AMCPEdu 2008 Poster
AMCPEdu 2008 Poster
AMCPEdu 2008 Poster
Damon Douglas
University of Maryland School of Pharmacy
Methods References
• Cox, J.C., Ross, S.A., Rubinstein, M.
Simple Medical Option Figure 4. Price solution of Medical Option Chain. Option price (φ)
Option Pricing: A Simplified Approach.
• Binomial outcome model of cashflows based on from the hospital to the PCP depends on hedging of the worst case
scenario of maximum utilization of its own service cost (Admission = Journal of Financial Economics.
extremes in projected utilization. 100) and subsequent LTC admission (Admission = 50) at a 10% rate 1979;7(3):229-263.
Figure 4. Option Price (φ) solution depends on hedging of a of return (r). RH-Hospital Revenue, CH-Hospital Cost, EL-LTC Option
• Markov model involving two states, hospitalized and worst case scenario of maximum utilization (Admission = 50) Exercise Cost.
at a 10% rate of return (r). RH-Hospital Revenue, CH-Hospital • Douglas DA. Using Option-Based
disabled, respectively (10,000 iterations). Cost. Contracts To Improve Health Outcomes.
Managed Care. 2008;17(4):50-52.
• Modeling of cashflow outcome for the Long-Term
Care (LTC) facility from differing hospital disability
end-outcomes. Acknowledgements
Simple Medical Option Chain Special thanks to Yu-Jung (Jenny) Wei for her listening,
• Binomial outcome model of cashflows based on Figure 5. Simulation of cashflows.
Markov model simulation
encouragement, criticism and feedback. Thanks to the
extremes in projected utilization for both the hospital (iterations=10,000) whereby two University of Maryland School of Pharmacy and
and LTC facility. hospital disability end-outcomes are Student Government Association for funds to print this
compared (30% vs. 15% LTC
admissions). As expected the better
poster and the travel expense subsidy. Finally, thanks to
• Markov model involving three states, outpatient, performing hospital (15% LTC friends of AMCP and the Maryland Student Chapter
hospitalized, and disabled, respectively. admission) results in higher with special acknowledgement to Tim Sawyers, Kim
cashflow for both the hospital and
the LTC facility.
Vernachio, Chip Robison, Beth Holland, Darlene
• Modeling of cashflow outcomes for both the hospital Mednick, and Robert Navarro for their encouragement
and LTC due to differing hospital disability end- and support.
outcomes.