Academic journal article Iranian Journal of Public Health

Towards an Improvement of Hospital Services and Streamlining of Health Care Costs: The DRG Analysis in Italy

Academic journal article Iranian Journal of Public Health

Towards an Improvement of Hospital Services and Streamlining of Health Care Costs: The DRG Analysis in Italy

Article excerpt

Abstract

The term Diagnosis-related Group (DRG) refers to a classification system used to assess hospital services with the aim of a better management of health care costs and improving performance. The DRG system focuses on the utilization of resources, and is not concerned with the specific type of care provided to the patient. This system highlights any diseconomies and eventual critical aspects of the hospital system. This article, starting from the history of heath care financing in Italy and pointing out the difficulty to define the "quality" of health care services, describes the variables used to evaluate correctly hospital performance based on the DRG system. These include Average Length of Stay, Average Daily Patient Load, Comparative Performance Index, and Case Mix Index.

Keywords: Hospital services, Health, Case, indexes, Italy

(ProQuest: ... denotes formulae omitted.)

Introduction

The System of Health Financing in Italy: The Four Last Decades History

The slowdown in economic growth following the crisis of the 70s was accompanied by a reduction in the rate of increase in resources for the protection of public health. Control policies and cost containment were developed; allocative behaviors based on the principles of technical and managerial efficiency became the main targets of innovations in the organization and financing of the sanitary sector. Policies aimed to economic control were concentrated on hospital assistance, which represented the largest health expenditure component. Inefficiency in the health sector was mainly due to the retrospective funding system, which led to behaviors tending to diseconomies; the retrospective funding system was then replaced by the prospective one.

This financing system based on predetermined rates for homogeneous diagnostic groups (DRG, Diagnosis Related Group) was experienced first in the U.S. and then adopted in Italy.

The Italian National Health Plan (1994-1996), approved by Presidential Decree on 1994, confirmed that funding for all public and private providers, should be based on predetermined rates established at regional level according to general national criteria. This mode of financing was intended to remunerate the delivered product (instead of the inputs used) proportionally to the work actually performed for the benefit of patients.

Effects of Prospective Financing System Based On DRG in Italy

The Italian health system, which in the past was oriented to the payment of production factors and focused on the number of days of hospitalization, then used another method based on predetermined rates for performance, classified by DRG. The effects produced by the prospective financing system can be summarized as follows:

1. Contraction of the duration of hospitalization, in order to avoid the unnecessary days of hospitalization (waiting for carrying out the examinations), also through greater use of less expensive forms of post-hospital care

2. Containment of diagnostic procedures through prescription of those considered actually necessary

3. Trend towards specialization of offered units

4. Adoption of technologies aimed to save resources and, in any case, more selective use of the technologies themselves

5. Greater integration between different health care services

The main reason why Italy decided to switch from one system based on the reimbursement of incurred costs to a prospective funding system of hospitals was the right objective of achieving cost saving; one could encourage health facilities to be more efficient and the funding body (the Region) could push dispensing facilities to provide less expensive treatments maintaining, however, a good level of quality.

Definition of Quality of Health Care Service

Health economists usually distinguish three meanings of quality:

- Quality in input: measured in terms of quantity and type of resources used, staffand equipment

- Quality in processes: measured by indicators of use of facilities and level of services offered, cost of hospitalization and hospital stays, duration of stay, number of diagnostic tests, number of procedures treatment, number of prescriptions and number of surgeries

- Quality in the output: measured through indicators of morbidity and mortality. …

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