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Using simple multiple regression to establish labor rates
1Weber State University, Ogden, Utah, USA. rmcdermott@weber.edu
Summary
Healthcare financial managers can control costs by using multiple-regression analysis to set standard pay rates. This method involves calculating job characteristic weights (betas) and ranking job factors (X values) to determine salaries.
Area of Science:
- Healthcare Financial Management
- Econometrics
- Human Resources
Background:
- Controlling healthcare costs is a significant challenge for financial managers.
- Accurate and standardized pay rates are essential for effective cost management.
Purpose of the Study:
- To present a methodology for healthcare financial managers to establish standard pay rates.
- To enable better cost control through the application of multiple-regression analysis.
Main Methods:
- Calculate market-determined weights (betas) for job characteristics.
- Rank job characteristics (X values) based on job descriptions and interviews.
- Utilize a salary formula incorporating betas and X values to derive standard hourly rates.
Main Results:
- The multiple-regression methodology provides a systematic approach to determining standard pay rates.
- Standardized rates facilitate improved cost control within healthcare organizations.
Conclusions:
- Multiple-regression analysis is a practical tool for healthcare financial managers to set equitable and cost-effective pay rates.
- Verification of proposed rates through market salary surveys is a crucial final step.
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