The Diagnostic Related Group (DRG) payment system, initially introduced by Medicare in 1983 to address the escalating healthcare costs in the United States of America (USA), is the foundation for prospective payment systems in hospitals.
By implementing DRGs, administrators and physicians had, for the first time, a common language for evaluating both the processes of care and the associated financial impacts. Transparency was created into the operation costs of hospitals and they could now be viewed as production lines, facilitating price comparison for hospital services.
This approach to hospital management created the incentive to increase the efficiency of health services (e.g. reducing the length of stay for many illnesses), thereby saving resources. Following the success of the DRG system, many countries followed in adopting the payment system. While the DRG system has achieved certain goals, it has also presented drawbacks such as premature discharges and upcoding—wherein cases are inaccurately classified as more complex to increase reimbursement.
Qualitative Research on the DRG Payment System in the Netherlands
In the Netherlands, policymakers tried to link the implementation of the DRG system with market competition for the additional purpose of improving the quality of healthcare. Given the dynamic nature of hospital operations, implementing a fixed top-down pricing structure is challenging. Nonetheless, governments strive to achieve optimal use of resources.
While the DRG system optimises the efficiency of resources for hospital activity and closes the gap between prices and costs of healthcare services, it does not necessarily incentivise the optimal allocation of resources to obtain the best health outcomes. In order to make the shift in reallocating or reinvesting resources a cultural shift is required where we go the next step and not only check whether a treatment is possible but also check if the treatment truly improves the quality of life of the patient and prospect for recovery
This qualitative study obtained the perspectives of managers, medical specialists and support staff of hospitals in the Netherlands, to answer 'how the DRG system influences activities and decisions in Dutch hospitals', and 'its role in achieving higher value healthcare according to the Value-Based Health Care (VBHC) dimensions'.
Values in VBHC
To inform the decision-making and transition towards higher value healthcare systems in Europe, the EXPH defines VBHC as a comprehensive concept built on four value pillars:
1. Appropriate care to achieve patients’ personal goals (personal value).
2. Achievement of best possible outcomes with available resources (technical value).
3. Equitable resource distribution across all patient groups (allocative value).
4. Contribution of healthcare to social participation and connectedness (societal value).
2. Achievement of best possible outcomes with available resources (technical value).
3. Equitable resource distribution across all patient groups (allocative value).
4. Contribution of healthcare to social participation and connectedness (societal value).
