The Diagnosis Related Group classification has provided an excellent basis for enhancing the equity of resource allocation between public acute hospitals. However, it underestimates the higher levels of severity and consequent costliness of referral hospitals. This paper describes a practical way of measuring within-DRG variations in severity, which can be used to increase the precision of casemix-based funding. It involves the regression of length of stay against the numbers of significant diagnoses and procedures, and bence the prediction of additional justified costs. An example is given of its application to data from South Australian public hospitals.
Having used DRGs extensively over the past decade for research, trend analysis and funding purposes, it isapparent to me that we have come a long way since the early inception of the DRG work by Fetter and theCommonwealth need to be acknowledged for the leadership and support they have provided in this process.However it is also apparent that we can make more significant improvements given what we have learned to date.I am interested in structural changes of DRGs for at least three purposes: funding, clinical understanding, andstrategic development of service delivery.
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