Statistics

Comparing Hospital Charges

Using the spreadsheet attached (and please send the completed document back), please use MegaStat to answer the following questions:

1. Do charges incurred by a patient depend on the type of insurance the patient has? If so, how? This is a hypothesis test where we could examine the average charges for patients with "managed care" vs. average charges for patients with "commercial" insurance. Could also use confidence intervals to help answer this question.

Answer

The null hypothesis tested is

H0: There is no significant difference in the average charges for patients with "managed care" vs. average charges for patients with "commercial" insurance. (µ1= µ2)

The alternative hypothesis is

H1: There is significant difference in the average charges for patients with "managed care" vs. average charges for patients with "commercial" insurance. (µ1≠ µ2)

Significance level = 0.05

The test statistic used is [pic]

Rejection criteria: Reject the null hypothesis, if the observed significance (p-value) is less than the significance level (0.05).

Details

|Hypothesis Test: Independent Groups (z-test) |

| | | | |

| |Managed Care |Commercial | |

| |2,966.44 |2,714.28 |mean |

| |1,195.76 |670.34 |std. dev. |

| |193 |96 |n |

| | | | |

|difference (Managed Care - Commercial) |252.159 |

|standard error of difference |109.951 |

|hypothesized difference | |0 |

| z | |...