Statistics for Business: Decision Making and Analysis, 3rd Edition

... fixed amount based on the number of patients in the care of that doctor, regardless of whether they visit the office.

This business model presents problems. To be profitable, the doctor (or office manager) needs to answer a few simple questions such as: Are patients from one HMO more likely to visit the office than those from another HMO? If so, the doctor may negotiate higher fees for covering patients from the plan with patients who are more likely to visit.

Many physicians still track patient records on paper. Our role in this example is to advise a doctor’s office on how to organize its data to make it easy for the office manager to compare patients from different HMOs. There’s not much that we can do with these data until we cover several more ...