. In the U.S. - there are 200 cardiac arrests per year on the 5,000 passenger ai

Question

. In the U.S. - there are 200 cardiac arrests per year on the 5,000 passenger aircrafts in service - installing an automated external defibrillator (AED) on a single plane and training crew to use it costs $3,000 annually - if a plane has an AED on board then 16% of those who have cardiac arrest survive (where survival means resuscitated, sent to hospital and then discharged from hospital and for simplicity we ignore hospital treatment costs) compared to a 1% survival rate if no AED is on the plane. - survivors live on average 10 years - on average survivors enjoy a quality of life of 0.5 (on a 0-1 scale) - a year of life in perfect health is valued to be worth $80,000. (a) Calculate the cost of AEDs per year of life saved. (b) Calculate the cost of AEDs per QALY. (c) Does a cost-benefit analysis support installing AEDs on U.S. aircraft? Explain your answer

Explanation / Answer

Live saved per year = 200 x 16% = 32 lives

a) Cost of AEDs per year of life saved = ($ 3000 * 5000 planes) / 32 = $ 468,750

b) Cost of AEDs per QALY = $ 468,750 / 0.5 = $ 937,500

c) Value of additional lives saved = (200 x 15%) x 10 years x $80,000 x 0.5 = $12,000,000

Cost of installation of AEDs = $3000 x 5000 Planes = $ 15,000,000.

Pure cost-benefit analysis suggests, it is not beneficial to install AED as cost of AED per annum is $ 15,000,000 and value of additional lives saved is  $ 12,000,000. However, apart from pure financial perspective, it is important to consider that human life is always worth more than just financial value (human capital) due to emotional and other factors.

Related Questions

Navigate

• Browse (All)
• Browse #
• Subjects

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.