Cost shifting or cost cutting by hospitals as a response to reimbursement reform? The case of diagnosis-related groups (DRG) scheme in China
BackgroundDiagnosis-related group (DRG) systems for healthcare reimbursement were recently introduced among hospitals in China, raising concerns about cost-shifting, where hospitals may increase charges for self-financing patients to offset reimbursement cuts by DRG. In 2018, both Nanchang and Ganzh...
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Frontiers Media S.A.
2025-08-01
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| Series: | Frontiers in Public Health |
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| Online Access: | https://www.frontiersin.org/articles/10.3389/fpubh.2025.1582001/full |
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| author | Jiabi Wang Jiabi Wang Jinyun Zhu Jinyun Zhu Kuan Hu Kuan Hu Yijun Chen Jinghua Zhang Xiaoyu Wu |
| author_facet | Jiabi Wang Jiabi Wang Jinyun Zhu Jinyun Zhu Kuan Hu Kuan Hu Yijun Chen Jinghua Zhang Xiaoyu Wu |
| author_sort | Jiabi Wang |
| collection | DOAJ |
| description | BackgroundDiagnosis-related group (DRG) systems for healthcare reimbursement were recently introduced among hospitals in China, raising concerns about cost-shifting, where hospitals may increase charges for self-financing patients to offset reimbursement cuts by DRG. In 2018, both Nanchang and Ganzhou Cities in Jiangxi Province installed DRG information systems, but only Nanchang fully implemented the DRG system during the 2019–2020 pilot period.Materials and methodsDrawing from a healthcare administrative dataset of 14,310 patients' records, this study investigates the hospitalization costs associated with Intraocular Lens (IOL) implantation procedures in Jiangxi Province, China, from 2017 to 2020. By applying the quantile difference-in-differences (DID) and difference-in-difference-in-difference (DDD) methodologies, the research examines the impacts of DRG implementation on hospitalization costs, with a particular focus on self-financing patients.ResultsUpon the implementation of DRG in hospitals in Nanchang, the IOL cost ratio for patients in Nanchang was lower on average by 0.047 (p < 0.001), with the largest reduction observed at higher quantiles (e.g., Q75: −0.105, Q90: −0.091) (p < 0.001). The DDD model revealed a decrease of 0.226 in the IOL cost ratio for self-financing patients in DRG hospitals post-implementation. These results remained robust across various healthcare cost ratios.ConclusionThe study indicates that implementing the DRG system in Chinese hospitals effectively constrained healthcare costs without causing unintended cost-shifting among self-financing patients. The system's heightened impacts on higher quantiles indicate its efficacy in addressing high-cost outliers. These outcomes are likely attributed to the centralized medical procurement and healthcare information technology integrated into the Chinese healthcare system. |
| format | Article |
| id | doaj-art-5604d08c68d04baeb4c3c879ed859d5e |
| institution | Kabale University |
| issn | 2296-2565 |
| language | English |
| publishDate | 2025-08-01 |
| publisher | Frontiers Media S.A. |
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| series | Frontiers in Public Health |
| spelling | doaj-art-5604d08c68d04baeb4c3c879ed859d5e2025-08-20T04:14:12ZengFrontiers Media S.A.Frontiers in Public Health2296-25652025-08-011310.3389/fpubh.2025.15820011582001Cost shifting or cost cutting by hospitals as a response to reimbursement reform? The case of diagnosis-related groups (DRG) scheme in ChinaJiabi Wang0Jiabi Wang1Jinyun Zhu2Jinyun Zhu3Kuan Hu4Kuan Hu5Yijun Chen6Jinghua Zhang7Xiaoyu Wu8School of Accounting, Nanfang College, Guangzhou, Guangdong, ChinaSchool of Business, Macau University of Science and Technology, Macao, Macao SAR, ChinaSchool of Business, Macau University of Science and Technology, Macao, Macao SAR, ChinaGanzhou Municipal Health Commission in Jiangxi Province of China, Ganzhou, Jiangxi, ChinaSchool of Accounting, Nanfang College, Guangzhou, Guangdong, ChinaSchool of Business, Macau University of Science and Technology, Macao, Macao SAR, ChinaSchool of Business, Macau University of Science and Technology, Macao, Macao SAR, ChinaSchool of Business, Macau University of Science and Technology, Macao, Macao SAR, ChinaSchool of Business, Macau University of Science and Technology, Macao, Macao SAR, ChinaBackgroundDiagnosis-related group (DRG) systems for healthcare reimbursement were recently introduced among hospitals in China, raising concerns about cost-shifting, where hospitals may increase charges for self-financing patients to offset reimbursement cuts by DRG. In 2018, both Nanchang and Ganzhou Cities in Jiangxi Province installed DRG information systems, but only Nanchang fully implemented the DRG system during the 2019–2020 pilot period.Materials and methodsDrawing from a healthcare administrative dataset of 14,310 patients' records, this study investigates the hospitalization costs associated with Intraocular Lens (IOL) implantation procedures in Jiangxi Province, China, from 2017 to 2020. By applying the quantile difference-in-differences (DID) and difference-in-difference-in-difference (DDD) methodologies, the research examines the impacts of DRG implementation on hospitalization costs, with a particular focus on self-financing patients.ResultsUpon the implementation of DRG in hospitals in Nanchang, the IOL cost ratio for patients in Nanchang was lower on average by 0.047 (p < 0.001), with the largest reduction observed at higher quantiles (e.g., Q75: −0.105, Q90: −0.091) (p < 0.001). The DDD model revealed a decrease of 0.226 in the IOL cost ratio for self-financing patients in DRG hospitals post-implementation. These results remained robust across various healthcare cost ratios.ConclusionThe study indicates that implementing the DRG system in Chinese hospitals effectively constrained healthcare costs without causing unintended cost-shifting among self-financing patients. The system's heightened impacts on higher quantiles indicate its efficacy in addressing high-cost outliers. These outcomes are likely attributed to the centralized medical procurement and healthcare information technology integrated into the Chinese healthcare system.https://www.frontiersin.org/articles/10.3389/fpubh.2025.1582001/fulldiagnosis-related groupscost-shiftinghospitals reimbursement reformcataract intraocular lens (IOL) implantationdifference-in-difference |
| spellingShingle | Jiabi Wang Jiabi Wang Jinyun Zhu Jinyun Zhu Kuan Hu Kuan Hu Yijun Chen Jinghua Zhang Xiaoyu Wu Cost shifting or cost cutting by hospitals as a response to reimbursement reform? The case of diagnosis-related groups (DRG) scheme in China Frontiers in Public Health diagnosis-related groups cost-shifting hospitals reimbursement reform cataract intraocular lens (IOL) implantation difference-in-difference |
| title | Cost shifting or cost cutting by hospitals as a response to reimbursement reform? The case of diagnosis-related groups (DRG) scheme in China |
| title_full | Cost shifting or cost cutting by hospitals as a response to reimbursement reform? The case of diagnosis-related groups (DRG) scheme in China |
| title_fullStr | Cost shifting or cost cutting by hospitals as a response to reimbursement reform? The case of diagnosis-related groups (DRG) scheme in China |
| title_full_unstemmed | Cost shifting or cost cutting by hospitals as a response to reimbursement reform? The case of diagnosis-related groups (DRG) scheme in China |
| title_short | Cost shifting or cost cutting by hospitals as a response to reimbursement reform? The case of diagnosis-related groups (DRG) scheme in China |
| title_sort | cost shifting or cost cutting by hospitals as a response to reimbursement reform the case of diagnosis related groups drg scheme in china |
| topic | diagnosis-related groups cost-shifting hospitals reimbursement reform cataract intraocular lens (IOL) implantation difference-in-difference |
| url | https://www.frontiersin.org/articles/10.3389/fpubh.2025.1582001/full |
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