Half-cycle correction

In Markov-type economic models, it is generally recommended that a half-cycle correction is incorporated in the analysis. This adjustment accounts for the fact that health events and transitions between health states can occur at any point within a model cycle, rather than exclusively at the beginning or end. For example, if a model observes 100 people alive at month ten and 90 at month eleven, then we know 10 deaths have occurred sometime within that month. A half-cycle correction typically assumes that such events occur at the mid-point of the cycle. This aims to provide a more accurate representation than assuming they occur at the start or end.

However, the application of a half-cycle correction requires careful consideration; for many health events, the implications of the event may not become apparant until a future cycle. For instance, the increased costs associated with disease progression may not occur until progression is clinically confirmed, which may only happen at routine follow-up visits (i.e. at the start of end of a cycle). Likewise, if packs of medicine prescribed on a monthly basis, then a monthly cost to the healthcare system would occur in full – no matter what point the person died within the cycle. Therefore, it is usually recommended that half-cycle correction is applied carefully and only to aspects where the timing of the event and its consequences are not known.