A good friend of yours works as afinancial analyst in a hospital that has an emergency care unit..

Triage nurses are well trained at allocating care based on the severity of injuries, and the hospital is proud of its low mortality rate.

Your friend is acutely aware of pressure on the hospital to try and manage treatment costs and so sheis trying to understand whether there are any predictors (besides apparent injuries) which may help staff to manage the cost of treating patients who arrive at the casualty unit. Sheassesses 8229 cases over the past three years and creates the regression model detailedin Appendix 1.

Knowing that you have recently improved your skills as an analyst, she asks you to critique her approach and model.

The model consists of the following variables:

Daily cost- the cost of treating a patient in R thousand

Single- whether the patient is single or married

Friday- a dummy variable indicating day of treatment

Weekend SS -a dummy variable indicating day of treatment

Waist - a measure of the patients girth on arrival

Age- in years

BMI- estimated Body Mass Index of patient on arrival

a)Using the outputs of Appendix 1, discuss the efficacy of the model and any potential regression problems in the model.(15)

b)Make recommendations as to what you would change in her approach(5)