Decision making in uncertainty

Physician Executive, Jan-Feb, 2005 by David P. Tarantino

Table 1

Probability  Demand  Doses

                     100      200     300     400     500
                     100      200     300     400     500
0.1          100     500    (1000)  (2500)  (4000)  (5500)
0.2          200     500     1000    (500)  (2000)  (3500)
0.3          300     500     1000    1500       0   (1500)
0.25         400     500     1000    1500    2000     500
0.15         500     500     1000    1500    2000    2500
             EMV     500      800     700       0   (1200)

Figure 1

EMV = (0.1)(-$1000)   (0.2)($1000)   (0.3)($1000)   (0.25)($1000)  
      (0.15)($1000)
EMV = $800

Figure 2

EPUC = (0.1)(($500)   (0.2)($1000)   (0.3)($1500)   (0.25)($2000)  
       (0.15)($2500)
EPUC = $1,575
Therefore, EVPI = EPUC - EMV = $1,575 - $800 = $775

By David P. Tarantino, MD, MBA

David P. Tarantino, MD, MBA, is the executive medical director of Shock Trauma Associates, P.A., a 50 physician, multispecialty practice associated with the University of Maryland School of Medicine. In addition, he is the chief executive officer of The MD Consulting Group, LLC, a health care management consulting firm in Baltimore. He can be reached by phone at 410-328-2036 or by e-mail at mdcg@verizon.net