Answer:
We conclude that the mean cost-to-charge ratio for Oregon hospitals is lower for outpatient care than for inpatient care.
Step-by-step explanation:W
We are given with the cost-to-charge ratios for both inpatient and outpatient care in 2002 for a sample of six hospitals in Oregon below;
Hospital 2002 Inpatient Ratio 2002 Outpatient Ratio
1 68 54
2 100 75
3 71 53
4 74 56
5 100 74
6 83 71
Let = <u><em>mean cost-to-charge ratio for outpatient care</em></u>
= <u><em>mean cost-to-charge ratio for impatient care</em></u>.
SO, Null Hypothesis, : {means that the mean cost-to-charge ratio for Oregon hospitals is higher or equal for outpatient care than for inpatient care}
Alternate Hypothesis, : {means that the mean cost-to-charge ratio for Oregon hospitals is lower for outpatient care than for inpatient care}
The test statistics that would be used here is <u>Two-sample t-test statistics</u> because we don't know about population standard deviations;
T.S. = ~
where, = sample mean cost-to-charge Outpatient Ratio = = 63.83
= sample mean cost-to-charge Impatient Ratio = = 82.67
= sample standard deviation for Outpatient Ratio = = 10.53
= sample standard deviation for Impatient Ratio = = 14.33
= sample of hospital for outpatient care = 6
= sample of hospital for outpatient care = 6
Also, = = 12.574
So, <u><em>the test statistics</em></u> = ~
= -2.595
The value of t test statistics is -2.595.
<u>Now, at 5% significance level, the t table gives critical value of -1.812 at 10 degree of freedom for left-tailed test.</u>
Since, our test statistics is less than the critical value of t as -2.595 < -1.812, so we have sufficient evidence to reject our null hypothesis as it will fall in the rejection region due to which <u><em>we reject our null hypothesis</em></u>.
Therefore, we conclude that the mean cost-to-charge ratio for Oregon hospitals is lower for outpatient care than for inpatient care.