A healthcare executive is using regression to predict total revenues.She has decided to include both patient length of stay and insurance type in her model.Insurance type can be grouped into three categories: Government-Funded,Private-Pay,and Other.Her model is A)Y = b₀. B)Y = b₀ + b₁X₁. C)Y = b₀ + b₁ X₁ + b₂X₂. D)Y = b₀ + b₁ X₁ + b₂ X₂ + b₃X₃. E)Y = b₀ + b₁ X₁ + b₂ X₂ + b₃X₃ + b₄X₄.

Question

Quizplus · Accepted Answer

The model includes both patient length of stay and insurance type, which are two independent variables. The model equation includes a constant term (b₀) and three interaction terms: b₁ X₁ (interaction of length of stay and government-funded insurance), b₂ X₂ (interaction of length of stay and private-pay insurance), and b₃ X₃ (interaction of length of stay and other insurance). This model allows for different slopes for each insurance type, which is appropriate since the effect of length of stay on revenue may differ across insurance types.

A Healthcare Executive Is Using Regression to Predict Total Revenues