A Certain HMO Is Attempting to Show the Benefits of Managed

question 31

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 sample mean charges for each of the eight categories are shown in the
Table. $\begin{array}{ccc}\hline \text { Primary Specialty } & \text { Foreign Grad } & \text { USA Grad } \\\hline \text { GP } & 39.00 & 41.40 \\\text { IM } & 52.90 & 50.60 \\\text { PED } & 21.30 & 23.10 \\\text { FP } & 32.80 & 36.60 \\\hline\end{array}$

What type of design was used for this experiment?

• A) \(4 \times 2\) factorial design with 20 replications
• B) completely randomized design with eight treatments
• C) \(2 \times 2\) factorial design with 160 replications
• D) completely randomized design with two treatments

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Definitions:

Annual Depreciation

The process of allocating the cost of a tangible asset over its useful life on a yearly basis.

Useful Service Life

The estimated period over which a fixed asset is expected to be usable by the company.

Straight-line Method

A depreciation method that allocates an equal amount of depreciation each year over the useful life of an asset.

Depreciable Assets

Assets whose cost is allocated over their useful lives due to usage, wear and tear, or obsolescence.