Case mix definition by diagnosis-related groups

By relating the demographic, diagnostic, and therapeutic characteristics of patients to the hospital outputs they utilize, a patient classification scheme can be developed which provides the framework for both the specification of hospital case mix and the measurement of the impact of case mix on hospital utilization and performance. The Diagnosis-Related Groups represent an attempt to provide such a patient classification scheme. As currently defined, the DRGs provide a manageable number of patient classes (383) that are exhaustive and mutually exclusive with respect to the types of patients seen in an acute-care setting. Further, the DRGs provide patient classes that are clinicially consistent and that have similar patterns of output utilization as measured by length of stay. The comparison of patient data across institutions or providers will invariably reveal the existence of differential levels, of utilization and performance. A comparative analysis by average length of stay, cost, or any other aggregate measure is not meaningful unless the impact of different case mix compositions can be determined. The DRGs can provide a framework for establishing the effects of case mix as well as for identifying diagnostic areas with potential problems. The goal of most comparative analyses is to isolate problem areas so that corrective measures can be initiated. If programs aimed at improving the performance of the hospital health-care system are to be successful, managers and regulators must establish an effective dialogue with those responsible for the delivery of services, the physician community. The DRGs provide the first step in such a dialogue since problems defined in the context of DRGs are understandable from a clinical perspective. The various of the DRGs in the area of utilization review, hospital budgeting and cost control, prospective reimbursement and regional planning emphasize the central role of the patient. By focusing on the types of patients being treated, programs responsible for these activities will share a common conceptual basis even though they are concerned with different aspects of the health care system. While the applications to date have been implemented to meet the immediate needs of the individual programs, future work will be directed toward exploring the potential of the DRGs in achieving better integration and coordination of the different program goals and activities.