Optimum investments in project evaluations: when are cost-effectiveness analyses cost-effective?
This manuscript extends the classical models of the value of information to ask whether a hospital's net financial return is ever maximized by a cost-effectiveness analysis of retrospective data when watchful waiting and a full randomized clinical trial are alternative methodologies. The manuscript demonstrates that (1) some small-scale retrospective analyses may negatively affect net income and (2) under some conditions, larger-scale retrospective analyses may maximize net income. The manuscript also suggests that risk aversion increases the value of information and therefore the optimum expenditure on a project evaluation.
Woodward
R S
RS
Health Administration Program, School of Medicine, Washington University, St. Louis, MO, USA.
Boxerman
S B
SB
Schnitzler
M A
MA
Dunagan
W C
WC
D003362:Cost-Benefit Analysis; D003657:Decision Making; D005069:Evaluation Studies as Topic; D005377:Financial Management, Hospital; D005102:Health Expenditures; D008923:Missouri; D015233:Models, Statistical; D015397:Program Evaluation / Q000191:economics*; D016032:Randomized Controlled Trials as Topic / Q000379:methods; D012189:Retrospective Studies; D018570:Risk Assessment