Scenario analysis and real options modeling of home brain monitoring in epilepsy patients

Breteler, Martine (2012) Scenario analysis and real options modeling of home brain monitoring in epilepsy patients.

Abstract:OBJECTIVES A lot of uncertainties exist when introducing new technologies to the healthcare market. The objective of this study is to explore the use of a real options approach to assess uncertainties of Home Brain Monitoring (HBM) in epilepsy patients and to construct different implementation scenarios of HBM in an early stage of its development. This method tries to show the (financial) consequences of different uncertainties on the option value of the HBM project to facilitate investment decisions in the future. METHODS Individual semi-structured interviews were used to present (implementation) uncertainties to 18 epilepsy experts. Expert elicitation was used to collect beliefs regarding uncertainties of HBM and to estimate probabilities of ‘success’ of uncertainties. Scenarios were constructed, each of which describe a set of uncertainties. These uncertainties were resolved in order to obtain a production process with a certain expected option value. Finally, a real options model was developed that shows the influence of uncertainties on the total option value of the project. Sensitivity analysis was used to demonstrate the impact of different uncertainties. RESULTS Obtained results indicated the importance of a proper estimation of the probabilities by experts. The most likely scenario of HBM which received the highest probability of success (14.3%) is scenario 3 of which HBM is being implemented after a negative first routine EEG together with a computer detection algorithm to analyze the results. Sensitivity analysis showed that uncertainty number 1, which refers to a very high diagnostic value, can increase the option value most when it is able to increase its probability of success in the future. CONCLUSIONS The real options approach used in this study, Project Portfolio Option-Value (PPO) provides an innovative way to represent and value uncertainty of new projects early in its development. This study is the first to apply PPO on a new development in healthcare combined with simplified elicitation techniques and could be used in the future to guide new developments when the validity of the experts’ estimations can be improved.
Item Type:Essay (Master)
Medisch Spectrum Twente
Faculty:BMS: Behavioural, Management and Social Sciences
Subject:85 business administration, organizational science
Programme:Health Sciences MSc (66851)
Link to this item:
Export this item as:BibTeX
HTML Citation
Reference Manager


Repository Staff Only: item control page