Recent research into the cost of various medical procedures has shown the impact
ID: 2549091 • Letter: R
Question
Recent research into the cost of various medical procedures has shown the impact of certain complications encountered in surgery on the total cost of a patient's stay in the hospital. The researchers used regression analysis and found the following results Total cost for patient Constant, plus Length of stay (measured in days), plus b x Presence of one or more complications (1 if true, 0 if false), plus c x Use of a laparoscope1 if true, 0 if false) Where a, b, c are coefficients of the regression model, and The laparoscope is an instrument somewhat like a miniature telescope with a fiber optic system which brings light into the abdomen. It is about as big around as a fountain pen and twice as long The research, based on 55 patients, showed the following regression results R-squared: 49% Constant term: $3,178 Coefficients and t-values for independent variables Length of Stay Complication Laparoscope Coefficient t-value $820 7.15 $1,995 4.48 $979 2.69 Required: 1. What is the estimated cost for a patient whose surgery has complications and who stays in the hospital four days, and whose surgery requires a laparoscope? Estimated cost 2. Which, if any, dummy variables are used in this regression? (You may select more than one answer. Click the box with a check mark for the correct answer and click to empty the box for the wrong answer.) Presence of one or more complications Use of a laparoscope (or not) Length of stay (measured in days)Explanation / Answer
Part 1 - Calculation of Estimated cost
Constant Term = $3178
Length of stay (4 days) = $820*4 = $3280
Complication (1) = $1995*1 = $1995
Laparoscope (1) = $979*1 = $979
Estimated Cost = ($3178+$3280+$1995+$979) = $9432
Part 2 - Dummy Variables
a) Presence of 1 or more complications
b) use of laparoscope
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