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Statistical models for the analysis of skewed healthcare cost data: a simulation study

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  • Amal Malehi
  • Fatemeh Pourmotahari
  • Kambiz Angali

Abstract

Skewed data is the main issue in statistical models in healthcare costs. Data transformation is a conventional method to decrease skewness, but there are some disadvantages. Some recent studies have employed generalized linear models (GLMs) and Cox proportional hazard regression as alternative estimators. The aim of this study was to investigate how well these alternative estimators perform in terms of bias and precision when the data are skewed. The primary outcome was an estimation of population means of healthcare costs and the secondary outcome was the impact of a covariate on healthcare cost. Alternative estimators, such as ordinary least squares (OLS) for Ln(y) or Log(y), Gamma, Weibull and Cox proportional hazard regression models, were compared using Monte Carlo simulation under different situations, which were generated from skewed distributions. We found that there was not one best model across all generated conditions. However, GLMs, especially the Gamma regression model, behaved well in the estimation of population means of healthcare costs. The results showed that the Cox proportional hazard model exhibited a poor estimation of population means of healthcare costs and the β 1 even under proportional hazard data. Approximately results are consistent by increasing the sample size. However, increasing the sample size could improve the performance of the OLS-based model. Copyright Malehi et al.; licensee Springer. 2015

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  • Amal Malehi & Fatemeh Pourmotahari & Kambiz Angali, 2015. "Statistical models for the analysis of skewed healthcare cost data: a simulation study," Health Economics Review, Springer, vol. 5(1), pages 1-16, December.
    • Handle: RePEc:spr:hecrev:v:5:y:2015:i:1:p:1-16:10.1186/s13561-015-0045-7
    DOI: 10.1186/s13561-015-0045-7
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    1. Partha Deb & James F. Burgess, Jr., 2003. "A Quasi-experimental Comparison of Econometric Models for Health Care Expenditures," Economics Working Paper Archive at Hunter College 212, Hunter College Department of Economics.
    2. Anirban Basu & Willard G. Manning & John Mullahy, 2004. "Comparing alternative models: log vs Cox proportional hazard?," Health Economics, John Wiley & Sons, Ltd., vol. 13(8), pages 749-765, August.
    3. Manning, Willard G. & Mullahy, John, 2001. "Estimating log models: to transform or not to transform?," Journal of Health Economics, Elsevier, vol. 20(4), pages 461-494, July.
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