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Cost accounting to determine prices: How well do prices reflect costs in the German DRG-system?

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  • Jonas Schreyögg
  • Oliver Tiemann
  • Reinhard Busse

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. Copyright Springer Science + Business Media, LLC 2006

Suggested Citation

  • Jonas Schreyögg & Oliver Tiemann & Reinhard Busse, 2006. "Cost accounting to determine prices: How well do prices reflect costs in the German DRG-system?," Health Care Management Science, Springer, vol. 9(3), pages 269-279, August.
    • Handle: RePEc:kap:hcarem:v:9:y:2006:i:3:p:269-279
    DOI: 10.1007/s10729-006-9094-0
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    References listed on IDEAS

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    1. Kathryn Antioch & Michael Walsh, 2004. "The risk-adjusted vision beyond casemix (DRG) funding in Australia," The European Journal of Health Economics, Springer;Deutsche Gesellschaft für Gesundheitsökonomie (DGGÖ), vol. 5(2), pages 115-115, May.
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    Cited by:

    1. Vogl, Matthias, 2014. "Hospital financing: Calculating inpatient capital costs in Germany with a comparative view on operating costs and the English costing scheme," Health Policy, Elsevier, vol. 115(2), pages 141-151.
    2. Klaus Kaier & Constantin Mühlen & Andreas Zirlik & Wolfgang Bothe & Philip Hehn & Manfred Zehender & Christoph Bode & Peter Stachon, 2019. "Estimating the additional costs per life saved due to transcatheter aortic valve replacement: a secondary data analysis of electronic health records in Germany," The European Journal of Health Economics, Springer;Deutsche Gesellschaft für Gesundheitsökonomie (DGGÖ), vol. 20(4), pages 625-632, June.
    3. Mareike Heimeshoff & Jonas Schreyögg & Lukas Kwietniewski, 2014. "Cost and technical efficiency of physician practices: a stochastic frontier approach using panel data," Health Care Management Science, Springer, vol. 17(2), pages 150-161, June.
    4. Oliver Tiemann & Jonas Schreyögg, 2012. "Changes in hospital efficiency after privatization," Health Care Management Science, Springer, vol. 15(4), pages 310-326, December.
    5. Gartner, Daniel & Kolisch, Rainer, 2014. "Scheduling the hospital-wide flow of elective patients," European Journal of Operational Research, Elsevier, vol. 233(3), pages 689-699.
    6. Christoph Baltin & Florian Kron & Alexander Urbanski & Thomas Zander & Anna Kron & Felix Berlth & Robert Kleinert & Michael Hallek & Arnulf Heinrich Hoelscher & Seung-Hun Chon, 2019. "The economic burden of endoscopic treatment for anastomotic leaks following oncological Ivor Lewis esophagectomy," PLOS ONE, Public Library of Science, vol. 14(8), pages 1-12, August.
    7. Raulinajtys-Grzybek, Monika, 2014. "Cost accounting models used for price-setting of health services: An international review," Health Policy, Elsevier, vol. 118(3), pages 341-353.
    8. Petrou, Panagiotis, 2021. "The 2019 introduction of the new National Healthcare System in Cyprus," Health Policy, Elsevier, vol. 125(3), pages 284-289.
    9. Sutherland, Jason Murray & Walker, Jan, 2008. "Challenges of rehabilitation case mix measurement in Ontario hospitals," Health Policy, Elsevier, vol. 85(3), pages 336-348, March.
    10. Oliver Tiemann, 2008. "Variations in hospitalisation costs for acute myocardial infarction – a comparison across Europe," Health Economics, John Wiley & Sons, Ltd., vol. 17(S1), pages 33-45, January.
    11. Petrou, Panagiotis & Vandoros, Sotiris, 2018. "Healthcare reforms in Cyprus 2013–2017: Does the crisis mark the end of the healthcare sector as we know it?," Health Policy, Elsevier, vol. 122(2), pages 75-80.
    12. Wozny, Florian, 2020. "Hospital Resources: Persistent Reallocation under Price Changes," IZA Discussion Papers 13256, Institute of Labor Economics (IZA).
    13. Daniel Gartner & Rainer Kolisch & Daniel B. Neill & Rema Padman, 2015. "Machine Learning Approaches for Early DRG Classification and Resource Allocation," INFORMS Journal on Computing, INFORMS, vol. 27(4), pages 718-734, November.
    14. Grigorakis, Nikolaos & Floros, Christos & Tsangari, Haritini & Tsoukatos, Evangelos, 2016. "Out of pocket payments and social health insurance for private hospital care: Evidence from Greece," Health Policy, Elsevier, vol. 120(8), pages 948-959.
    15. Mareike Heimeshoff & Helge Hollmeyer & Jonas Schreyögg & Oliver Tiemann & Doris Staab, 2012. "Cost of Illness of Cystic Fibrosis in Germany," PharmacoEconomics, Springer, vol. 30(9), pages 763-777, September.
    16. Ettelt, Stefanie & Fazekas, Mihaly & Mays, Nicholas & Nolte, Ellen, 2012. "Assessing health care planning – A framework-led comparison of Germany and New Zealand," Health Policy, Elsevier, vol. 106(1), pages 50-59.
    17. Tom Stargardt & Jonas Schreyögg & Ivan Kondofersky, 2014. "Measuring The Relationship Between Costs And Outcomes: The Example Of Acute Myocardial Infarction In German Hospitals," Health Economics, John Wiley & Sons, Ltd., vol. 23(6), pages 653-669, June.
    18. Klaus Kaier & Holger Reinecke & Huseyin Naci & Lutz Frankenstein & Martin Bode & Werner Vach & Philip Hehn & Andreas Zirlik & Manfred Zehender & Jochen Reinöhl, 2018. "The impact of post-procedural complications on reimbursement, length of stay and mechanical ventilation among patients undergoing transcatheter aortic valve implantation in Germany," The European Journal of Health Economics, Springer;Deutsche Gesellschaft für Gesundheitsökonomie (DGGÖ), vol. 19(2), pages 223-228, March.
    19. Jonas Schreyögg & Tom Stargardt & Oliver Tiemann & Reinhard Busse, 2006. "Methods to determine reimbursement rates for diagnosis related groups (DRG): A comparison of nine European countries," Health Care Management Science, Springer, vol. 9(3), pages 215-223, August.
    20. Mareike Heimeshoff & Jonas Schreyögg & Oliver Tiemann, 2014. "Employment effects of hospital privatization in Germany," The European Journal of Health Economics, Springer;Deutsche Gesellschaft für Gesundheitsökonomie (DGGÖ), vol. 15(7), pages 747-757, September.
    21. Lukas Kwietniewski & Jonas Schreyögg, 2018. "Efficiency of physician specialist groups," Health Care Management Science, Springer, vol. 21(3), pages 409-425, September.
    22. Bernhard Ultsch & Ingrid Köster & Thomas Reinhold & Anette Siedler & Gérard Krause & Andrea Icks & Ingrid Schubert & Ole Wichmann, 2013. "Epidemiology and cost of herpes zoster and postherpetic neuralgia in Germany," The European Journal of Health Economics, Springer;Deutsche Gesellschaft für Gesundheitsökonomie (DGGÖ), vol. 14(6), pages 1015-1026, December.
    23. Vogl, Matthias, 2013. "Improving patient-level costing in the English and the German ‘DRG’ system," Health Policy, Elsevier, vol. 109(3), pages 290-300.
    24. Fainman, Emily Zhu & Kucukyazici, Beste, 2020. "Design of financial incentives and payment schemes in healthcare systems: A review," Socio-Economic Planning Sciences, Elsevier, vol. 72(C).
    25. Polyzos, Nikolaos & Karanikas, Haralampos & Thireos, Eleftherios & Kastanioti, Catherine & Kontodimopoulos, Nick, 2013. "Reforming reimbursement of public hospitals in Greece during the economic crisis: Implementation of a DRG system," Health Policy, Elsevier, vol. 109(1), pages 14-22.

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