Multi Regression analysis

of the Total Expenses of hospitalS

By:
Name Roll No.

Amit Gulati 06

Anuj Khanna 08

Bhupinder Singh Negi 11

Trivedi Sachinkumar Gunvantlal 25

Shobhit Shukla 26

Vinayak Sharma 28

Deepak Singh Chauhan 29

 Overview
• Background of the project
• Approach to the project
Stage 1
• Introduction to the factors affecting total expenses
Concept

• The Math
• Scatter plots of Independent variables
• Excel output of Multi Regression Analysis
Stage 2 • Residual plots of the output
Analysis

• Interpretation of the output

• Conclusion & possible applications
Stage 3
Inferenc
e
Stage 1:Concept
 Background

 Hospitals need to keep a check on their total expenditure and the factors
which effect it
 Various factors affect the total expenditure incurred by a hospital
 Budget allocation is important for setting up the hospitals
 There are a number of factors which affect the cost incurred in setting up a
hospital. The idea is to not find all of them but develop a model with the
available data and then use the same model but with different factors
elsewhere
 In the analysis an attempt has been made to develop a mathematical
equation for the total expenses of the hospital by using some of the factors
available which affect it.
 Approach

 Data collection for total expenses of 72 hospitals spread across 6 regions.

 For determining the total expenditure a multi-regression analysis has been
performed taking into account some of the factors available that might affect
the expenses.
 The results of the multi regression analysis are then interpreted to check the
validity of regression model.
 If the model is found to be successful then a similar model with different set
of independent variables can be checked to create an estimate of the total
expenses of any geography.
 Shortlisting the Factors

 The factors (i.e. independent variables)

used for analysis of the total expenses Number of
beds
are
1. Payroll expenses of various hospitals in
the region.(X₁)
2. Number of Beds in the hospital. (X₂)
3. Number of admissions in the hospitals Payroll
Expenses
Total
Expenditure
Number of
admissions
on a particular date.(X₃)
4. The number of births that have taken
place across each of the hospitals. (X₄)
 The degree to which these factors have
contributed to the total expenses need to New born
be checked after performing the
regression analysis.
Stage 2:Analysis
 The Math
 Since the total expense (Y) is a variable that is dependent on other factors stated in previous slides,
the equation for the total expenses will be

Y= b₀ + b₁X₁+b₂X₂+b₃X₃+b₄X₄

b₀ = Intercept where the plot crosses the Y-axis

b₁ = Coefficient for number of beds X ₁ = Total Number of beds in the hospital
b₂ =Coefficient for number of admissions X ₂ = Total Number of admissions in the hospital
b₃ = Coefficient for payroll expenses X ₃ = Payroll expenses across hospitals in different regions
b₄ = Coefficient for the births X ₄ = Total Number of births across different hospitals.
 Scatter Plots
Payroll Expenses Scatter Plot Beds Scatter Plot
200000 1200
180000
160000 1000
payroll expenses

140000

number of beds
800
120000
100000 600
80000
60000 400
40000 200
20000
0 0
0 50000 100000 150000 200000 250000 300000 350000 400000 0 50000 100000 150000 200000 250000 300000 350000 400000
total expenses total expenses

Admissions Scatter Plot Births Scatter Plot

40000 6000
35000
5000
number of admissions

30000

number of births
4000
25000
20000 3000
15000
2000
10000
1000
5000
0 0
0 50000 100000 150000 200000 250000 300000 350000 400000 0 50000 100000 150000 200000 250000 300000 350000 400000
total expenses total expenses
 Regression Statistics
Excel
Outp
Multiple R 0.990
R Square 0.980
Adjusted R Square
Standard Error
Observations
0.979
12873.480
72.000
ut..!!
ANOVA

df SS MS F Significance F
Regression 4 5.458E+11 1.36E+11 823.3571 3.7035E-56
Residual 67 1.11E+10 1.66E+08
Total 71 5.569E+11

Standard
Coefficients Error t Stat P-value Lower 95% Upper 95% Lower 95.0% Upper 95.0%
Intercept 490.060 3434.650 0.143 0.887 -6365.529 7345.650 -6365.529 7345.650
Payroll Exp. 1.678 0.078 21.600 0.000 1.523 1.834 1.523 1.834
Beds -32.380 16.843 -1.922 0.059 -65.998 1.239 -65.998 1.239
Admissions 3.868 0.624 6.199 0.000 2.623 5.114 2.623 5.114
Births -5.130 2.620 -1.958 0.054 -10.359 0.099 -10.359 0.099

Y= 490.060 + 1.678X₁-32.380X₂+3.868X₃-5.130X₄
 Residual plots
Payroll Expenses Residual Plot Number of Beds Residual Plot
60000 60000
40000 40000

Residuals
Residuals

20000 20000
0 0
0 0 0 0 0 00 00 00 00 00 00 0 200 400 600 800 1000 1200
-20000 00 00 00 00 00 00 00 00 00 00 -20000
20 40 60 80 10 12 14 16 18 20
-40000 -40000
Payroll Exp. Beds

Admissions Residual Plot Number of Births Residual Plot

60000 60000
40000 40000
Residuals

Residuals
20000 20000
0 0
0 5000 10000 15000 20000 25000 30000 35000 40000 0 1000 2000 3000 4000 5000 6000
-20000 -20000
-40000 -40000
Admissions Births
Stage 3:Inference
 Interpretation
 The high value of correlation coefficient indicates that the regression model
has been successful. Mathematically 99% of the properties of the Total
Expenses has been explained by the regression model.
 The P-value of all the four factors is below 6%.This implies that the rejection
area is 0.06 which is fantastic.
 The standard error is 12873 $, which means that if we draw a curve of
distribution of residuals then 68% & 95% of the values of the residuals should
lie between +/- 12873 $ & +/- 2*12873 for the distribution to be normal. We
have done the calculations and the distribution is normal.
 The F significance value is almost 0 suggesting the validity of the model.
Lower the value the better is the regression model..
 Conclusion & Possible Applications
 Analysis suggest that the regression model is close to a best fit. Hence it can
be used for estimating the total expenses of hospitals.
 Possibility of developing a similar model with different set of independent
variables can be used by hospital authorities if they are planning for an
expansion to estimate the total cost that will be incurred.
 It can be used by doctors who are planning to set up their own hospitals.
 A similar model can be used by government for budget allocation towards
opening of new hospitals and health care centers in different locations.
 Researchers who are doing their research in the health care industry can find
a similar model helpful.
THANK YOU