3. Suppose that of the 4,000 patients that are treated for stomach pains at Seattle Grace Hospital each year, 25 of them have an undiagnosed tumor that will cause them to die in one year if not treated. A blood test that can correctly identify all tumors costs $3,500 per test. However, all patients treated for stomach pains must be tested in order to identify the 25 patients with a tumor. Individuals who have the tumor removed are expected to live for 20 more years. On average, individuals with a tumor (with or without receiving treatment) will enjoy a quality of life of 0.75 on a QALY scale while they are alive. A year in perfect health (1 QALY) is valued at $50,000.
    •    What is the cost of blood testing per year of life saved?
    •    What is the cost of blood testing per QALY?
    •    Does a cost-benefit analysis support running the blood test on each patient at Seattle Grace?

4. A study finds benefit in giving patients the flu shot while they visit the doctor for routine check-ups.  Specifically, the probability of getting the flu drops from 30% for those not treated to 15% for those who receive the vaccine.  We consider the costs and benefits of a clinic providing the flu shot for its 5,000 patients when:
-The cost of the flu shot is $20
-The benefits from getting the flu shot last for one year
-On average, individuals place a benefit on not getting the flu at $250
 
    •    Perform a cost-benefit analysis of the flu shot. Does it favor the vaccination?
    •    What is the cost of the flu shot per case avoided?
    •    Now consider that the benefit of not getting the flu is $200.  Does this change your answer from part a? Explain.

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