I am looking at the impact of activity-based funding on the length of stay (LOS) in the hospital. I will run three models: 1) 2009 vs 2010; 2) 2009 vs 2011; 3) 2009 vs 2012. For the treatment groups I have same percentile distribution till 90 percentile. Is it a problem? Conceptually, this is expected because the reduction in LOS will occur from the patients who stays longer. I am taking log of the dependent variable. I get reasonable results. I found a small statistically significant coefficient for the interaction term in the third period. The question is: is it worth doing because of the distribution issue. I personally see no problem, but one of my colleagues thinks I shouldn't proceed with this project.

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