1A hospital struggling to contain costs investigates procedu

1.A hospital struggling to contain costs investigates procedures on which it loses money. Government standards place medical procedures into Diagnostic Related Groups (DRGs). For example, major joint replacements are DRG 209. The hospital takes from its records a random sample of 8 DRG 209 patients each month. The losses incurred per patient have been in control, with mean $6400 and standard deviation $700. The following is an x¯-chart for the next 15 months. The dotted lines are the control limits and the dashed line is the center line. What does the pattern on this chart tell us about the hospital\'s losses on major joint replacements?

2.Referring to the x¯-chart given in question above, what is the value that is used for the center line?

3.Referring to the x¯-chart given in question above, which formula was used to compute the value 7140 for the upper control limit?

4.Referring to the x¯-chart given in question above, which formula was used to compute the value 5660 for the lower limit?

7140.... 64001 5660.. 2 4 6 8 10 12 14 16

Solution

2)

value that is used for the center line = 6400

3)

X + 1.057 * SD ---> 6400 + 1.057 * 700

4)

X - 1.057 *SD ----> 6400 - 1.057 * 700