Over the past 20 years, most European countries have introduced DRGs or similar grouping systems as instruments for hospital reimbursement. This paper compares and analyzes the methods used to determine prices for inpatient care within DRGs or similar grouping systems employed in nine EU member states (i.e., Denmark, France, Germany, Hungary, Italy, Tthe Netherlands, Poland, Spain and England). It categorizes the systems of patient classification used in these nine countries and compares them according to the three steps necessary in order to set prices: 1.) definition of a data sample, 2.) use of trimming methods and plausibility checks and 3.) definition of prices. It concludes with a discussion on the typical development path of DRG systems and the role of additional reimbursement components in this context.

We investigated the effects of privatization on hospital efficiency in Germany. To do so, we obtained bootstrapped data envelopment analysis (DEA) efficiency scores in the first stage of our analysis and subsequently employed a difference-in-difference matching approach within a panel regression framework. Our findings show that conversions from public to private for-profit status were associated with an increase in efficiency of between 2.9 and 4.9%. We defined four alternative post-privatization periods and found that the increase in efficiency after a conversion to private for-profit status appeared to be permanent. We also observed an increase in efficiency for the first three years after hospitals were converted to private non-profit status, but our estimations suggest that this effect was rather transitory. Our findings also show that the efficiency gains after a conversion to private for-profit status were achieved through substantial decreases in staffing ratios in all analyzed staff categories with the exception of physicians and administrative staff. It was also striking that the efficiency gains of hospitals converted to for-profit status were significantly lower in the diagnosis-related groups (DRG) era than in the pre-DRG era. Altogether, our results suggest that converting hospitals to private for-profit status may be an effective way to ensure the scarce resources in the hospital sector are used more efficiently.

Abstract

Germany has recently introduced a system of Diagnosis Related Groups (DRGs) to engender more appropriate resource allocation. The following article describes the German DRG-system and the methodologies used to determine prices. It analyses the extent to which prices, or calculated cost weights, reflect the actual costs incurred by hospitals for their respective services. We reveal that a "compression" of DRG cost weights occurs, and that the data sample used to calculate cost weights is lacking in terms of its representativeness. Although cost data accuracy has improved over the last few years there are still a number of challenges that need to be addressed.