A comparison of methods to handle skew distributed cost variables in the analysis of the resource consumption in schizophrenia treatment

Transformation of the dependent cost variable is often used to solve the problems of heteroscedasticity and skewness in linear ordinary least square regression of health service cost data. However, transformation may cause difficulties in the interpretation of regression coefficients and the retransformation of predicted values. The study compares the advantages and disadvantages of different methods to estimate regression based cost functions using data on the annual costs of schizophrenia treatment. Annual costs of psychiatric service use and clinical and socio-demographic characteristics of the patients were assessed for a sample of 254 patients with a diagnosis of schizophrenia (ICD-10 F 20.0) living in Leipzig. The clinical characteristics of the participants were assessed by means of the BPRS 4.0, the GAF, and the CAN for service needs. Quality of life was measured by WHOQOL-BREF. A linear OLS regression model with non-parametric standard errors, a log-transformed OLS model and a generalized linear model with a log-link and a gamma distribution were used to estimate service costs. For the estimation of robust non-parametric standard errors, the variance estimator by White and a bootstrap estimator based on 2000 replications were employed. Models were evaluated by the comparison of the R2 and the root mean squared error (RMSE). RMSE of the log-transformed OLS model was computed with three different methods of bias-correction. The 95% confidence intervals for the differences between the RMSE were computed by means of bootstrapping. A split-sample-cross-validation procedure was used to forecast the costs for the one half of the sample on the basis of a regression equation computed for the other half of the sample. All three methods showed significant positive influences of psychiatric symptoms and met psychiatric service needs on service costs. Only the log- transformed OLS model showed a significant negative impact of age, and only the GLM shows a significant negative influences of employment status and partnership on costs. All three models provided a R2 of about.31. The Residuals of the linear OLS model revealed significant deviances from normality and homoscedasticity. The residuals of the log-transformed model are normally distributed but still heteroscedastic. The linear OLS model provided the lowest prediction error and the best forecast of the dependent cost variable. The log-transformed model provided the lowest RMSE if the heteroscedastic bias