Forecasting Customer Demand

Paper Summary:

This paper explains that the Veterans Health Administration uses aggregation, a process for clustering several similar products or services to group veteran types by age, priority level and enrollees type. It also shows how the VHA uses cost models to reflect the projected health care demand of the enrollees by preferred facility and to reflect the projected health care demands of enrollees by their county of residence. The author outlines the methodology used to develop the Veteran Enrollment, Health Care Utilization and Expenditure Projection Demand Models. The paper states that predictive forecasting customer demand models achieve for the VHA (1) an integrated healthcare plan including financial, capital assets and workforce needs to provide data-driven information for budgetary and legislative and regulatory negotiations with OMB, the President, and Congress; (2) a continuous feedback loop for VHA to assess performance and outcomes and (3) needed information for mandated reporting to Congress. Charts.

From the Paper:

"The root of most business decisions is the challenge of forecasting customer demand; this function is a difficult task because the demand for goods and services can vary greatly. External factors impact the VA's demand for healthcare. External factors that affect demand for a firm's products or services are beyond management's control. For example, it is impossible to determine how world events will unfold. Those events that impact our economy and the use of our military may have a profound impact on veterans' enrollment in our health care programs as well as expenditure projections."

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