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Beyond DRG: the effect of socio-economic indicators on inpatient resource allocation in Australia

Beyond DRG: the effect of socio-economic indicators on inpatient resource allocation in Australia
Beyond DRG: the effect of socio-economic indicators on inpatient resource allocation in Australia

Financing in Australia's public hospital works through the Australian Refined Diagnosis Related Groups (AR-DRGs) with separations to specific DRG groups based on medical diagnosis or surgical procedure, patient's age, mode of separation, clinical complexity and complications. This paper aims at assessing how the AR-DRGs reflect the efficiency and equity of the hospitals resource allocation. Using administrative data of all acute public hospital admissions and length of stay (LOS) as a proxy for hospital costs, this paper showed that patients’ socio-economic (SES) characteristics are a strong determinant of health care utilization. Our results revealed that the lower the SES, the longer the LOS and hence more utilization of the inpatient resources. Therefore, omitting SES from the risk adjusters list and solely focusing on DRG- based compensation penalizes hospitals catering to lower SES populations. Our findings further support the idea of smaller/remote hospitals based on block funding.

Australia, Diagnosis Related Groups (DRG), Length of stay, Socio-economic status
2211-8837
302-309
Hasanova, Renata
a43c5ae9-d425-4b2f-9f6f-f72e34a8b96e
Mentzakis, Emmanouil
c0922185-18c7-49c2-a659-8ee6d89b5d74
Paolucci, Francesco
073b630d-7adc-41ee-b198-6b33bcacce6c
Shmueli, Amir
142ced37-e489-45a2-afe6-084fde7fdda5
Hasanova, Renata
a43c5ae9-d425-4b2f-9f6f-f72e34a8b96e
Mentzakis, Emmanouil
c0922185-18c7-49c2-a659-8ee6d89b5d74
Paolucci, Francesco
073b630d-7adc-41ee-b198-6b33bcacce6c
Shmueli, Amir
142ced37-e489-45a2-afe6-084fde7fdda5

Hasanova, Renata, Mentzakis, Emmanouil, Paolucci, Francesco and Shmueli, Amir (2018) Beyond DRG: the effect of socio-economic indicators on inpatient resource allocation in Australia. Health Policy and Technology, 7 (3), 302-309. (doi:10.1016/j.hlpt.2018.07.001).

Record type: Article

Abstract

Financing in Australia's public hospital works through the Australian Refined Diagnosis Related Groups (AR-DRGs) with separations to specific DRG groups based on medical diagnosis or surgical procedure, patient's age, mode of separation, clinical complexity and complications. This paper aims at assessing how the AR-DRGs reflect the efficiency and equity of the hospitals resource allocation. Using administrative data of all acute public hospital admissions and length of stay (LOS) as a proxy for hospital costs, this paper showed that patients’ socio-economic (SES) characteristics are a strong determinant of health care utilization. Our results revealed that the lower the SES, the longer the LOS and hence more utilization of the inpatient resources. Therefore, omitting SES from the risk adjusters list and solely focusing on DRG- based compensation penalizes hospitals catering to lower SES populations. Our findings further support the idea of smaller/remote hospitals based on block funding.

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Accepted/In Press date: 14 July 2018
e-pub ahead of print date: 21 July 2018
Published date: September 2018
Keywords: Australia, Diagnosis Related Groups (DRG), Length of stay, Socio-economic status

Identifiers

Local EPrints ID: 424480
URI: http://eprints.soton.ac.uk/id/eprint/424480
ISSN: 2211-8837
PURE UUID: 0b09b118-e5b5-48ac-a28b-5a64b19e5cf0
ORCID for Emmanouil Mentzakis: ORCID iD orcid.org/0000-0003-1761-209X

Catalogue record

Date deposited: 05 Oct 2018 11:37
Last modified: 22 Nov 2021 06:45

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Contributors

Author: Renata Hasanova
Author: Francesco Paolucci
Author: Amir Shmueli

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