A Certain HMO Is Attempting to Show the Benefits of Managed

question 82

Multiple Choice

A certain HMO is attempting to show the benefits of managed health care to an insurance company. The HMO believes that certain types of doctors are more cost-effective than others. One theory is that both primary specialty and whether the physician is a foreign or USA medical school graduate are an important factors in measuring the cost-effectiveness of physicians. To investigate this, the president obtained independent random samples of 40 HMO physicians, half foreign graduates and half USA graduates, from each of four primary specialties?General Practice (GP) , Internal Medicine (IM) , Pediatrics (PED) , and Family Physician (FP) ?and recorded the total per-member, per-month charges for each. Thus, information on charges were obtained for a total of n = 160 doctors. The ANOVA results are summarized in the following table. $$\begin{array} { l r r r r r } \text { Source } & \text { df } & \text { SS } & \text { MS } & \text { F Value } & \text { Prob } > \text { F } \\\hline \text { Specialty } & 3 & 22855 & 7618 & 60.94 & .0001 \\\text { Medschool } & 1 & 105 & 105 & 0.84 & .6744 \\\text { Interaction } & 3 & 890 & 297 & 2.38 & .1348 \\\text { Error } & 152 & 18950 & 125 & & \\\hline\text { Total } & 159 & 42800 & & & \\\hline \end{array}$$ Interpret the test for interaction shown in the ANOVA table. Use ? = 0.05.

• A) There is insufficient evidence at the ? = 0.05 level to say that primary specialty and medical school interact.
• B) There is sufficient evidence at the ? = 0.05 level to say that primary specialty and medical school interact.
• C) There is sufficient evidence at the ? = 0.05 level to say that primary specialty and medical school do not interact.
• D) It is impossible to make conclusions about primary specialty and medical school interaction based on the given information.

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Definitions:

Speculative Investment

An investment with a high degree of risk, where the investor anticipates significant returns in exchange for the risk of losing most or all of the invested amount.

GAAP Accounting

Generally Accepted Accounting Principles, a set of rules and standards for financial reporting and accounting practices in the United States.

Unrealized Gain

The hypothetical profit on an investment that has not yet been sold, and thus, not yet converted into actual cash.

Hedged Item

An asset, liability, or planned transaction exposed to price risks that are offset by using a hedging instrument.