Regression analysis of health care charges with heteroscedasticity

Xiao Hua Zhou, Kevin T. Stroupe, William M. Tierney

Research output: Contribution to journalArticlepeer-review

33 Scopus citations


We examine the effects of a prospective drug utilization review and patients' characteristics on total in-patient and out-patient health care charges. Our analysis of charges is complicated by the fact that the total health care charges are skewed. A log-transformation of these charges can normalize their distribution but may not stabilize their variance. To handle these problems, we propose a linear regression model with a non-constant variance (heteroscedasticity). Using results from a fitted linear regression model for log-transformed charges, we also discuss interpreting the regression coefficients in the original scale and estimating the total health care charges to individual patients. Employing these methods, we analyse total health care charges for drug utilization review patients with hypertension and identify patients' factors that are related to their total health care charges.

Original languageEnglish (US)
Pages (from-to)303-312
Number of pages10
JournalJournal of the Royal Statistical Society. Series C: Applied Statistics
Issue number3
StatePublished - Jan 1 2001


  • Health care charges
  • Health care costs
  • Heteroscedasticity
  • Hypertension
  • Log-normal data
  • Skewed data

ASJC Scopus subject areas

  • Statistics and Probability
  • Statistics, Probability and Uncertainty

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