Patient Utilization

please read thoroughly and carefully before you begin the coursework.

Creating a Monte Carlo simulation (Windows operating system needed).
Go to the following link: http://www.palisade.com/cgi-bin/trialversion_info.pl?product=1000-I-6000-EN&FormRegion=US, to download the software @Risk. You just need the free trial version to complete this task. You will need to install the software on your computer. Start the program and an Excel file will open automatically.
Here is the link to the quick start guide: http://www.palisade.com/QuickStart/EN/RISK/ (Links to an external site.)

I have downloaded an excel file detailing an example of a Monte Carlo Simulation. The file title is "F2".

Construct a Monte Carlo simulation model to answer the followings:

VVH is considering a pharmacy-managed medication assistance program (MAP). This program would help patients who are unable to afford pharmaceuticals obtain free drugs from pharmaceutical manufacturers. VVH would save the cost of the drugs but incur costs to manage the program. They would like to know whether the program would be cost beneficial. VVH believes that between 60 and 120 patients will use this program with equal probability over this range (a uniform distribution). The average value of a patient’s drugs per year most likely will be $200 but could be as low as $0 or as high as $1,000 (a triangular distribution). They believe that the time to administer the program will follow a normal distribution with a mean of 4 hours/week and a standard deviation of 0.5 hours/week (but never less than 0 hours). VVH also believes that there is an 80 percent probability that pharmacy research fellows who receive wages and benefits of $30/hour could administer the program, but hospital pharmacists may need to administer the program ($60/hour wages and benefits). Analyze this situation using @Risk. What should VVH do? Why?

Several input variables should be included in the model:

Patient Utilization: a uniform distribution

Drug Value: a triangular distribution

Administration Time: a normal distribution. Note that the minimum value for time is 0. First highlight the cell that will contain the value of admin time, click Define Distributions, select Normal. Then you will see a dialogue box. You will see Function (Normal), Parameters (standard), etc. on the left hand side. Click the cell containing Standard and you will see a small black triangle. Click the triangle and another dialogue box will jump out. Check Truncation Limits and click OK. Now you will be able to set the Trunc. Min to 0. To get the administrative time for a year, you need to multiply this value by 50 (assume the program operates 50 weeks a year).

Administration Cost: select discrete distribution for the value of this variable. The value can be $30 per hour with an 80% chance and $60 per hour with a 20% chance. To specify the probability distribution for this variable, first highlight the cell that is used to store the value for this variable. Click Define Distributions tab from the @Risk ribbon. Double click Discrete to select discrete distribution. In the dialogue box that jumped out, click the cell right to X-Table and you can see a small black triangle. Click the triangle and you will see a table editor. Change the numbers for the X-Table and P-Table columns. The X-Table column holds values ($30 and $60) and the P-Table contains corresponding probabilities.

The output variable Net Benefit equals Patient Utilization* Drug Value – Administration Time*50* Administration Cost.

After you specify the values, you should see =risk* in the formula bar when you highlight a cell. The value for the output variable should contain =RiskOutput()+Patient Utilization* Drug Value – Administration Time*50* Administration Cost.

Specify Iterations as 100 and Simulations as 1 in the Simulation tool group in the @Risk tab. Click Start Simulation to run the simulation model. A dialogue box will jump out to display the distribution of the output variable. You can see a confidence limit on the top of the graph. Click on the lower limit and change the value to 0. In this way, you can know the probability for the hospital to lose money in this program. Mouse over the third icon at the bottom of the dialogue box and it reads Edit and Export. Click it and select Chart in Excel. Insert a Text Box in the Excel file to answer the questions: should the hospital adopt the program and why?

P(2)

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