Managerial workarounds in three European DRG systems

What is it about?

In many countries, hospitals (and sometimes other health services) are paid according to a fixed tariff per patient. In Diagnostic Related Group (DRG) forms of this tariff, the payment increases for more complex and expensive treatments. That creates an incentive for hospitals (and other services) to treat larger numbers of patients, and in more complex ways. But this incentive also works against the policy of reducing healthcare costs, or at least of making these costs rise less fast. This study of England, Germany and Italy found that in all three countries, health managers worked around this conflict by negotiating hospital contract with special, modified forms of DRG payments. These managerial workarounds were not so much an attempt to obstruct current health policy, but to find practical solutions to inconsistencies in it and to design problems in the DRG system.

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