Economic, Financial and Statistical Modeling
Careful evaluation of health policy often includes the development of
models to simulate the various options and their impacts on cost,
quality, and access to care. These impact estimations provide policy
makers with a better understanding of the number of individuals
affected by each policy option, the cost of each policy option, and the
benefit of each policy option. In addition, it is often necessary to
determine which factors drive or "cause" a given outcome. Thoughtful
modeling is required to make these assessments.
Econometric Modeling
Econometric modeling is often used to determine the extent to which a
given variable (e.g., cost per case) is influenced by provider and
patient characteristics as well as other factors. We have conducted and
interpreted numerous econometric models during our years of practice.
Our primary skill is interpreting the policy implications of these
models. We often assess the governments' analytic activities for our
clients in terms of their substantive content and their policy implication.
Medicare Part D Model
Medicare Part D is a complex system that attempts to both increase
beneficiaries' access to prescription drugs and control cost through
competition. Although Part D has increased the options available to
both beneficiaries and providers, the "donut hole" poses a financial
challenge to beneficiaries. Our model calculates total prescription
drug out-of-pocket costs for beneficiaries under different scenarios,
and predicts how a change in policy might affect costs to Medicare,
providers, beneficiaries, and other payers.
"Hydraulic" Modeling
U.S. health care finance is highly complex, in part because many
individuals are uninsured, public payers tend to pay less than the cost
of the care provided, and commercial payers tend to make pay more in
order to cover these payment shortfalls. This "hydraulic" action -
underpayments being covered by corresponding overpayments-in effect,
underlies much public program payment policy. If uninsured and Medicare
and Medicaid payment shortfalls are too large to be covered by
commercial payers, the nation's providers will not be financially
viable. Dobson | DaVanzo is often commissioned to analyze these
complexities as they relate to hospital finance.
Transfer Pricing / FMV
Increasingly popular are joint venture ("JV") arrangements between
different health care providers, such as hospitals and physicians.
Development of JVs is complex due to legal and regulatory requirements
facing the health care industry, such as the Stark law. A critical
element in the development of a JV is identification of the fair market
value (FMV), also known as the transfer price, of the individual
medical services that will delivered by the JV. Dobson | DaVanzo
assists JV partners identify the fair market values for each of the
partners.
Due diligence
Due diligence is defined as an investigation of a business to ensure
that its performance is within a certain standard of financial and
operational soundness. Due diligence, in our experience, represents a
process through which we assist a potential acquirer in investigating
the acquisition target using publically available data.