IDEAS home Printed from https://ideas.repec.org/a/wly/hlthec/v21y2012is2p6-18.html
   My bibliography  Save this article

How Well Do Diagnosis‐Related Groups Explain Variations In Costs Or Length Of Stay Among Patients And Across Hospitals? Methods For Analysing Routine Patient Data

Author

Listed:
  • Andrew Street
  • Conrad Kobel
  • Thomas Renaud
  • Josselin Thuilliez
  • ON BEHALF OF THE EURODRG GROUP

Abstract

We set out an analytical strategy to examine variations in resource use, whether cost or length of stay, of patients hospitalised with different conditions. The methods are designed to evaluate (i) how well diagnosis‐related groups (DRGs) capture variation in resource use relative to other patient characteristics and (ii) what influence the hospital has on their resource use. In a first step, we examine the influence of variables that describe each individual patient, including the DRG to which the patients are assigned and a range of personal and treatment‐related characteristics. In a second step, we explore the influence that hospitals have on the average cost or length of stay of their patients, purged of the influence of the variables accounted for in the first stage. We provide a rationale for the variables used in both stages of the analysis and detail how each is defined. The analytical strategy allows us (i) to identify those factors that explain variation in resource use across patients, (ii) to assess the explanatory power of DRGs relative to other patient and treatment characteristics and (iii) to assess relative hospital performance in managing resources and the characteristics of hospitals that explain this performance. Copyright © 2012 John Wiley & Sons, Ltd.

Suggested Citation

  • Andrew Street & Conrad Kobel & Thomas Renaud & Josselin Thuilliez & ON BEHALF OF THE EURODRG GROUP, 2012. "How Well Do Diagnosis‐Related Groups Explain Variations In Costs Or Length Of Stay Among Patients And Across Hospitals? Methods For Analysing Routine Patient Data," Health Economics, John Wiley & Sons, Ltd., vol. 21(S2), pages 6-18, August.
    • Handle: RePEc:wly:hlthec:v:21:y:2012:i:s2:p:6-18
    DOI: 10.1002/hec.2837
    as

    Download full text from publisher

    File URL: https://doi.org/10.1002/hec.2837
    Download Restriction: no
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. Brigitte Dormont & Carine Milcent, 2004. "The sources of hospital cost variability," Health Economics, John Wiley & Sons, Ltd., vol. 13(10), pages 927-939, October.
    2. Mason, Anne & Street, Andrew & Miraldo, Marisa & Siciliani, Luigi, 2009. "Should prospective payments be differentiated for public and private healthcare providers?," Health Economics, Policy and Law, Cambridge University Press, vol. 4(4), pages 383-403, October.
    3. Bruce Hollingsworth, 2008. "The measurement of efficiency and productivity of health care delivery," Health Economics, John Wiley & Sons, Ltd., vol. 17(10), pages 1107-1128, October.
    4. Edward C. Norton & Courtney Harold Van Houtven & Richard C. Lindrooth & Sharon‐Lise T. Normand & Barbara Dickey, 2002. "Does prospective payment reduce inpatient length of stay?," Health Economics, John Wiley & Sons, Ltd., vol. 11(5), pages 377-387, July.
    5. Saxonhouse, Gary R, 1976. "Estimated Parameters as Dependent Variables," American Economic Review, American Economic Association, vol. 66(1), pages 178-183, March.
    6. Cameron, A Colin & Trivedi, Pravin K, 1986. "Econometric Models Based on Count Data: Comparisons and Applications of Some Estimators and Tests," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 1(1), pages 29-53, January.
    7. Reid, Beth & Sutch, Stephen, 2008. "Comparing diagnosis-related group systems to identify design improvements," Health Policy, Elsevier, vol. 87(1), pages 82-91, July.
    8. Lewis, Jeffrey B. & Linzer, Drew A., 2005. "Estimating Regression Models in Which the Dependent Variable Is Based on Estimates," Political Analysis, Cambridge University Press, vol. 13(4), pages 345-364.
    9. Brigitte Dormont & Carine Milcent, 2005. "How to Regulate Heterogeneous Hospitals?," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 14(3), pages 591-621, September.
    10. repec:dau:papers:123456789/5426 is not listed on IDEAS
    11. Hausman, Jerry & Hall, Bronwyn H & Griliches, Zvi, 1984. "Econometric Models for Count Data with an Application to the Patents-R&D Relationship," Econometrica, Econometric Society, vol. 52(4), pages 909-938, July.
    12. Nigel Rice & Andrew Jones, 1997. "Multilevel models and health economics," Health Economics, John Wiley & Sons, Ltd., vol. 6(6), pages 561-575, November.
    13. Alvaro Montenegro, 2001. "On sample size and precision in ordinary least squares," Journal of Applied Statistics, Taylor & Francis Journals, vol. 28(5), pages 603-605.
    14. Mark McClellan, 1997. "Hospital Reimbursement Incentives: An Empirical Analysis," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 6(1), pages 91-128, March.
    15. Cameron, A Colin & Windmeijer, Frank A G, 1996. "R-Squared Measures for Count Data Regression Models with Applications to Health-Care Utilization," Journal of Business & Economic Statistics, American Statistical Association, vol. 14(2), pages 209-220, April.
    16. repec:dau:papers:123456789/5425 is not listed on IDEAS
    17. Street, Andrew & Maynard, Alan, 2007. "Activity based financing in England: the need for continual refinement of payment by results," Health Economics, Policy and Law, Cambridge University Press, vol. 2(4), pages 419-427, October.
    18. Lee, Lung-Fei, 1986. "Specification Test for Poisson Regression Models," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 27(3), pages 689-706, October.
    19. Silvio Daidone & Francesco D’Amico, 2009. "Technical efficiency, specialization and ownership form: evidences from a pooling of Italian hospitals," Journal of Productivity Analysis, Springer, vol. 32(3), pages 203-216, December.
    20. W. David Bradford & Andrew N. Kleit & Marie A. Krousel-Wood & Richard N. Re, 2001. "Stochastic Frontier Estimation Of Cost Models Within The Hospital," The Review of Economics and Statistics, MIT Press, vol. 83(2), pages 302-309, May.
    21. Kim Rose Olsen & Andrew Street, 2008. "The analysis of efficiency among a small number of organisations: How inferences can be improved by exploiting patient‐level data," Health Economics, John Wiley & Sons, Ltd., vol. 17(6), pages 671-681, June.
    22. Martin, Stephen & Smith, Peter, 1996. "Explaining variations in inpatient length of stay in the National Health Service," Journal of Health Economics, Elsevier, vol. 15(3), pages 279-304, June.
    23. Halvorsen, Robert & Palmquist, Raymond, 1980. "The Interpretation of Dummy Variables in Semilogarithmic Equations," American Economic Review, American Economic Association, vol. 70(3), pages 474-475, June.
    24. Boyd H. Gilman, 2000. "Hospital response to DRG refinements: the impact of multiple reimbursement incentives on inpatient length of stay," Health Economics, John Wiley & Sons, Ltd., vol. 9(4), pages 277-294, June.
    25. Daniel P. Kessler & Mark B. McClellan, 2002. "The Effects of Hospital Ownership on Medical Productivity," RAND Journal of Economics, The RAND Corporation, vol. 33(3), pages 488-506, Autumn.
    26. Brigitte Dormont & Carine Milcent, 2005. "How to Regulate Heterogeneous Hospitals?," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 14(3), pages 591-621, September.
    27. Manning, Willard G. & Mullahy, John, 2001. "Estimating log models: to transform or not to transform?," Journal of Health Economics, Elsevier, vol. 20(4), pages 461-494, July.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. James Gaughan & Conrad Kobel & Caroline Linhart & Anne Mason & Andrew Street & Padraic Ward & on behalf of the EuroDRG group, 2012. "Why Do Patients Having Coronary Artery Bypass Grafts Have Different Costs Or Length Of Stay? An Analysis Across 10 European Countries," Health Economics, John Wiley & Sons, Ltd., vol. 21(S2), pages 77-88, August.
    2. Martin, Stephen & Street, Andrew & Han, Lu & Hutton, John, 2016. "Have hospital readmissions increased in the face of reductions in length of stay? Evidence from England," Health Policy, Elsevier, vol. 120(1), pages 89-99.
    3. Zeynep Or & Thomas Renaud & Josselin Thuilliez & Cora Lebreton & on behalf of the EuroDRG group, 2012. "Diagnosis Related Groups And Variations In Resource Use For Child Delivery Across 10 European Countries," Health Economics, John Wiley & Sons, Ltd., vol. 21(S2), pages 55-65, August.
    4. Häkkinen, Unto & Rosenqvist, Gunnar & Peltola, Mikko & Kapiainen, Satu & Rättö, Hanna & Cots, Francesc & Geissler, Alexander & Or, Zeynep & Serdén, Lisbeth & Sund, Reijo, 2014. "Quality, cost, and their trade-off in treating AMI and stroke patients in European hospitals," Health Policy, Elsevier, vol. 117(1), pages 15-27.
    5. Bernal-Delgado, Enrique & Comendeiro-Maaløe, Micaela & Ridao-López, Manuel & Sansó Rosselló, Andreu, 2020. "Factors underlying the growth of hospital expenditure in Spain in a period of unexpected economic shocks: A dynamic analysis on administrative data," Health Policy, Elsevier, vol. 124(4), pages 389-396.
    6. Francesc Cots & Pietro Chiarello & Xavier Salvador & Xavier Castells & on behalf of the EuroDRG group, 2012. "Patient Classification Systems And Hospital Costs Of Care For Knee Replacement In 10 European Countries," Health Economics, John Wiley & Sons, Ltd., vol. 21(S2), pages 116-128, August.
    7. Chris Bojke & Katja Grašič & Andrew Street, 2018. "How should hospital reimbursement be refined to support concentration of complex care services?," Health Economics, John Wiley & Sons, Ltd., vol. 27(1), pages 26-38, January.
    8. Anne Mason & Zeynep Or & Thomas Renaud & Andrew Street & Josselin Thuilliez & Padraic Ward & ON BEHALF OF THE EURODRG GROUP, 2012. "How Well Do Diagnosis‐Related Groups For Appendectomy Explain Variations In Resource Use? An Analysis Of Patient‐Level Data From 10 European Countries," Health Economics, John Wiley & Sons, Ltd., vol. 21(S2), pages 30-40, August.
    9. Jacqueline O'Reilly & Lisbeth Serdén & Mats Talbäck & Brian McCarthy & on behalf of the EuroDRG group, 2012. "Performance Of 10 European Drg Systems In Explaining Variation In Resource Utilisation In Inguinal Hernia Repair," Health Economics, John Wiley & Sons, Ltd., vol. 21(S2), pages 89-101, August.
    10. Reinhard Busse & on behalf of the EuroDRG group, 2012. "DO DIAGNOSIS‐RELATED GROUPS EXPLAIN VARIATIONS IN HOSPITAL COSTS AND LENGTH OF STAY? – ANALYSES FROM THE EURODRG PROJECT FOR 10 EPISODES OF CARE ACROSS 10 EuroPEAN COUNTRIES," Health Economics, John Wiley & Sons, Ltd., vol. 21(S2), pages 1-5, August.
    11. Gerli Paat‐Ahi & Maria Świderek & Paweł Sakowski & Janek Saluse & Ain Aaviksoo & on behalf of the EURODRG group, 2012. "DRGs IN EUROPE: A CROSS COUNTRY ANALYSIS FOR CHOLECYSTECTOMY," Health Economics, John Wiley & Sons, Ltd., vol. 21(S2), pages 66-76, August.
    12. Gianluca Fiorentini & Silvana Robone & Rossella Verzulli, 2018. "How do hospital‐specialty characteristics influence health system responsiveness? An empirical evaluation of in‐patient care in the Italian region of Emilia‐Romagna," Health Economics, John Wiley & Sons, Ltd., vol. 27(2), pages 266-281, February.
    13. Unto Häkkinen & Pietro Chiarello & Francesc Cots & Mikko Peltola & Hanna Rättö & ON BEHALF OF THE EURODRG GROUP, 2012. "Patient Classification And Hospital Costs Of Care For Acute Myocardial Infarction In Nine European Countries," Health Economics, John Wiley & Sons, Ltd., vol. 21(S2), pages 19-29, August.
    14. Carine Milcent, 2016. "Upcoding and heterogeneity in hospitals’ response: A Natural Experiment," PSE Working Papers halshs-01340557, HAL.
    15. Alexander Geissler & David Scheller‐Kreinsen & Wilm Quentin & on behalf of the EuroDRG group, 2012. "Do Diagnosis‐Related Groups Appropriately Explain Variations In Costs And Length Of Stay Of Hip Replacement? A Comparative Assessment Of Drg Systems Across 10 European Countries," Health Economics, John Wiley & Sons, Ltd., vol. 21(S2), pages 103-115, August.
    16. Chris Bojke & Katja Grasic & Andrew Street, 2015. "How much should be paid for Prescribed Specialised Services?," Working Papers 118cherp, Centre for Health Economics, University of York.
    17. Mikko Peltola & on behalf of the EuroDRG group, 2012. "Patient Classification And Hospital Costs Of Care For Stroke In 10 European Countries," Health Economics, John Wiley & Sons, Ltd., vol. 21(S2), pages 129-140, August.
    18. Thanassoulis, Emmanuel & Silva Portela, Maria & Graveney, Mike, 2016. "Identifying the scope for savings at inpatient episode level: An illustration applying DEA to chronic obstructive pulmonary disease," European Journal of Operational Research, Elsevier, vol. 255(2), pages 570-582.
    19. David Scheller‐Kreinsen & on behalf of the EuroDRG group, 2012. "How Well Do Diagnosis‐Related Group Systems Group Breast Cancer Surgery Patients?—Evidence From 10 European Countries," Health Economics, John Wiley & Sons, Ltd., vol. 21(S2), pages 41-54, August.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Daidone, Silvio & Street, Andrew, 2013. "How much should be paid for specialised treatment?," Social Science & Medicine, Elsevier, vol. 84(C), pages 110-118.
    2. Nils Gutacker & Chris Bojke & Silvio Daidone & Nancy J. Devlin & David Parkin & Andrew Street, 2013. "Truly Inefficient Or Providing Better Quality Of Care? Analysing The Relationship Between Risk‐Adjusted Hospital Costs And Patients' Health Outcomes," Health Economics, John Wiley & Sons, Ltd., vol. 22(8), pages 931-947, August.
    3. Laudicella, Mauro & Olsen, Kim Rose & Street, Andrew, 2010. "Examining cost variation across hospital departments-a two-stage multi-level approach using patient-level data," Social Science & Medicine, Elsevier, vol. 71(10), pages 1872-1881, November.
    4. James Gaughan & Anne Mason & Andrew Street & Padraic Ward, 2012. "English Hospitals Can Improve Their Use of Resources: An Analysis of Costs and Length of Stay for Ten Treatments," Working Papers 078cherp, Centre for Health Economics, University of York.
    5. Roberto Colombi & Gianmaria Martini & Giorgio Vittadini, 2017. "Determinants of transient and persistent hospital efficiency: The case of Italy," Health Economics, John Wiley & Sons, Ltd., vol. 26(S2), pages 5-22, September.
    6. Theurl, Engelbert & Winner, Hannes, 2007. "The impact of hospital financing on the length of stay: Evidence from Austria," Health Policy, Elsevier, vol. 82(3), pages 375-389, August.
    7. Thanassoulis, Emmanuel & Silva Portela, Maria & Graveney, Mike, 2016. "Identifying the scope for savings at inpatient episode level: An illustration applying DEA to chronic obstructive pulmonary disease," European Journal of Operational Research, Elsevier, vol. 255(2), pages 570-582.
    8. Carine Milcent, 2014. "Coût des soins hospitaliers : effet de la concurrence par la qualité," PSE Working Papers halshs-01010327, HAL.
    9. Jose Escarce & Carole Roan Gresenz & Jeanette A. Rogowski, 2004. "Healthcare Markets, the Safety Net and Access to Care Among the Uninsured," NBER Working Papers 10799, National Bureau of Economic Research, Inc.
    10. Carine Milcent, 2017. "Premier bilan de la tarification à l’activité (T2A) sur la variabilité des coûts hospitaliers," Economie & Prévision, La Documentation Française, vol. 0(1), pages 45-67.
    11. Luigi Siciliani & Peter Sivey & Andrew Street, 2013. "Differences In Length Of Stay For Hip Replacement Between Public Hospitals, Specialised Treatment Centres And Private Providers: Selection Or Efficiency?," Health Economics, John Wiley & Sons, Ltd., vol. 22(2), pages 234-242, February.
    12. Carine Milcent, 2015. "Tarification et variabilité des coûts hospitaliers : Le cas de l'infarctus du myocarde," Working Papers halshs-01202684, HAL.
    13. Ángel Marcos Vera‐Hernández, 1999. "Duplicate coverage and demand for health care. The case of Catalonia," Health Economics, John Wiley & Sons, Ltd., vol. 8(7), pages 579-598, November.
    14. Perelman, Julian & Closon, Marie-Christine, 2007. "Hospital response to prospective financing of in-patient days: The Belgian case," Health Policy, Elsevier, vol. 84(2-3), pages 200-209, December.
    15. Carine Milcent, 2017. "Premier bilan de la T2A sur la variabilité des coûts hospitaliers," Working Papers halshs-01649554, HAL.
    16. Perelman, Julian & Shmueli, Amir & Closon, Marie-Christine, 2008. "Deriving a risk-adjustment formula for hospital financing: Integrating the impact of socio-economic status on length of stay," Social Science & Medicine, Elsevier, vol. 66(1), pages 88-98, January.
    17. Aleksey Oshchepkov & Anna Shirokanova, 2020. "Multilevel Modeling For Economists: Why, When And How," HSE Working papers WP BRP 233/EC/2020, National Research University Higher School of Economics.
    18. Blazsek, Szabolcs & Escribano, Álvaro, 2015. "Dynamic conditional score patent count panel data models," UC3M Working papers. Economics we1510, Universidad Carlos III de Madrid. Departamento de Economía.
    19. Daniel Hellerstein, 1993. "Intertemporal data and travel cost analysis," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 3(2), pages 193-207, April.
    20. James Gaughan & Conrad Kobel & Caroline Linhart & Anne Mason & Andrew Street & Padraic Ward & on behalf of the EuroDRG group, 2012. "Why Do Patients Having Coronary Artery Bypass Grafts Have Different Costs Or Length Of Stay? An Analysis Across 10 European Countries," Health Economics, John Wiley & Sons, Ltd., vol. 21(S2), pages 77-88, August.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:wly:hlthec:v:21:y:2012:i:s2:p:6-18. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Wiley Content Delivery). General contact details of provider: http://www3.interscience.wiley.com/cgi-bin/jhome/5749 .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.