The insurance company is computing the savings that may occur after 6 years of offering a preventive care program and they want to know if it is worthwhile to use a predictive model to target the patients for the preventive care.

Provide the expected value of savings if the preventive care program is used and if the predictive model is also used:

1. Expected Value (cost no Preventive Care - cost Preventive care only)

2. Expected value (cost no preventive care - cost preventive care and predicted model)

The client wants to save at least $500,000 if Preventive care is launched in the next six-year. Are both options of Preventive are provide a $500,000 savings?

3. Do only preventive care will provide $500,000 savings in the next 6 years?

4. Do only preventive care using the predictive model will provide $500,000 savings in the next 6 years?

Use the following assumptions to answer the above questions

Help an insurance company on one of their initiatives
An insurance company is studying the benefits of using a prediction model to help on their business. They are developing a model to identify the subjects that may start having diabetes the following year. They are planning to offer a preventive program to reduce the number of future diabetes patients and reduce costs.	Assumptions1	Probability1	Assumptions2	Probability2	Assumptions3	Probability3
Diabetes rate	34%	50%	40%	25%	45%	25%
Preventive care per patient will cost	$ 25,000	100%
Yearly average cost per diabetes patient	$ 20,000	100%
The enrollment rate to participate in these kinds of programs	60%	50%	65%	30%	75%	20%
The enrollment rate to participate in this kind of program if assurance of getting diabetes	90%	50%	75%	30%	85%	20%
The program success	75%	100%
The model precision	90%	100%
The model recall

Answer rating: 100% (QA)

1 Expected Value cost no Preventive Care cost Preventive care only 2500000 2 Expected value cost no ... View the full answer