Financial Impact on Predictive Modeling

[chuie]

Any suggestion on doing "Financial impact" of predictive modeling? We have built "no show" predictive modleing for 8 clinic. We need to create a summary report in terms of revenue saved from this model.. any suggestions?

[DougWielenga · Accepted solution]

The financial impact is related to what you did differently and whatever additional cost/revenue might have resulted.   Did the "no show" prediction allow you to schedule additional/alternate patients?   If you did, was there any loss due to people showing up who were not expected (e.g. extra hours worked, loss of customer satisfaction for wait time, etc...)?  There are likely a virtually limitless number of things to consider for this type of calculation so the challenge in part is to balance between the risk of oversimplifying and the risk of adding in too much complexity.  In the end, this is really a business question rather than a Data Mining problem since it depends more on the business value of making the decision and computing the resulting financial impact using those business assumptions.  This information when available can be included when building the model so that the costs and revenue from certain types of correct/incorrect decisions can influence which model is chosen but the actual valuation is purely a business decision. 

Hope this helps!

Doug

[chuie]

Thank you very much .. this is really helpful