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The Economics of Medical Decision Making

In: Medical Decision Making

Author

Listed:
  • Stefan Felder

    (University of Basel)

  • Thomas Mayrhofer

    (Stralsund University of Applied Sciences)

Abstract

We present the economics of medical decision making, taking into consideration that every decision has opportunity cost. Money spent on health is no longer available for other purposes. Like benefits and harms, the costs of medical services influence the test and treatment thresholds and will affect medical decisions. We study two versions. The QALY approach includes only health in the decision makers’ utility function. Commensurability between the utility gain and utility loss of treatment, and its cost is achieved by defining a willingness to pay for a QALY. The more general approach, which is referred to as welfarism, assumes that utility of health and utility of consumption are not separable but rather mutually dependent. We study the implications of test and treatment costs for the thresholds in the decisions under diagnostic and therapeutic risks.

Suggested Citation

  • Stefan Felder & Thomas Mayrhofer, 2022. "The Economics of Medical Decision Making," Springer Books, in: Medical Decision Making, edition 3, chapter 0, pages 209-231, Springer.
    • Handle: RePEc:spr:sprchp:978-3-662-64654-0_10
    DOI: 10.1007/978-3-662-64654-0_10
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