Modeling of medical activity heterogenity to improve the hospital management by diagnosis-related groups

Since the early 1980s healthcare systems in the industrialized nations have been undergoing radical reform aimed at curbing overspending of hospital expenditure. After a discussion of the limits of a prospective payment due to heterogeneity of costs within DRGs, we demonstrate the ability of anovel statistical model to identify high cost patients. We derive from this statistical model an economic heuristic in order to account for high cost patients in budget allocation and a Structural and Contingent method is proposed as a budgeting tool. Economic analysis based on this modeling of DRG heterogeneity further reveals the potential for improving the equity and the efficiency of the prospectiv…