Unlocking Value Through Health Economic Modelling

Health Economics and Outcomes Research (HEOR) is the industry terminology for evaluating how much value a new intervention or product can bring to a healthcare service or society.


Health economics underpins important topics such as reimbursement, commercialisation, and pricing by measuring and modeling costs against outcomes. Typically this is done through stages of modeling, from early economic modelling where a presumed value proposition is identified, through to full cost-effectiveness analysis where total costs across a patient’s lifetime are measured against health benefits, measured in Quality Adjusted Life Years (QALYs).

Health economics is of critical importance for novel products like SaMD, since it is as yet unknown how effective they are at producing clinical benefits, nor what their longterm cost savings are. Only by modelling out scenarios and patient journeys can you reach a robust understanding of the total value of a new technology. 



Early modelling should ideally be done before a commitment is made to undergoing clinical investigation and regulatory submission - we at Hardian think of this as the ‘why’ of your product strategy. Why will someone pay for it? How will you demonstrate both clinical and cost effectiveness?

In fact, it is nearly 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 modeling for all of its health technology evaluations.

Health economic modelling for SaMD builds off well-established principles that have been used for decades in the life sciences and pharmaceutical industries.

Mathematical models incorporating decision tress, Markov scenario modelling and Bayesian reasoning can be combined to produce different types of models. At Hardian we focus on three types of model:



Early models
- to help guide clinical investigation planning

Budget Impact Models (BIM)


Cost Effectiveness Analysis (CEA)



These three types of health economic model are the most commonly used in NICE submissions and payer discussions globally.

Hardian uses six key steps in the development of a cost-effectiveness analysis:

Evidence review: systematically review relevant clinical and economic published literature.

Conceptualisation (2 parts): firstly, using findings from the evidence review identify the decision problem using the PICO framework. Secondly, choose the optimal analytical method e.g. decision tree or Markov model.

Data gathering: validate the conceptual framework of the evaluation through key opinion stakeholders’ engagement and extract data from clinical and real-world studies.

Model build: create model in the preferred modelling software e.g. Microsoft Excel.

Model results: analyse the results of the model.

Accounting for uncertainty: test the model results against uncertainty using sensitivity analysis.