Health Economics

Numbers tell stories, and in MedTech, they spell out clearly whether your innovation will transform healthcare or become filed away as a maybe. This is where preliminary health economic modelling can guide your every decision from pricing to market entry.

It’s almost impossible to get any traction with payer systems without modelling for a business case, or for independent body review such as NICE, which recommends health economic modelling for all of its health technology evaluations.

_{Hardian Health.}

Preliminary modelling is the art of translating clinical benefits into an economic language. It should resonate with every stakeholder in your ecosystem. This will serve as the quantitative backbone of your entire commercial strategy, proving not only that your device works but delivers measurable value worth paying for. With economic modelling, we can forecast adoption scenarios, quantify cost savings, and build a compelling business case that attracts investment and secures reimbursement. This analytical foundation will ensure your innovation doesn't just improve outcomes, but prove its worth every step of the way.

The power of preliminary modelling in today's market

Like a future forecast backed by data, it systematically projects any clinical benefits, quantifies the cost impact, and validates commercial assumptions that determine your device's market destiny. By building this foundation, it will serve as your investor pitch, convince sceptical payers, and establish the economic credibility that transforms promising technology into a profitable reality.

Health economists strive to facilitate decision-making that leads to efficient use of scarce resources by weighing up the costs and benefits of two or more competing products. This goal is usually achieved through a regulator-recognised and approved modelling procedure.

_{Calum Jones, Mtech Access}

Test and test again

This is where science meets economics. Building your model begins with a thorough quantification of improved patient outcomes versus current standard-of-care treatments. By measuring a reduction in complications, shortened recovery times, improved quality of life scores, and enhanced procedural success rates, we can translate clinical superiority into tangible economic metrics. This systematic approach will reveal the true value your device delivers and ensure your innovation's benefits resonate with both clinicians and financial decision-makers.

Comprehensive cost analysis modelling

Every economic decision hinges on understanding the true cost. By developing detailed cost models that encompass device pricing, procedural expenses, training requirements, and infrastructure needs, we can assess the total cost of ownership versus the current alternatives. This is about analysing direct costs, discovering any indirect expenses, and eeking out hidden savings that determine adoption decisions. Your cost model needs to account for every possibility.

Defining boundaries

By precisely identifying eligible patient populations, estimating market penetration rates, and forecasting adoption curves, we can project realistic revenue scenarios and market impact. This systematic approach examines demographic factors, clinical criteria, geographic distribution, and institutional readiness that influence uptake. Understanding your addressable population will transform your broad market estimates into actionable commercial intelligence.

Payer impact assessment

Payers. They think differently and your model needs to speak their language. By conducting comprehensive budget impact analyses, cost-effectiveness evaluations, and return-on-investment calculations, we can demonstrate clear economic value from payer perspectives. This involves modelling healthcare system savings, reduced downstream costs, and improved resource utilisation that resonates with coverage decision-makers.

Clinical outcome quantification

Measuring what matters most to healthcare stakeholders
Your preliminary model starts with the fundamental question: how much better are patient outcomes with your device? This isn't about clinical impressions—it's about measurable, quantifiable improvements that can be translated into economic terms. By systematically measuring efficacy endpoints, safety profiles, and patient-reported outcomes, we can build the clinical foundation that supports every economic calculation in your model.

Economic modelling architecture

Your health economic model needs solid architectural foundations. By establishing clear modelling methodologies, defining appropriate time horizons, and selecting relevant comparators, we can create frameworks that generate credible, defensible economic projections. This involves decision tree analyses, Markov modelling approaches, and budget impact assessments that align with health technology assessment standards. Cost-effectiveness isn't just about lower prices, it's about superior value. By conducting comprehensive cost-effectiveness analyses that compare your device against the current standard of care, we can quantify the economic value proposition that drives adoption decisions. This involves calculating incremental cost-effectiveness ratios, quality-adjusted life years, and other metrics that health economists use to evaluate innovation value.

Market penetration modelling

Innovation doesn't achieve instant market penetration, and your model must reflect realistic adoption curves. By analysing historical precedents, competitor experiences, and market dynamics, we can forecast penetration rates that account for clinical validation periods, reimbursement timelines, and competitive responses. This systematic approach provides realistic revenue projections and helps optimise launch strategies.

Risk assessment and scenario planning

Healthcare markets are unpredictable, and your model must account for uncertainty. By developing multiple economic scenarios—optimistic, realistic, and conservative—we can assess potential outcomes under various market conditions. This includes modelling competitive responses, regulatory delays, and reimbursement challenges that could impact your device's economic performance.

Your preliminary model will need external validation to establish any credibility with stakeholders. By engaging health economists, clinical experts, and industry veterans in peer review processes, we can refine methodologies, validate assumptions, and strengthen economic arguments. This collaborative approach will identify potential weaknesses, prompt improvement, and build confidence in your model's reliability.

In financially constrained health systems across the world, increasing emphasis is being placed on the ability to demonstrate that health care interventions are not only effective, but also cost-effective. Decision-analytic modelling is commonly used as the framework for meeting these requirements.

_{Andrew Briggs, London School of Hygiene & Tropical Medicine}

Waypoint checklist

A deep dive into preliminary models will guide you along the way.

• Clinical Benefits showing improved outcomes versus current treatments.
• Cost Analysis with model device price, procedure costs, and potential savings.
• Patient Population that defines eligible users and adoption potential.
• Payer Impact to assess cost-effectiveness and reimbursement viability.
• Assumption testing that analyses key variables, such as price and adoption.

Need help with your health economics?

This vital modelling process requires expert guidance and rigorous methodology. At VP MED Ventures we will help you systematically build robust models, validate key assumptions, and create economic arguments that drive commercial success. This way, we can ensure your MedTech innovation delivers economic value at every stage of development and prepares you for success.