Variable Respecification in Excel

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  • 0:04 Using Respecification
  • 1:47 Weighting & Respecification
  • 3:40 Lesson Summary
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Lesson Transcript
Instructor: Scott Tuning

Scott has been a faculty member in higher education for over 10 years. He holds an MBA in Management, an MA in counseling, and an M.Div. in Academic Biblical Studies.

When performing market research, it's not uncommon for raw data to be adjusted in order to improve the accuracy and quality of the answer to the research question. In this lesson, learn how Microsoft Excel can help researchers adjust these variables.

Using Respecification

Because of the high cost of healthcare in the United States, an increasing number of hospitals, physicians, and insurance companies are turning to alternative revenue models. One of the up-and-coming payment models is known as 'per-member, per-month.' In this model, an insurance company pays a physician a fixed monthly sum in exchange for the physician's commitment to treat a member, regardless of the frequency of his or her visits. For members who rarely need a physician, the clinic comes out on top since they're receiving payment for a patient who requires very little of the physician's time. On the other hand, a sick patient making numerous clinic visits may require more time from the physician than the time for which he or she is being paid.

As you might imagine, this arrangement calls for clinics to make a careful analysis of their customer base in order to determine the feasibility of participating in a higher-risk payment model like per-member, per-month. Consider for a moment all the variables that could impact the profitability of such an arrangement.

Figure 1. A few of the variables that a healthcare organization might find important for making business decisions.
Figure 1

This variables list is already quite extensive, but it includes only a few of the hundreds of possible variables to consider. Since the clinic already obtains all of these variables through their normal check-in process, the practice should respecify certain aspects of the data in order to better answer its research question about the average cost of caring for a patient with a particular set of variables. Respecificiation of variables is the process of modifying existing variables in order to create new variables that better answer research questions.

Weighting & Respecification

Even though the clinic already collects all the variables seen in the previously shown diagram, not all of them are of equal importance. Clearly, there is less predictive value for the amount of time a patient might need from a physician by creating a new variable of ''married and working'' than by creating a variable of ''pre-existing condition and heavy smoker.'' When selecting the variables that will be respecified, the most important consideration is weighting. Weighting is the process of assigning more power to variables that have a greater impact on a research question.

Microsoft Excel has tools that make it relatively easy to respecify variables. Here's an example of a few variables selected from the hypothetical physician's office that is considering the new revenue model.

Figure 2. A data sample from the hypothetical business.
Fig 2

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