Health Economics Models

After losing my dad to cancer, I became a cancer researcher at MIT – looking for answers. What I learned surprised me: it’s not the science that’s failing us. It’s the system that pays for it. A founder I know built AI that detects cancer on radiology scans earlier than any human can — early enough to cure it. He pitched a major health insurance exec: ✅ “Catch cancer early, when it’s cheaper to treat. Cut costs. Save lives. Everyone wins.” His reply? ❌ “We’ll never pay for it.” Why? 👉 “The average person switches jobs every ~2.5 years. We’d pay for the test and the treatment… But their next insurer would get the benefit.” Let that sink in. We’ve built a system where saving lives is a bad business decision. The root problem? Health insurance is tied to your job. Which means insurers think short-term. They have no reason to invest in your long-term health. But imagine if you owned your insurance — and took it with you job to job, like a 401(k). Suddenly, long-term thinking could win. Cancer rates are rising — especially in young people. We don’t just need better treatments. We need better incentives. It’s time to rewire the system: ✅ Where saving lives is good business ✅ Where insurers think long-term ✅ Where healthcare actually makes people healthy This isn’t theoretical. It’s personal. And it’s why I’m building Thatch.

Unveiling a comprehensive noncommunicable diseases #NCDs investment case, #Malaysia is taking a bold step towards a healthier future This collaborative effort by the Ministry of Health Malaysia, the World Health Organization, and the United Nations Inter-Agency Task Force on Non-Communicable Diseases (UNIATF), promises not only to improve #publichealth but also to enhance economic prosperity This investment case demonstrates how NCDs harm Malaysia’s economy, proposes possible interventions to address NCD risk factors, and shows the economic and social benefits of such changes, the potential returns on #investment and the political feasibility of implementing these interventions in Malaysia Each year, NCDs in #Malaysia cause 72% of all #premature #deaths. Economic analysis of data from 2021 has estimated that NCDs cause 64.2 billion Malaysian ringgit (RM) in economic losses per year, including RM 12.4 billion in health-care expenditure and disability payments, and RM 51.8 billion in productivity losses. The total social and economic losses due to NCDs are equivalent to 4.2% of gross domestic product Modelling of the most effective and cost-effective policy interventions has demonstrated that RM 30 billion of economic output could be recovered over the next 15 years. In addition, implementing the modelled interventions would result in over 180 000 lives saved and over 400 000 healthy life years gained The #salt-reduction package showed the highest return in investment: for every RM 1 invested, the expected return is RM 60 within 15 years. The other interventions modelled included #physicalactivity awareness (a return of RM 6.6 for every RM 1 invested), #tobacco control (a return of RM 6 for every RM 1 invested), #cancer prevention and management (up to RM 8.4 for every RM 1 invested) and several other NCD clinical interventions An institutional context analysis was conducted to identify relevant institutions, stakeholders and political opportunities, to engage relevant actors and to mobilize coalitions of support The analysis showed a series of actionable “entry points” that are feasible and effective for change within the political and institutional context. Stakeholders identified the following opportunities: salt reduction as an area likely to gain political buy-in; a strong foundation for implementing new tobacco control measures and strengthening existing measures; opportunities to use the introduction of the Health White Paper, approved by Parliament in June 2023, to generate political momentum for NCD prevention and control; and cross-sectoral dialogue to unite stakeholders for NCD #prevention and #control Several #recommendations are provided in the concluding section of the report online at uniatf.who.int   Tedros Adhanom Ghebreyesus, Guy Fones, Alexey Kulikov

What If the Next Trillion-Dollar Healthcare Opportunity Isn’t a New Drug — But a New Mindset? A few years ago, a US-based healthcare group approached McKinsey with a critical question: 👉 Is it worth investing in the long-term prevention and management of metabolic disease—not just for patients already sick, but across an entire population? The result? A full feasibility study that started as a business case for one group… and became one of the most powerful public health reports in recent memory. McKinsey published the findings openly: 📘 “The Path Toward a Metabolic Health Revolution” — and it reads like both a wake-up call and a blueprint. What they uncovered is profound: 🔹 Path 1 – Treat obesity with drugs, surgeries, and structured weight loss programs. Important, but limited. 🔹 Path 2 – Target the root causes of metabolic dysfunction across the population, even before people are diagnosed. And the difference between the two? 📈 $5.65 trillion in annual global GDP by 2050 🧬 469 million healthy life years gained 🏥 And a total rethinking of what hospitals, investors, insurers, and public health agencies should prioritize. ⸻ The five calls to action in the report are as strategic as they are scientific: 1. Understand the full spectrum of metabolic dysfunction—not just BMI 2. Create robust measurement tools that span clinical, behavioral, and economic outcomes 3. Use AI and digital platforms to tailor care and prevention 4. Align financial incentives for long-term health (not short-term volume) 5. Engage communities to make metabolic health everyone’s responsibility ⸻ As a hospital CEO and healthcare strategist in the Middle East, I see immediate relevance here. Our region is disproportionately affected by metabolic diseases—and yet, we continue to spend most of our energy treating late-stage illness instead of preventing the early breakdowns. 💡 McKinsey’s report reminds us: Prevention is not just good medicine—it’s good economics. I highly recommend reading the full study—especially for those working in hospital planning, healthcare investment, or national health strategy. 🔗 Read the report here: https://lnkd.in/ew4SKu55 #MetabolicHealth #HealthcareLeadership #PreventiveMedicine #McKinseyHealth #HealthEconomics #PopulationHealth #MiddleEastHealthcare #GLP1Strategy #DigitalHealth #HealthPolicy

New Era in Health Economic Modeling – Excel Finally Levels Up I recently read "Patient-Level Health Economic Modeling in Excel Without VBA: A Tutorial" by Rob Blissett et al., and here are the key takeaways: What it is: This tutorial demonstrates how to build a patient-level cost-effectiveness model, specifically a Discrete Event Simulation (DES), directly in Microsoft Excel using only formulas—no VBA required. Why this matters: - Excel is the default tool in Health Technology Assessment (HTA), despite its limitations. - Traditional cohort-level models often fail to capture patient heterogeneity, leading to biased decisions. - While VBA-based patient-level models exist, they are criticized for poor speed, transparency, and accessibility. What’s new: - The authors leverage Excel 365’s LAMBDA, LET, and REDUCE functions to implement complex simulations without any scripting or VBA. - Performance approaches that of VBA and R implementations while maintaining full transparency and reproducibility in Excel. Why it’s important: - This approach removes technical and institutional barriers that have limited the use of patient-level models. - It makes transparent, flexible modeling more accessible to broader stakeholder groups, including those unfamiliar with coding. - It could reduce decision errors in HTA processes like NICE appraisals. Performance insights: - The VBA-free model ran 10,000 patient simulations in approximately 4 seconds, faster than R and 25 times faster than DICE models. - It produced identical outcomes to VBA implementation thanks to shared random number streams. Implications: - This facilitates greater uptake of individual-level modeling without leaving Excel. - It opens doors to more nuanced, realistic, and clinically aligned HTA submissions. - It may significantly democratize cost-effectiveness modeling in pharma, policy, and academic settings. This is a must-read for anyone in health economics, HTA, or pharma modeling. Access the full tutorial & model: https://lnkd.in/e4e2jfPs

New health economic guidelines will take effect in Saudi Arabia in 2025. The Saudi Food and Drug Authority (SFDA) recently published requirements for full or partial economic evaluations. For new chemical entities and new biologics, companies will have to submit at least one of the following types of economic evaluation: budget impact analysis, cost-effectiveness analysis, cost-utility analysis.   Submissions will need to provide information on the disease, its prevalence, incidence, targeted population, and number of patients globally and in Saudi Arabia. Companies will also have to document their drugs’ current market share in Saudi Arabia if the products are already on the market or estimate the market share for the next five years if the medicines have not yet been launched.   The dossier should include details of any access agreements (e.g., entry agreements, localisation, incentives granted, breakthrough designation, patient support programmes, other initiatives to support access) in force at the time of submission or expected in the future.   The SFDA is interested in how other leading HTA agencies have evaluated medicines. Therefore, companies will be required to submit details of published economic evaluations, including disease area, time horizon, method of analysis, model used, comparators, cost measure, outcomes measure, results, and conclusion. In addition, they must include a summary of conclusions from evaluations conducted by the following agencies—NICE, ICER, Canada’s Drug Agency, Haute Autorité de Santé, Pharmaceutical Benefits Advisory Committee—among others.   For full economic evaluations (i.e., CEAs, CUAs, CMAs, CBAs), clinical data should be derived from randomised controlled trials, real-world evidence and/or network meta-analysis. Comparators should reflect the current standard of care, including the least expensive and most effective treatments; inclusion of emerging technologies is also encouraged. The current estimated cost-effectiveness threshold in Saudi Arabia is SAR 50,000-75,000 ($13,331-19,996) per QALY. However, exceptions may be made for some products. The annual discount rate is 3-5% and must be included for cost calculations at least. The cost-effectiveness threshold is significantly below the Saudi GDP per capita figure of $28,895 in 2023 reported by the World Bank.   For partial economic evaluations (i.e., budget impact analyses), the perspective should be that of the healthcare payer. Cost data must be derived from the #Saudi healthcare system and should include direct healthcare costs. The required time horizon is 2-5 years. Comparators should reflect the current standard of care, including the least expensive and most effective treatments; inclusion of emerging technologies is also encouraged.   Adherence to the new guidelines is currently voluntary. It will become mandatory for general requirements from January 2025 and for economic evaluation requirements from July 2025. #healtheconomics

Singapore’s Medical Insurance Problem Is Not Cost. It Is Incentives. Premiums rise. Claims escalate. Benefits tighten. It looks like a cost problem. It is actually an incentive problem. Our current insurance structure rewards utilisation, not value. From clinical training, public health systems research, and business strategy work, I have seen one truth repeat across countries: human behavior follows incentives more consistently than clinical guidelines. Three forces drive over utilisation: 1. Moral hazard When individuals do not feel cost, the internal question shifts from “Do I need this?” to “Why not?” 2. Fee for service rewards activity The system pays based on volume. If we reward quantity, we get quantity. If we want value, we must reward value. 3. Information imbalance Patients often lack the context to judge necessity. In uncertainty, the default becomes “do more.” These forces increase utilisation without improving health outcomes. What will actually fix the problem? We redesign incentives. A. Value Based Insurance Design Lower barriers for high value care. Shared accountability for low value care. B. Bundled or episode based payments One price for the entire episode of care. Providers focus on outcomes, not procedures. C. Predictive analytics and prevention Use data to identify risk early. Prevent expensive hospitalisation instead of reacting to it. D. Primary care as the coordinator Right care, right level, right time. The mindset shift The goal of insurance is not to maximise claims. The goal is to maximise health. When incentives change, behavior changes. Patients make grounded decisions. Providers prioritise outcomes over activity. Insurers shift from bill paying to health investing. For those who want to shape health financing and policy If you want to learn how to: • Analyse insurance and financing models • Evaluate cost effectiveness • Influence health policy Consider the Master of Health Economics, Management and Policy at Newcastle Australia Institute of Higher Education in Singapore. Healthcare needs leaders who think deeply, analyse clearly, and design systems that work. https://lnkd.in/gRYTNp8x

If you're frustrated with rising healthcare cost exposure for patients, check out this systematic review of the current literature. --- There's a concept called "moral hazard" in health insurance, which refers to the increased utilization of health care services when consumers do not bear the full cost. This is one of the primary reasons health insurance adds cost sharing like copays, coinsurance, and deductibles – when members have “skin in the game”, moral hazard is reduced. While these cost-sharing measures reduce medical and #PharmacySpending, it is unclear if they improve utilization for clinically appropriate high-value services, or if they indiscriminately reduce utilization regardless of need or value. --- A new paper published last month (in the comments) tries to answer this question. The systematic review was conducted to evaluate the impact of various #UtilizationManagement strategies, value-based insurance design (VBID) models, and cost-sharing policies on consumer spending and healthcare value. They found limited empirical support for broad patient cost exposure as a means to improve efficiency (defined as the use of clinically appropriate services whose value exceeds their cost). Instead, #CostSharing may lead to reduced utilization of both high and low-value care without discerning between them, potentially reducing access to care and worsening health disparities. --- The review highlights the need for more nuanced insurance designs that align incentives with the value of care, such as VBID models, which encourage the use of high-value services and discourage low-value ones. It also emphasizes the importance of considering behavioral factors and non-monetary incentives in benefit design. The study suggests that plan sponsors should integrate insights from behavioral economics and consider the economic incentives on the supply side to create a more effective and equitable health care system. --- While we can't say this answers the question of cost sharing (is it beneficial for healthcare consumers to have “skin in the game”) definitively, the authors summarize the big takeaway very well: "Based on this review of the evidence, we thus conclude that more empirical #research on cost exposure and insurance benefit design is sorely needed." The data for all kinds of benefit designs are out there to run all kinds of research. If cost sharing is working as intended, let's identify those situations and implement policies to support adoption. If cost sharing isn’t working as intended, and instead is keeping patients from accessing needed healthcare services, let's consider reversing the climb of more patient cost exposure.

Singapore’s upcoming parliamentary debate on Integrated Shield Plan (IP) rider changes goes to the heart of a difficult but necessary trade-off in healthcare financing. On one hand, rising premiums and private healthcare costs are clearly unsustainable. Insurance designs that eliminate almost all out-of-pocket expenses weaken price signals and encourage higher utilisation. This is not about bad faith by patients. It is about incentives. When the marginal cost of care approaches zero, claims rise, premiums follow, and affordability for the wider risk pool steadily erodes. On the other hand, MPs are right to ask how families will cope if deductibles and co-payments become unaffordable at moments of medical stress. Sustainability cannot come at the expense of dignity or access. Cost sharing may be economically sound, but if poorly calibrated, it risks discouraging timely care, worsening health outcomes, or imposing sudden cash-flow shocks on households least able to absorb them. This debate is often framed as a matter of individual consumer choice. In reality, it produces systemic effects. Highly comprehensive riders may feel rational for one household, but collectively they drive higher utilisation, push up costs across the system, and increase pressure on public healthcare resources. The policy question is therefore not whether cost sharing should exist, but how much risk should be socialised, how much should remain visible, and how those boundaries are enforced fairly. Affordability must also be understood more broadly than premiums alone. It includes whether families can manage sudden deductibles, whether sufficient buffers and safety nets exist, and whether support mechanisms are well targeted rather than blunt. Cost sharing works only when paired with safeguards that recognise uneven financial resilience across households. At its core, this debate is a reminder that healthcare financing is a shared responsibility. Patients, insurers, providers, and policymakers all shape outcomes through incentives and expectations. Parliament’s discussion is therefore not just about insurance riders, but about fairness, resilience, and how we design systems that remain compassionate, credible, and sustainable over the long term. What do you think?

Amidst all the buzz about the government’s new ‘Neighbourhood Health Service’ in their 10 year health plan, a crucial point is being missed. In general, I welcome this initiative – care that can take place in the community should take place in the community. It’s better for patients and cheaper for the NHS. It can also help relieve pressure on A&E. But has the financial framework for this been thought through sufficiently? Crucially, how will the funding flow through the system in a way that leads to sustainable change and better health outcomes? To give you an example of where things go wrong with current approaches, take cervical cancer screening. This is on my mind as I attended the launch of the Hologic, Inc. Women’s Cancer Screening Taskforce report at the Commons yesterday. And we learnt that one GP practice has screening uptake of 46%, down from over 80%. But the commissioning model releases funding at a threshold of 40% screened mark, with no further money until 80% of women are screened. So, there is no financial incentive for that practice to implement changes to increase uptake to 70%, for instance. Yet, were the funding increase to be staggered – so each 10% gain in screening rates released further money – this would undoubtedly improve the situation, as the incentive is there to improve. And at no extra cost. With ICBs hospitals, GP and other services under so much pressure, across so many areas, it’s understandable that effort will be concentrated on the areas that release funding. So putting careful consideration into funding and commissioning models can lead to better outcomes. And this is my point with the neighbourhood health initiative. It’s not as simple as throwing money at it and setting up new systems. Careful thought must also be applied to ensure the money flows through the system in a way that incentivises and encourages better care. 

How we collectively choose hospitals, is also impacting health insurance premiums. Last week, I ran two Twitter polls, one week apart, to see how people’s hospital choices change based on whether they have health insurance or not. Here's what I found: 👉 Without insurance, 23% chose top-tier hospitals for simple surgeries. 👉 With insurance, that preference nearly doubled to 42%. Interestingly, a 2023 FICCI-KPMG report highlighted something similar Why does this matter? 🔹 Corporate tertiary care hospitals have nearly double the costs of a neighborhood secondary care hospital for small surgeries. The average revenue per occupied bed of a big hospital is 50K, compared to 30K in a smaller hospital. Recently a patient in Mumbai reported that a knee keyhole joint surgery was quoted at ₹1.2 lakh in a renowned chain hospital, whereas a trusted orthopedic clinic nearby estimated ₹60,000 for the same procedure 🔹Tertiary care corporate hospitals and their doctors are primarily run on targets - thus resulting in over treatment, unnecessary tests to blow up bills - knowing the customer is not paying. 🔹 This drives claims costs higher, causing premiums to rise for everyone. 🔹 This behaviour also burdens Tertiary-care hospitals with routine cases, raising costs and affecting care availability for complex treatments like transplants, neurosurgeriens. 🔹 Smaller hospitals, despite being efficient and affordable, struggle to attract insured patients, leading to unsustainable economics. A recent industry report “Hospitals for Bharat” found that as large hospital chains expand into Tier-II and Tier-III cities, they are drawing high income patients away. This behavioral insight opens opportunities to rethink health insurance product design: ✅ Educate: Provide guidance to customers about suitable hospital choices for different treatments. ✅ Gatekeeping: Incentivize talking to a neutral teams of qualified doctors who advise customers about the right hospital based on their actual medical needs. ✅ Incentivize: Give cashbacks or higher cover credits to customers choosing suitable lower-cost hospitals. We already have something for twin sharing vs private ✅ Discourage adverse behavior: Introduce copayments or higher premiums for customers consistently choosing expensive tertiary-care hospitals for minor planned treatments. ✅ Clarify large coverage: Educate customers that high coverage (₹1 crore policies) isn’t a luxury - it’s protection against rare, catastrophic healthcare costs. ✅ Humanize Insurance: Finally, the ultimate solution is to transform the perception of insurance from a transactional "cash-back" instrument into a collective "community fund" everyone protects. Changes like these are required to battle the serious hikes people are seeing in health insurance since COVID.