Estimating Differential Value and Relative Worth:
The Total Value-In-Use Path
We will start with a value analysis that follows a total value-in-use path to estimating Lowparin's differential value and relative worth. This approach to value analysis estimates Lowparin's differential value-in-use by finding the difference between its total value-in-use and the total value-in-use of standard heparin, the competing alternative. Lowparin's relative worth is then estimated by adding its differential value-in-use to the price of standard heparin.
The spreadsheet containing this analysis consists of 3 main sections. In sections A and B we estimate the expected per incident costs to a hospital associated with post-operative clotting and post-operative bleeding, the two types of problems that can follow major surgery. In section C, we convert those per incident expected costs into per surgery expected costs for each of the three courses of treatment: no anticoagulant, standard heparin, and Lowparin. These per surgery costs combine with other costs to provide a basis for estimating the total values-in-use for standard heparin and Lowparin. With these total values-in-use, we can then estimate Lowparin's differential value and relative worth.
Section A - Cost of treatment for post-operative clotting
Section A lists the five things that contribute to the cost of post-operative clotting. The average hospital stay is for 4 days at $840. That comes to $3,360. Drug therapy costs on average $460. Laboratory costs are $770. Emergency service is $420. Sixty percent of the people who come back into the hospital because of post-operative clotting use the hospital's emergency service. So 60% of $420 produces an expected cost of $252. Finally, 20% of the people who come back end up again in surgery, which costs an average of $5,300. All of these elements add up to $5,902, the expected cost of treatment for post-operative clotting.
Section B - Cost of treatment for post-operative bleeding
The same types of calculations are done to estimate the costs of treatment for post-operative bleeding. But some of the numbers are different. For example, with post-operative bleeding, the average stay is 2 days rather than 4. Two days times $840 makes $1,680. Drug therapy for postoperative bleeding comes to, on average, $320. Laboratory costs come to $200. Only 40% of patients who return to the hospital for treatment of post-operative bleeding make use of the hospital's emergency services. So 40% times $420 for emergency services is $168. Finally, 15% of the patients who come back to the hospital to be treated for post-operative bleeding end up in surgery. That surgery is not as involved as surgery for clotting. Its average cost is $2,900. 15% times that $2,900 is $435. Add up these five elements, and the expected cost of treatment for post-operative bleeding comes to $2,803.
So, what do we have in Sections A and B? We have the average, expected costs when each of these two adverse events occurs - $5,900 for a case of post-operative clotting, and $2,800 for a case of postoperative bleeding. (You may have noticed that we dropped the digits in the fourth columns of each of these numbers. That is because we are dealing here with estimates, where anything past the second digit is usually just noise.)
The next step in the analysis is to estimate the effect on a hospital's costs of differences between standard heparin and Lowparin in influencing the frequency with which these two adverse events occur and in reducing the costs to the hospital associated with them. It is here that the two analytic approaches part company in the paths they take. Let's go first down the total value-inuse path.
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