Diagnosis Related Groups the impact on Germany s hospitals

Transcription

1 Diagnosis Related Groups the impact on Germany s hospitals German Sino Conference on Public Administration October 2010 Session Healthcare Management Prof. Dr. med. habil. Jens-Uwe Niehoff Health Care Management Consulting Niehoff, J.-U., Healthcare Management Consulting 1

2 Diagnosis Related Groups (DRG) DRGs = a case classification scheme, it provides a way of relating hospital cases to pre-standardized products adopted to the case-specific resources required. These resources are defined by measuring the average resource consumption per case within all the German hospitals. These hospital products are considering the diagnosis, the scale of severity/co-morbidity and the procedures done but tabulated as a relative cost weight per product performed. Some countries/third-party-payers use this methodology for case-based reimbursements per case (both in retrospective and prospective payment systems), others for the prospective planning of resource allocation on a regional level for each of the contracted hospitals. 2

3 The Mechanism Each of the hospital products is related to a relative prize (cost weight), adjusted around a standard case set to 1. Any of the hospital costs per case which are independent from the DRG scheme are fixed as the base rate. The base rate becomes regularly negotiated for individual hospitals or the hospitals of a region. The cost weight multiplied with the base rate is the performed product s prize. 3

4 The DRG s history in Germany In 2002 the legislative body decided to introduce the system for all German hospitals with few exceptions. Since 2003 hospital cases have been classified and reimbursed according to the DRGs. One of the pre-conditions was to evaluate the impact on hospitals, professionals and patients regularly. This presentation shows selected results of the first evaluation by BRAUN et al, published The presentation also shows results from own investigations based on the DRG data from the region Berlin and Brandenburg. 4

5 The political intention DRGs will reduce hospital costs decline the number of hospitals and hospital beds concentrate hospitals to bigger units implement a prospective payment system guarantee the same payment for each of the classified DRG products to avoid competition for low costs and endangering quality improve regular utilization review procedures, will raise up quality of treatments and accordingly the satisfaction both for patients and hospital s professionals enable to evaluate hospitals regularly. 5

6 1 th Intention: DRGs will reduce costs Total expenditures of the Public Sick Funds: 2002: 143 Mrd. Euro 2009: 167 Mrd. Euro Total Costs for Hospitals: Mrd. Euro Mrd. Euro We find a permanent average increase of 3.2 % per year since

7 Selected sick funds expenditures public funds Public Sick Funds, Expenditures Mrd. Euro pharmaceuticls out-patient care hospitals sick leave compensation Year 7

8 2 nd Intention: DRGs will reduce the number of hospitals and beds Number of beds 2000: : (minus 10,2%) Number of hospitals 2000: : 2080 (minus 7,2 %) Cases per hospital bed 2000: 30,8 2008: 34,8 (plus 13 %) Utilization rate of hospital beds 2000: 81,0 % 2008: 77,4 % (minus 4,5 %) 8

9 3 d Intention: DRG will concentrate hospital provision Changes among small and big hospitals numberof beds per class class > > > > > > > > > total hospitals classified by beds 9

10 4 th Intention: prospective payment and improvement of the financial stability A proportion of up to 40 % of all the hospitals is estimated to be endangered by insolvency up to the year ("Krankenhaus Rating Reports 2007 ) Some argue this will be a result of the DRG system. These assumptions may wrong or right but illuminate (1) the ongoing conflicts and (2) the uncertainty regarding the financial stability 10

11 5 th Intention: the same payment for each of the classified hospital products While the cost weights are equal, the base rates vary widely between German hospitals and regions. It is hardly possible to get inside into the range of base rates. Respectively, the reimbursement for the same product differs between hospital and regions widely. 11

12 6 th Intention: Increased quality, more satisfaction for patients, doctors, nurses (results of the WAMP-study by Braun, B. et al) The impact on hospital performance (The WAMP-study on the DRG impact, by Braun et al) DRGs classify the utilization of hospital products correctly. DRGs set incentives to dismiss patients to early. DRGs may endanger quality if cases are complex and seldom. Costs are increasingly influencing the communication with the patients. DRGs are changing the culture of medicine towards a product medicine. Except surgery, it is see less evidence for a better case management. DRGs shorten the hospital stay. The out-patient system is unprepared. DRGs do not improve cooperation among the hospital staff. DRGs are seen causing dissatisfaction with working conditions. DRGs are seen to raise up bureaucracy. 12

13 7 th Intention: Regular evaluation The Ministry of Health has purposely avoided any study to evaluate the impact of the DRGs on care quality, hospitals working conditions and patient s and staff s satisfaction despite of the contradicting advise of the legislative body. (Braun, B. at al: Auswirkungen der DRGs auf Versorgungsqualität und Arbeitsbedingungen im Krankenhaus, Huber Verlag 2010, S. 9) 13

14 The regional infrastructure of hospital provision before 2002 Number of Cases Hospitals of basic provision Specialized Hospitals University and highly specialized clinics Poorly profiled clinics Number of different products 14

15 The impact on the regional infrastructure of hospital provision 2009 Number of Cases Hospitals of basic provision Specialized Hospitals university and highly specialized clinics Poorly profiled clinics Number of different products 15

16 Portfolio selection pushed by DRGs the number of different DRGs raises up rapidly until approximately 500 different DRGs per hospital (almost half of all DRGs available) if the hospital has up to 10,000 cases year (about 300 beds) more cases than a year per hospital generates only slightly more DRGs if zooming on hospitals with less than 10,000 cases per year a subgroup appears with far less diversity than mainstream (hospitals competing others by sharp case and risk selection, respectively by profiling portfolio) 16

17 The diversity of products per hospital increases only up to 7000 cases per hospital a year (is a hospital with about 200 beds) # MDC 30 diversity (# MDCs) vs. hospital seize annual cases 17

18 A hospital with about cases per year (about 710 beds) generates nearly any of the different DRG products per year diversity (# DRGs) vs. hospital seize # DRG annual cases 18

19 Conclusion (I) DRGs are of profound impact on hospitals but beyond the political intentions. There was nearly no impact on the macroeconomic level, but profound impact on the micro-economic level mostly by increasing the density of work per time unit. DRGs experiences give no evidence that the increase of the hospital size will profile the portfolio if having more than 300 beds 19

20 Conclusion (II) DRGs have have impact on the regional infrastructure of hospitals by weakening the basic providers, pushing highly specialized portfolios and increasing the proportion of simple cases in large but highly specialized hospitals. DRGs increase the intensity of staff s work, weaken basic hospitals, push specialization, and are setting incentives of up-grading the coding of cases according to the DRG classification. 20