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Updated: Sep 26, 2026

An R-Based Landscape Validation of a Competing Risk Model
Published on: September 16, 2022
Comparing the financial risk of bed-day and DRG based pricing types using parametric and simulation methods
Hennamari Mikkola1, Reijo Sund, Miika Linna
1National R&D Centre for Welfare and Health, Helsinki, Finland. Hennamari.Mikkola@stakes.fi
Abstract:
The extent of random financial risk involved in the Finnish bed-day and Diagnosis Related Groups (DRG) based hospital pricing systems were estimated and compared using parametric and simulation methods. DRG based payment schemes were found to provide significantly better protection against financial risk for municipalities, but municipality's size was the main determinant of financial risk. Small municipalities should use longer contracts between hospitals or form bigger purchaser-organisations for risk pooling. In addition, the current risk management system proved to be ineffective in decreasing the random variation in total costs.
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