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Budget impact models - making an impact

Budget impact models (BIMs) are increasingly being used to determine the financial impact of new products on the budgets of healthcare decision-makers across the globe. In periods of financial pressure, stakeholders are highly cost conscious, leaving pharmaceutical, medical device and diagnostic firms struggling with ways to clearly present the real value of their products.

A budget impact model, or budget impact analysis, is defined as a model that measures the net cumulative cost of treatment with a particular therapy for a given number of patients in a specific population. Generally, the model shows two or more scenarios, one of which includes the new product while the others do not. Statistics regarding the example environment (e.g. health systems population, hospitals resources etc.) are used as real inputs which produces outputs specific to that particular healthcare system. BIMs are also highly valued as they allow for the manipulation of the market share of treatments for a certain condition and will display how each market share impacts total spending on treatment.

The application of these models is particularly useful when assessing a product’s affordability and for the reallocation of resources. These matters are interesting to hospital administrators or others in charge of healthcare budgets as they provide an understanding of trade-offs for new products, as well as for budget planning and forecasting. This is one of the key reasons why pharmaceutical, medical device, and diagnostic companies are creating BIMs as support during the sales process. In combination with other economic models, a BIM is an effective analysis that helps to build arguments for the adoption of the new product.

However, a key challenge still remains: how does one present this complex health economic data in a clear and meaningful manner? For most key account managers, presenting a complex BIM in a brief sales meeting is difficult. Recently, new tools have been developed with this particular challenge in mind, BaseCase apps being one of these technologies.

With a BaseCase app, a BIM can be presented in a way which is relevant to the particular payer’s healthcare environment. The interactive interface is driven by spreadsheets which include real data for a particular patient population and market share of treatment methods. A specific BIM is presented via interactive slide decks and dashboards allowing the key account manager to engage with the model - showing inputs, calculations and results relevant to that particular audience.