Healthcare technology assessment under uncertainty: The case of the digital medical linear accelerators

Medical device replacement decisions have considerable impact on the budget management and service quality levels of healthcare institutions, being particularly complex for modelling. In that sense, this paper develops a framework to support the decision-making process, employing cost analysis methods and shows evidence of the low relevance of operating and maintenance costs and the significance of innovative variables, such as the penalty costs, which valorize the pecuniary losses incurred by periods of device malfunction. As well as using the discounted cash flow model, the paper assesses the replacement process through the Real Options approach, providing enhanced valuations.