The timing of adoption of positron emission tomography: a real options approach

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Abstract

This paper presents the economic evaluation from a hospital’s perspective of the investment in positron emission tomography, adopting a real options approach. The installation of this equipment requires a major capital outlay, while uncertainty on several key variables is substantial. The value of several timing strategies, including sequential investment, is determined taking into account that future decisions will be based on the information available at that time. The results show that adopting this approach may have an impact on the timing of investment, because postponing the investment may be optimal even when the Expected Net Present Value of the project is positive.

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Notes

  1. 1.

    Possible sources of uncertainty in this field include the equilibrium price of new drugs, chances that the new technology influences clinical practice and patients’ outcomes and estimates of costs and benefits that can be updated as more evidence becomes available.

  2. 2.

    The half-life of the most common tracer (F-18-Fluorodeoxyglucose) is about 110 minutes. Therefore the site of production should normally be located no more than 2 hours traveling time from the scanning facility.

  3. 3.

    These limits are lower for the earliest period in which the scanner is in operation (See Table 1).

  4. 4.

    In what follows, primes are introduced for variables at the regional level in order to distinguish them from the corresponding variables at the catchment area level.

  5. 5.

    The regulator cannot decide whether the new scanner will be installed within a Fully Equipped PET or not. The size of new capacity is affected by this decision. In converting g t into G t we refer to the capacity of project P.

  6. 6.

    The relationship between the number of scanners and the number of FEPs will be discussed in more details in Section 6.

  7. 7.

    This is relevant because this assumption was actually made by the Hospital Trust in previous assessments.

  8. 8.

    Current recommendations in Italy, in accordance with the international literature, include performing PET scans in the management of the following cancers: brain, breast, colorectal, head and neck, lung (non-small cell, small cell and solitary pulmonary nodule), lymphoma (Hodgkin’s and non-Hodgkin’s), malignant melanoma, oesophageal and thyroid [36].

  9. 9.

    Retrospective studies and modelled decision tree analyses have suggested that information provided by 18F-FDG PET affect clinical management in 20–40% of all cases of cancer [37].

  10. 10.

    This is calculated on the deterministic number of patients for each year.

  11. 11.

    This reflects the estimate of the Italian Association of Nuclear Medicine that a good ratio would be one cyclotron every four PET scanners.

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Correspondence to Paolo Pertile.

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Pertile, P., Torri, E., Flor, L. et al. The timing of adoption of positron emission tomography: a real options approach. Health Care Manag Sci 12, 217 (2009). https://doi.org/10.1007/s10729-008-9085-4

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Keywords

  • Positron emission tomography
  • Real options
  • Investment timing
  • Technology adoption