Estimating the VA total health care cost using a semi-parametric heteroscedastic two-part model



To appropriately assess the impact of the establishment of community-based outpatient clinics (CBOCs) on the total health care costs in a VA study, we need to deal with three methodological problems inherent in the data. The first problem is skewness of the data. The second one is zero costs for some patients. The third one is heteroscedasticity. We proposed a semi-parametric heteroscedastic two-part transformation regression model to deal with these problems, and the proposed model would allow us to explicit model heteroscedasticity.


Extra zeros Health care costs Heteroscedastic regression model Retransformation Skewed data Smearing Two-part model 



Professor Xiao-Hua Zhou is presently a Core Investigator and Senior Biostatistician at the Northwest HSR&D Center of Excellence within the VA Puget Sound Health Care System. Matt Maciejewski is presently a Core Investigator at the Northwest HSR&D Center of Excellence within the VA Puget Sound Health Care System. The research reported here was supported by Department of Veterans Affairs, Veterans Health Administration, Health Services Research and Development Service, ECI-03-206 and in part by AHRQ grant R01HS013105. We would like to thank John Fortney for providing us with the data.


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© Springer Science+Business Media, LLC 2006

Authors and Affiliations

  1. 1.U.S. Department of Veterans AffairsPuget Sound Health Care SystemSeattleUSA
  2. 2.Department of BiostatisticsUniversity of WashingtonSeattleUSA
  3. 3.Department of Mathematics and StatisticsGeorgia State UniversityAtlantaUSA
  4. 4.Department of Health ServicesUniversity of WashingtonSeattleUSA

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