Abstract

Mission Hospital started its operations on April 02, 2008 with the aim of providing highest quality patient care facilities to all individuals at affordable rates. This super specialty hospital located in Durgapur, West Bengal, India, specializes in cardiac surgeries. Many of its patients are from nearby states and neighboring countries, and are covered under different health schemes. Among hospitals in India, flat rate for different treatments is becoming popular, mainly owing to healthcare tourism and government schemes. Dr. Satyajit Bose, chairman of Mission Hospital, was considering adoption of a package pricing (flat fee) strategy under which patients would be provided a fixed price for their treatment at the time of admission. This would imply that the package price should be calculated by the hospital on the basis of patient’s clinical and non-clinical information available at the time of admission. Flat fee (or package pricing) can result in a loss to the hospitals if they do not accurately estimate the treatment cost for a patient. The hospital faces the challenge of identifying the key factors that drive the total cost of treatment so that it can quote an appropriate price to the patient.

Learning Objective

The case may be used at the introductory level or for teaching advanced concepts in regression. The case is ideal for teaching multiple regression model building and model validation through several statistical tests. The case helps the instructor to demonstrate use of R-square (coefficient of determination), hypothesis testing, model validation, variable significance, variance inflation factor, and step-wise regression. The instructor may provide the data on Excel spreadsheet to the students (file name: IMB 529 Mission.xls)