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Impact of diagnosis-related groups' prospective payment on utilization of medical intensive care

M Ahmad1, L Fergus, P Stothard

  • 1Division of Medicine and Finance, Cleveland Clinic Foundation.

Chest
|January 1, 1988
PubMed

Insights

Diagnosis-Related Groups (DRGs) significantly impacted Medicare patients in medical intensive care units (MICUs), causing substantial financial losses for hospitals. Despite a year of DRG experience, MICU admission practices and patient types remained unchanged.

Area of Science:

  • Health Economics
  • Healthcare Management
  • Critical Care Medicine

Background:

  • Diagnosis-Related Groups (DRGs) are a payment system used by Medicare.
  • Medical Intensive Care Units (MICUs) provide critical care for severe illnesses.
  • Understanding the financial implications of DRGs on MICU operations is crucial for resource management.

Purpose of the Study:

  • To assess the financial impact of DRG payments on Medicare patients in MICUs.
  • To determine if DRG implementation altered patient admission patterns or MICU bed utilization.

Main Methods:

  • Retrospective analysis of financial data for Medicare patients admitted to an MICU in 1984 and 1985.
  • Comparison of costs versus payments under the DRG system.
  • Chi-squared tests to analyze mortality rates and patient types by DRG assignment.

Main Results:

  • In 1984, DRG payments were $2.6 million below cost for 267 Medicare MICU patients, averaging a $9,794 loss per discharge.
  • In 1985, the average loss per discharge increased to $14,113 for 241 Medicare MICU patients.
  • No significant changes in mortality rates or patient types admitted to the MICU were observed between 1984 and 1985.

Conclusions:

  • DRG payments resulted in significant financial losses for MICU care of Medicare patients.
  • The initial year of DRG experience did not alter MICU admission practices or bed utilization.
  • Strategic management responses are necessary to optimize MICU resource allocation under the DRG payment system.

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