Healthcare actuaries are increasingly responsible for advising their employers and
clients in areas of managed care. Managed care links traditional health actuarial
financial work to areas of medical practice, to address the fundamental question: what
works? These relatively new responsibilities have required an expansion of actuarial
techniques into non-traditional areas, and, in particular, epidemiology and biostatistics.
This study is about a specific area of statistics, survival analysis, a topic of great
potential application in non-traditional managed care actuarial practice. Survival
analysis is used frequently in biostatistics to evaluate the efficacy of treatments and to
identify factors that contribute to patient survival. In this study, we illustrate three
applications of survival models to solve real-world problems in areas of health actuarial
practice: the estimation of survival of permanently disabled workers receiving lifetime
benefits for occupational illness and injury, the rate at which seriously ill hospice
patients, at risk of polypharmacy, are weaned from non-life sustaining drugs, and the
ability to predict, using a model incorporating drug dosage information and specifically
changes in dosage, changes in expected future lifetimes of hospice patients.
All three case studies are examples of practical models that can be applied
within a business context. The study will serve a more important purpose, if it shows
health actuaries the potential value of the application of a non-traditional technique
within their evolving practice
