Decision Analysis for Clinical and Public Health Practices



Y. Claire Wang, M.D., Sc.D.





This course is designed to provide an introduction to the methods and growing range of applications of decision analysis and cost-effectiveness analysis in health care technology assessment, medical decision making, and health resource allocation.


Course requirements:

1.      Class attendance and participation

2.      Case assignments

3.      A brief essay (research article critique)

4.      Final examination



An introductory course in biostatistics is a prerequisite, but may be taken concurrently. Introductory economics may be helpful but is not required.



Students who successfully complete this course will be able to:

§  Identify and describe the uses and limitations of these techniques.

§  Critique and apply these methods in decision making under uncertainty in health policy and patient care.

§  Master a set of basic techniques used in performing decision analyses and cost-effectiveness analyses.




Most of the required readings are published journal articles, which will be posted on CourseWorks. We will also assign chapters from the textbook Decision Making in Health and Medicine: Integrating Evidence and Values by Myriam Hunink and colleagues as essential readings. The purchase of this book is optional but strongly recommended for interested students, since most of the topics covered in this course are expertly elaborated in this text.


Hunink MGM, Glasziou PP, Siegel JE, Weeks JC, Pliskin JS, Elstein AS, Weinstein MC: Decision Making in Health and Medicine: Integrating Evidence and Values.  Cambridge, UK: Cambridge University Press, 2001.


            Alternative Texts:


Muennig, P. Cost-effectiveness Analysis in Health: A Practical Approach. San Francisco, CA: Jossey-Bass, 2007


Clemen RT. Making Hard Decisions: An Introduction to Decision Analysis, 2nd edition. Belmont, California: Duxbury Press, Wadsworth Publishing Company, 1995.


Haddix AC, Teutsch SM, Corso PS. Prevention Effectiveness: A Guide to Decision Analysis and Economic Evaluation. Oxford University Press, 2003.


Other Useful References:


Gold MR, Siegel JE, Russell LB, Weinstein MC (eds.): Cost-Effectiveness in Health and Medicine.  Report of the Panel on Cost-Effectiveness in Health and Medicine.  New York: Oxford University Press, 1996.


Drummond M, Stoddart G, Torrance G. Methods for the Economic Evaluation of Health Care Programs, 2nd edition. Oxford: Oxford University Press (1997).


Raiffa H. Decision Analysis: Introductory Lectures on Choices Under Uncertainty, Reading, Massachusetts: Addison-Wesley (1968).


CEA Registry: Tufts Medical Center. https://research.tufts-nemc.org/cear4/default.aspx




Course Schedule


Session 1 – Introduction & Decision Trees


Learning Objectives:

Uses of decision analysis in public health and medicine: what, why, and who; Elements of Decision Analysis; Constructing decision trees; Calculating expected values; Threshold analysis; Sensitivity analysis.



Hunink, Glasziou, et al.: Decision Making in Health and Medicine, Chapter 1 & 2.


Pearson SD, Rawlings MD: Quality, Innovation, and Value for Money: NICE and the British National Health Service. JAMA 2005; 294 (20): 2618-2622.



Read Detsky et al. for tree-building tips:

Detsky AS et al. Primer on Medical Decision Analysis: Part 2 – Building a Tree. Medical Decision Making 1997; 17 (2): 126-135.


Lab 1: Introduction to TreeAge I

Learn to build a simple decision tree and perform sensitivity analyses using the TreeAge software.



Session 2 – Evaluating Decisions to Test


Learning Objectives:

Decisions involving imperfect tests; Test characteristics (Sensitivity/Specificity); Probability Revision; Bayes’s Formula



Hunink, Glasziou, et al.: Decision Making in Health and Medicine, Chapter 5: p128-149.


Grimes DA, Schulz KF: Uses and abuses of screening tests. The Lancet 2002; 359 (9309): 881-884


Wald NJ, Hackshaw AK, Frost CD. When can a risk factor be used as a worthwhile

screening test? BMJ 1999; 319: 1562-5


Lab 2: Introduction to TreeAge II

Incorporate imperfect tests into decision tree in TreeAge




Session 3 – Diagnostic Testing Strategies


Learning Objectives:

Tests with multiple results; ROC curves, Choosing an optimal positivity criterion.



Hunink, Glasziou, et al.: Decision Making in Health and Medicine, Chapter 7.


Obuchowski NA: Receiver Operating Characteristic Curves and their use in radiology. Radiology 2003; 229(1): 3-8.


Avins AL, Browner WS. Improving the Prediction of Coronary Heart Disease to Aid in the Management of High Cholesterol Levels: What a Difference a Decade Makes. JAMA 1998; 279: 445-449


Lab 3: Build decision tree in Excel; ROC Curve

An Excel tutorial on constructing ROC curve and building decision trees in Excel when TreeAge is not available.




Session 4 – Recurring Events and Markov Models


Learning Objectives:

Life expectancy revisited; Recurring events; Introduction to Markov models; Using Markov models to inform decision analyses; Concepts of cohort simulation versus Monte Carlo simulations.


Reading: Sonnenberg FA, Beck JR: Markov models in medical decision making: a practical guide.  Medical Decision Making 1993; 13:322-338.


Muennig P, Franks P, Gold MR. The cost-effectiveness of health insurance. American Journal of Preventive Medicine. 2005; 28:59-64.


Smith KJ, Roberts MS. The cost-effectiveness of Sildenafil. Ann Int Med 2000; 132: 933-937.


Lab 4: Markov models I

Simple Markov models in Excel : Matrix Multiplication

Markov modeling in TreeAge: life expectancy




Session 5 – Preferences in Medical Decision Making


Learning Objectives:

Measuring and Valuing Outcomes in Individuals; Eliciting Utilities; Standard Gamble; Time Trade-Off; Rating Scale; Other Quality-of-Life Measures



Hunink, Glasziou, et al.: Decision Making in Health and Medicine, Chapter 4: Sections 4.1-4.3.


Gold, Siegal, Russell and Weinstein. Cost-effectiveness in Health and Medicine. Chapter 4. Identifying and Valuing Outcomes.  Page 113-128.



Lab 5: Markov models II

[Continue] Markov modeling in TreeAge

3-state Markov model, multiple outcomes, and probabilistic sensitivity analysis



Session 6 – Quality-adjusted Life Years



Learning Objectives:

Life expectancy; Quality-adjusted life years (QALYs); Disability-adjusted life years (DALYs)



Weinstein MC, Torrance G, McGuire A. QALYS: The Basics. Value in Health, 2009, 12: S5-9


Gold MR et al.: HALYS and QALYS and DALYS, OH MY: Similarities and Differences in Summary Measures of Population Health. Annual Review of Public Health, 2002, 23: 115-134


Murray CJL, Salomon JA, Mathers C. A Critical Examination of Summary Measures of Population Health. Bulletin of the World Health Organization, 2000;78:981-992.


Murray CJL et al.: Eight Americas: investigating mortality disparities across races, counties, and race-counties in the United States, PLoS Med 2006: 3(9) e260


Lab 6: QALY in Excel; Markov models III

1. Excel tutorial on QALY


2. Replicate in TreeAge Muennig et al. The cost-effectiveness of health insurance. American Journal of Preventive Medicine. 2005; 28:59-64.



Session 7 – Biases and Framing Effects


Learning Objectives:

Biases in probability judgment; Framing effects; Representativeness, availability, anchoring and adjustments; Heuristics; Subjective probability




Redelmeier DA et al.: Understanding patients’ decisions. JAMA 1993; 270: 72-76


McNeilm BJ, Pauker SG, Sox HC, Tversky A: On the Elicitation of preferences for alternative therapies. N Engl J Med 1982; 306: 1259-1262


Tversky A, Kahneman D: The Framing of Decisions and the Psychology of Choice. Science 1981; 211:453-458



SPRING BREAK (No Class on 3/15)


Session 8 – Cost-Effectiveness Analysis & Resource Allocation



Learning Objectives:

Methods in economic evaluation: Shopping spree vs. competing choices problems; Resource allocation; Incremental cost-effectiveness analysis; Dominance and extended dominance.



Doubilet P, Weinstein MC, McNeil BJ:  Use and misuse of the term ‘costeffective’ in medicine. N Engl J Med 1986; 314:253256.


Hunink, Glasziou, et al.: Decision Making in Health and Medicine, Section 9.6.


Muennig P, Franks P, Gold M. The cost-effectiveness of health insurance. Am J Prev Med 2005; 28 (1): 59-64.


Rinfret S, Cohen DJ, Lamas GA, Fleischmann KE, Weinstein MC, Orav J, Schron E, Lee KL, Goldman L: Cost-effectiveness of dual-chamber pacing as compared with ventricular pacing for sinus-node dysfunction.  Circulation 2005; 111: 165-72


Paltiel AD, Weinstein MC, Kimmel AD, Seage GR III, Losina E, Zhang H, Freedberg KA, Walensky RP: Expanded HIV Screening in the United States – an Analysis of cost-effectiveness.  The New England Journal of Medicine; 2005; 352: 586-595.


Kim JJ, Wright TC, Goldie SJ: Cost-effectiveness of alternative triage strategies for atypical squamous cells of undetermined significance.  JAMA 2002; 287:2382-2390.


Fowler RA et al.  Cost-effectiveness of defending against bioterrorism: a comparison of vaccination and antibiotic prophylaxis against anthrax.  Ann Intern Med 2005; 142: 601-610. 


McMahon PM, Araki SS, Sandberg EA, Neumann PJ, Gazelle GS: Cost-effectiveness of PET in the diagnosis of Alzheimer disease.  Radiology 2003; 228:515-522.


Rein DB et al. Cost-effectiveness of routine childhood vaccination for hepatitis A in the United States. Pediatrics 2007; 119(1): e12


Fiscella K, Franks P. Cost-Effectiveness of the Transdermal Nicotine Patch as an Adjunct to Physicians’ Smoking Cessation Counseling. JAMA 1996; 275:1247-1251.


Rosen AB, Hamel MB, Weinstein MC, Cutler DM, Fendrick AM, and Vijan S. Cost-Effectiveness of Full Medicare Coverage of Angiotensin-Converting Enzyme Inhibitors for Beneficiaries with Diabetes. Annals Int Med; 143: 89-99

Lab 7: Excel workshop: Competing choices, shopping spree







Session 9 – CEA workshop, Time Preferences and Discounting


Learning Objectives: 

Rationale for discounting; Present value and future value; Amortization; Keeler and Cretin’s paradox; Consequences of discounting; choice of discount rates.



Hunink, Glasziou, et al.: Decision Making in Health and Medicine, Section 9.5.


Weinstein et al. Recommendations of the Panel on Cost-Effectiveness in Health and Medicine. JAMA 1996; 276: 1253-1258.


Siegal JE et al. Recommendations for Reporting Cost-Effectiveness Analyses. JAMA 1996; 276: 1339-1341.


Lab 8: Cost-effectiveness Analysis in TreeAge

Advanced GCA case




Session 10 – Public Health Application: Cancer Screening

Guest Speaker: Elena Elkin, PhD, Memorial Sloan-Kettering Cancer Center



Learning Objectives:

How decision analysis can be used to assess the health benefits and costs of cancer screening interventions; sources of data for models of cancer screening; common biases in the estimation of screening efficacy; currently recommended cancer screening strategies and their cost-effectiveness.




Knudsen AB, McMahon MA, Gazelle GS. Use of Modeling to Evaluate the Cost-Effectiveness of Cancer Screening Programs. J Clin Oncology 25 (2) 2007, p203-208




Session 11 – Ethical and Policy Implications

Guest Lecturers



Learning Objectives: Historical resistance to CEA in the U.S.; Legal, political, and ethical concerns; The future of CEA



Neumann PJ. Using cost-effectiveness analysis to improve health care.  Chapter 3-5.




Session 12   Wrap-up and Exam Review