1. Cost Effectiveness Study: The health authorities are considering the treatment alternatives for three types of diseases: heart disease, cancer, and infectious disease. For each diagnosis, there are a number of mutually independent treatment alternatives (including no treatment) as shown in the following table. Use the following table to complete a cost effectiveness analysis for each disease category (heart disease, cancer, infectious disease) following these steps: i. Rank the alternative treatment options by health benefit (begin with lowest benefit) ii. Eliminate treatment alternatives that are strictly dominated iii. Calculate the ICER between each treatment option and the next most expensive option iv. Eliminate treatment options that display extended dominance Then answer questions from your work in the quiz. COST PER TREATMENT QALYS GAINED 0 HEART DISEASE A B D 0 100 800 400 600 300 2 15 8 12 8 E F 2. Cost Benefit Analysis The data below represents projected costs and benefits of building a new hospital in Athens, OH. The costs include construction costs, maintenance costs, and opportunity costs. The benefits are an estimated like dollar benefit to the users of the potential hospital. Use this data below (and/or the same data in the accompanying excel file named Cost Benefit Analysis) to fill in the table with the net benefits (Benefit-Cost), the discounted net benefit, and the net present value (NPV) and then answer the questions in the quiz. Use a benchmark discount rate of 0.05. Be able to answer the following questions in the quiz: a. According to your cost benefit analysis, is this an economically viable project and why? b. How sensitive is your analysis to the discount rate? Is there a discount rate that is results in the net present value equaling zero? How does this value compare to the benchmark discount rate of 0.05? For the project to be economically viable, do we need to be more or less future oriented? Year Benefit B-C Discounted 0 0 1 2 3 4 5 6 7 8 9 Cost 10,000,000.00 50,000.00 600,000.00 1,150,000.00 1,700,000.00 2,250,000.00 2,800,000.00 3,350,000.00 3,350,000.00 3,350,000.00 3,350,000.00 3,350,000.00 3,350,000.00 3,350,000.00 3,350,000.00 3,350,000.00 3,350,000.00 3,350,000.00 3,350,000.00 3,350,000.00 3,350,000.00 10 1,000,000.00 1,150,000.00 1,322,500.00 1,520,875.00 1,749,006.25 2,011,357.19 2,313,060.77 2,660,019.88 3,059,022.86 3,517,876.29 4,045,557.74 4,652,391.40 5,350,250.11 5,350,250.11 5,350,250.11 5,350,250.11 5,350,250.11 5,350,250.11 5,350,250.11 5,350,250.11 11 12 13 14 15 16 17 18 19 20 NPV