Business Finance Homework Help

You are the manager in a Tennessee acute care facility, responsible for clinical services that include patients with congestive heart failure (CHF), a high volume condition that contributes much to your facility’s overall case mix. Your payor mix is dominated by Medicare. You ask one of your nurses to evaluate your facility’s length of stay (LOS) and hospital charges for the Medicare patients with CHF relative to a state-level benchmark. He assures you all is well and presents the following data as justification for his optimism:

CHF: Heart Failure and Shock CMS National Statistics ALOSStdDev*Average Charge*Std Dev Charge*National4.280.76$28,797$8,652Facility5.082.26$28,407$10,445

* National level standard deviations and average charge are fictitious

You are a bit incredulous about the numbers, knowing that your facility has a history of longer than average LOS for the CHF condition. You ask to see his data sources and he presents you with an Excel file with national Medicare statistics for 2016 and an Excel data set with information from the 50 patients discharged in 2016 (the most recent data available):

• CMS_Benchmark
• DRG Excel Data Set

You immediately notice some problems. First, Medicare reimburses hospitals prospectively using a diagnosis related group (DRG) to classify patients into homogeneous disease categories. Many providers criticize the DRG classification system because it does not accurately account for a patient’s severity of illness (for those who may not be familiar with the DRG system, see The Design and Development of the Diagnosis Related Group (DRG) for a brief overview). In 2008, Medicare converted the DRG classification system to a Medicare-severity diagnosis related group (MS-DRG) classification. The numbers presented above are just for a single classification (CHF). When asked how he came up with these values, the nurse said he averaged all the values together and did not separate patients by their MS-DRG when computing the facility statistics.

Congestive Heart Failure is defined by three different MS-DRGs: 291, 292, 293

You are concerned that senior administration will ask you to report on the financial status of the clinical services for which you are responsible. You want to be proactive and have all your bases covered, so you decide to write a report detailing the nature of the data being analyzed and recalculating the statistics to reflect the MS-DRG classification. You appreciate that your senior leaders have some facility with statistics and quantitative analysis, but you want to be prepared to answer any and all possible questions that might be asked.

In your report, you will complete the following:

1. Identify the type of data (nominal, ordinal, interval, or ratio) for each variable found in the facility’s DRG Excel Data Set (MS-DRG, gender, age, race, LOS, charges).
2. Recalculate the ALOS, Average Charges, and the standard deviation statistics for each MS-DRG for your facility.
3. Explain why aggregating across MS-DRGs to derive just one measure of ALOS (as presented by the nurse in the example above) is inappropriate.
4. Explain whether you think the mean is the appropriate statistic to measure central tendency and why, and explain why the standard deviation is used instead of the variance.