The DRG Story:The DRG Story:Transition to Europe and BeyondTransition to Europe and Beyond

Miriam WileyMiriam Wiley

The Economic and Social Research InstituteThe Economic and Social Research Institute

Dublin, IrelandDublin, Ireland

““The US health care system … The US health care system … is…a conspicuous failure..And is…a conspicuous failure..And yet yet American ideasAmerican ideas-notably -notably notions of competition-have notions of competition-have been influential in a range of been influential in a range of European countries. And European countries. And American policy toolsAmerican policy tools-for -for example,example,diagnosis-related diagnosis-related groupsgroups-based systems of -based systems of remuneration have been remuneration have been adopted.”adopted.”Rudolf Klein, AJPH, Jan 2003, Vol 93, No.1, Rudolf Klein, AJPH, Jan 2003, Vol 93, No.1, p.63p.63

Factors influencing dissemination of DRGs Factors influencing dissemination of DRGs internationallyinternationally

DRGs used on a national basis in DRGs used on a national basis in USUS

DRGs first case mix management DRGs first case mix management system to make transition from system to make transition from research to policyresearch to policy

National relevance could be National relevance could be assessed empiricallyassessed empirically

Kimberly & de Pouvourville, 1993Kimberly & de Pouvourville, 1993

Factors influencing dissemination of DRGs Factors influencing dissemination of DRGs internationally (contd.)internationally (contd.)

Technology for using DRGs readily Technology for using DRGs readily available at an affordable priceavailable at an affordable price

Consultation and technical Consultation and technical assistance available from assistance available from developersdevelopers

DRGs flexible classification DRGs flexible classification schemescheme

Refined DRGs required minimal Refined DRGs required minimal additional investmentadditional investment

Kimberly & de Pouvourville, 1993Kimberly & de Pouvourville, 1993

Gateways to Europe and AustraliaGateways to Europe and Australia

Late 1970’s Bob Fetter spent a sabbatical at Late 1970’s Bob Fetter spent a sabbatical at the Catholic University of Louvain (with Jan the Catholic University of Louvain (with Jan Blanpain)Blanpain)

1979 French task force visit to Yale (following 1979 French task force visit to Yale (following contact between Jean de Kervasdoue and contact between Jean de Kervasdoue and John Kimberly) and in 1982 PMSI established John Kimberly) and in 1982 PMSI established after further Yale research visitafter further Yale research visit

1982 George Palmer (University of New South 1982 George Palmer (University of New South Wales) was a Visiting Professor at Yale Wales) was a Visiting Professor at Yale University School of ManagementUniversity School of Management

Health Policy Health Policy ContextContext

Technical Technical ContextContext

Internal & External Internal & External Networks of SupportNetworks of Support

Role of Key Role of Key ConstituentsConstituents

Fate of Fate of DRGsDRGs

Path of EntryPath of Entry

Effectiveness Effectiveness of Championsof Champions

Kimberley & de Pouvourville, 1993Kimberley & de Pouvourville, 1993

MilestonesMilestones

19831983 introduction of US PPS legislation introduction of US PPS legislation 19841984 meeting in Paris of representatives of meeting in Paris of representatives of

5 European countries interested in 5 European countries interested in pursuing DRG-related research (France, pursuing DRG-related research (France, Portugal, the Netherlands, Belgium, Portugal, the Netherlands, Belgium, Ireland)Ireland)

19861986 London conference following which London conference following which PCS/E officially inauguratedPCS/E officially inaugurated

19881988 Sydney conference bringing together Sydney conference bringing together researchers and policy experts from researchers and policy experts from Europe, Australian and US Europe, Australian and US

Geographical Penetration by early 1990’sGeographical Penetration by early 1990’s

By By 19911991, Portugal and Norway , Portugal and Norway committed to using DRGs at the committed to using DRGs at the national levelnational level

Belgium, England, Finland, France, Belgium, England, Finland, France, Italy, Spain, Sweden, Switzerland, Italy, Spain, Sweden, Switzerland, Ireland involved in testing DRG Ireland involved in testing DRG applicationsapplications

Germany and Denmark considered Germany and Denmark considered DRGs unsuitable for local use DRGs unsuitable for local use (subsequently reversed)(subsequently reversed)

EvolutionEvolution

19831983 2003200319931993

TestingTestingApplicationsApplications

Localisation?Localisation?

Data Coding CostingData Coding Costing

AN DRGs, HRGsAN DRGs, HRGs

““For the outside world, the US For the outside world, the US health care scene is [therefore] a health care scene is [therefore] a kind of supermarket where they can kind of supermarket where they can shop selectively. But having shop selectively. But having shopped, they also shopped, they also adaptadapt…the …the crucial element is the local crucial element is the local environment and context-and the environment and context-and the extent to which imports fit, or can extent to which imports fit, or can be made to fit, local needs” be made to fit, local needs” Rudolf Rudolf Klein, AJPH, Jan 2003, Vol 93, No.1, p.63Klein, AJPH, Jan 2003, Vol 93, No.1, p.63

‘‘European’ Case European’ Case Mix Classification Mix Classification System?System?

‘‘National’ Case Mix National’ Case Mix Classification Classification Systems?Systems?

Coding Systems?Coding Systems?

Coding Schemes for Diagnoses & Procedures

Case-Mix Classification Schemes

‘‘Other’ Other’ Case-Mix Case-Mix SystemsSystems LeistungsLeistungsorientierteorientierte

KrankenanstaltenfinanzierungKrankenanstaltenfinanzierung (L (LKKF)F) (Austria)(Austria)

Health Resource Groups (HRGs)Health Resource Groups (HRGs) (England) (England) Diagnose Behandelings Combinatie (DBC)Diagnose Behandelings Combinatie (DBC)

(The Netherlands)(The Netherlands) Nord DRGsNord DRGs

(The Nordic Countries)(The Nordic Countries) G-DRGs (Germany)G-DRGs (Germany) Groupes Homogenes de Malades (GHM)Groupes Homogenes de Malades (GHM)

(France)(France)

“… “… the innovation process virtually the innovation process virtually guarantees that guarantees that changechange, not , not stability, is the norm and thus stability, is the norm and thus suggests that one should expect suggests that one should expect change in products as they change in products as they mature”mature” Kimberley and de Pouvourville, 1993Kimberley and de Pouvourville, 1993

OverviewOverview

The ‘DRG approach’ now used The ‘DRG approach’ now used throughout Western, Central and throughout Western, Central and Eastern Europe, Australia, Asia, Eastern Europe, Australia, Asia, South Africa, North, Central and South Africa, North, Central and South AmericaSouth America

Country Line Item

Per Case

Global Budget

Combination Global Budget with DRG/Case-Mix Adjuster

Austria X

Belgium X

Denmark X X

England X

Finland X

France X

Germany X

Ireland X

Italy X

Norway X

Portugal X

Spain X

Sweden X

Payment of Hospitals in Western Europe

Overview (contd.)Overview (contd.)

An Australian ‘footprint’ now evident An Australian ‘footprint’ now evident alongside the original US model in alongside the original US model in many international applicationsmany international applications

Increasingly development/adaptation Increasingly development/adaptation of ‘national’ systems more in evidence of ‘national’ systems more in evidence as data, expertise and technology as data, expertise and technology available become more advanced.available become more advanced.

Overview (contd.)Overview (contd.)

• While the application of case-mix While the application of case-mix measures varies between measures varies between countries, these initiatives have countries, these initiatives have generally had significant generally had significant implications in a number of areas, implications in a number of areas, including the including the development of high development of high quality activity and cost quality activity and cost information systemsinformation systems, , technology technology transfertransfer and and software software adaptation/developmentadaptation/development..

““.... the point of irreversibility has been .... the point of irreversibility has been reached.. [this] irreversibility is lodged reached.. [this] irreversibility is lodged not in the DRGs per se but rather in the not in the DRGs per se but rather in the underlying logicunderlying logic. We believe that a . We believe that a significant shift has taken place in the significant shift has taken place in the way all parties to the health care way all parties to the health care process think about the products of the process think about the products of the hospital, patterns of resource hospital, patterns of resource consumption within the hospital, and consumption within the hospital, and the way in which the production the way in which the production process should be monitored.” process should be monitored.” (Kimberley (Kimberley 1993)1993)

Penetration of DRG/DRG-Type Applications

The Ongoing ChallengeThe Ongoing Challenge

• Given the dynamic nature of Given the dynamic nature of health/health/hospital systems, the hospital systems, the development of case-mix measures development of case-mix measures must be continually advanced to ensure must be continually advanced to ensure that these techniques are responsive to that these techniques are responsive to increasing demands from innovation in increasing demands from innovation in technology and information systems, technology and information systems, rising consumer expectations and the rising consumer expectations and the globalisation of service provision within globalisation of service provision within the health care sectorthe health care sector

The ‘DRG’ Journey Continues – ENJOY! The ‘DRG’ Journey Continues – ENJOY!