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Teaching and hospital production: The use of regression estimates
Author(s) -
Lehner Laura A.,
Burgess James F.
Publication year - 1995
Publication title -
health economics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.55
H-Index - 109
eISSN - 1099-1050
pISSN - 1057-9230
DOI - 10.1002/hec.4730040204
Subject(s) - multicollinearity , regression , econometrics , regression analysis , statistics , health care , estimation , linear regression , confidence interval , production function , production (economics) , payment , actuarial science , medicine , economics , mathematics , management , finance , macroeconomics , economic growth
Abstract Medicare's Prospective Payment System pays U.S. teaching hospitals for the indirect costs of medical education based on a regression coefficient in a cost function. In regression studies using health care data, it is common for explanatory variables to be measured imperfectly, yet the potential for measurement error is often ignored. In this paper, U.S. Department of Veterans Affairs data is used to examine issues of health care production estimation and the use of regression estimates like the teaching adjustment factor. The findings show that measurement error and persistent multicollinearity confound attempts to have a large degree of confidence in the precise magnitude of parameter estimates.