
apply to all the plans. If you’re using a spreadsheet, insert a column to the right of the attributes,
as this will facilitate completing the next step.
Step 4: Aggregate the scores from Step #2 and the importance weights from Step 3.
Now comes the math part, which should be relatively simple if you’ve constructed a spreadsheet
for this exercise. In this step, we calculate the total weighted score for each of the plans. For each
plan, we determine that score, multiply the score or a performance indicator for an attribute by the
importance weight you assigned to that attribute, and aggregating these products across all
attributes. Basically, you’re calculating a weighted score for each plan that is represented
mathematically as:
Total weighted scorei = Σ wjuij
where wj is the relative weight you assigned to a performance indicator j, and uij is the
performance score for plan i on indicator j. In this way you obtain an overall evaluation of each
plan across the criteria by which you have chosen to evaluate the plans. If you used the direct
weighting method to assign ratings to the plans as described in Step #2 above, plan scores will be
out of 100 points. This may or may not hold if you used some other method to assign ratings,
although whatever method you use isn’t important as long as each plan’s score on an indicator
reflects its performance relative to the others, and the process is applied consistently. In your
write-up, note which four plans you would recommend at this point and why.
Step 5: Perform sensitivity analyses and make recommendations.
Doing a sensitivity analysis-changing one or more parameter values and redoing the
calculations to see whether any change in our inputs changes our recommendations-is a
desirable last step for any decision modeling. For purposes of this exercise, change a couple of
the weights you assigned to some of the criteria and recalculate the aggregate scores for each
plan to see if these adjustments change your recommendations. However, make significant
changes (i.e., adding or subtracting 10 points or more from various attributes), as you would find
that the results might not be sensitive to smaller changes in the relative weights you’ve assigned
to each attribute or criteria. Describe this sensitivity analysis and the resulting changes in your
recommendations, if any.
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HCM3002 Economics of Healthcare
© 2013 South University
Constructing a MAU model can be of value to managers as decision makers as an aid to decision
making. It obviously can have many applications, such as choosing which candidate to fill a
position (or, from another perspective, choosing which job opportunity to take); evaluating
potential site locations for an organization; or deciding on marketing strategies, just to name a
few. When making important decisions that may involve several alternatives and criteria against
which each alternative needs to be judged, the MAU model provides a logical and well-defined
process that can aid in making a decision.