Question
A health insurer's records show that average yearly patient medical expenses are $800 per year with an SD of $1,000.Under their coverage plan each patient
A health insurer's records show that average yearly patient medical expenses are $800 per year with an SD of $1,000.Under their coverage plan each patient is assigned to a primary care physician. The insurer tries to control costs by tracking the average yearly per-patient medical expenses for each of the 1,800 affiliated primary care physicians. They see that the physician with the highest average per-patient average expense has 100 patients assigned to her and a per-patient average expense of $1,100. Could this high average be reasonably explained by chance? Or is this some evidence of a problem? Explain.
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