Healthcare Economist April 17, 2022
In many countries including the US and England, hospitals are paid by payers (i.e., commercial insurers and governments) on a per-admission basis with more reimbursement for treating patients with more severe conditions and lower reimbursement for treating patients with less severe conditions. This system is known in the U.S. as the diagnosis-related group (DRG) system, since DRGs are used to assess admission severity and also hospital reimbursement levels. In England, the change in the system was implemented as described in Aragón et al. (2022):
From 1989 the intention was for purchasers to enter into contractual agreements with hospitals with discretion as to exactly what form those agreements took. However, the system of setting hospital level budgets – known in...
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