ABC analysis of the relationship between pharmacy charges and DRGs

DRGs and pharmacy charges were analyzed using the ABC analysis for a cross section of hospitals represented in the Blue Cross of Central Ohio (BCCO) region and for Riverside Methodist Hospital (RMH). A total of 43,969 patients were discharged from the 43 BCCO hospitals and 6,121 patients from RMH in the one-year study period. They were retrospectively assigned to 465 and 371 DRG categories, respectively. The ABC analysis of pharmacy charges and DRGs showed that 10 major diagnostic categories (MDCs) accounted for 80.4% and 80.1% of all pharmacy and i.v. charges for the BCCO hospitals and RMH, respectively. Hospital charges were found to be strongly related to pharmacy charges, and length of stay was found to be moderately related to pharmacy charges. In the absence of pharmacy cost data per DRG, the ABC analysis can be used to categorize DRGs on the basis of pharmacy charges. Before using pharmacy or hospital charges data per DRG for resource monitoring, hospital pharmacy directors should investigate the causes of high pharmacy charges for the high-cost DRGs and MDCs.