Dobson|DaVanzo

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, as well as the costs and benefits 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 constructed 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 government’s analytic activities for our clients in terms of their substantive content and their policy implications. We are highly familiar with large scale “difference-in-difference” models as well as propensity score models.

Medicare Part D Modeling
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 for beneficiaries. Our models calculate total prescription drug out-of-pocket costs for beneficiaries under different scenarios, and predict 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 and post-acute care providers’ finance.
 
Transfer Pricing / Fair Market Value
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 with identifying 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 publicly available data.