DRGs + Four Factors in Hospital Improvement Joe Attokaren HS 6000 Change to Dark background with white letters Redo Images More Info on DRGs

Overview DRGs Problem Service Line Strategies Demographic Considerations Market Segmentation 4/19/2019 JA

% of Health Care Expenditures DRG History Medicare: Enrolled Population and Expenditures 1967 and 1985 Year Number of Enrollees Expenditures % of Health Care Expenditures 1967 19.5 million $4.7 billion 9.20% 1985 31.1 million $72.3 billion 16.90% Two Main Factors for Rapid Growth in Expenditures 1. Market Induced Demand 2. Increasing Cost of Medical Technologies 4/19/2019 JA

DRG History 4/19/2019 JA

DRGs Classification System for reimbursement for hospitals Inpatients Only Organized into 25 MDC Pays a predetermine lump sum amount Encourages more cost-efficient management of medical care 546 Total DRGs Diagnosis Related Groups (DRGs) are a classification system that is used as the basis to reimburse hospitals for inpatient services. It also serves hospital needs for data management, reimbursement and comparability, benchmarking, and other types of research. 4/19/2019 JA

DRGs Principal Diagnosis Complications and Comorbidities Surgical Procedures Age Gender Discharge Disposition 4/19/2019 JA

Top 10 DRGs 4/19/2019 JA

Calculating DRG Payment DRG Payment = DRG Weight x Rate DRG Weight = average resources used Base Payment Rate Labor Costs Wage Index Non Labor Costs Cost of Living Add-on Disproportionate Share Hospital Teaching Hospitals Outlier Cases Disproportionate Share Hospital – low income patients 4/19/2019 JA

Example Cases DRG Calculator Payment Case Study Worksheet 4/19/2019 JA http://www.irp.com/cgi-bin/webplus.exe?Script=/irpsys/drgcalc.wml 4/19/2019 JA

Importance of DRGs Useful tool for managing inpatient quality measurements and operating costs Creates an incentive for the hospitals to operate more efficiently and more profitably 4/19/2019 JA

Problem Hospitals are finding it harder to make good financial decisions and the DRG system can help address this issue and provide long last success for hospitals. Service Line Strategies Demographic Considerations Market Segmentation 4/19/2019 JA

DRG Claim Process ICD-9 = International Classification of Diseases Ver 9 4/19/2019 JA

Service Line Strategies What Are The “Cash Cows?” Cardiovascular Orthopedic Neurosciences General Surgery Annual Changes/Updates Improve Profitable Lines Reduce or Cease not so Profitable Lines CMS adjusts DRG payments annually to relfect changes in hospital costs and changes in technology 4/19/2019 JA

Service Line Strategies 4/19/2019 JA

Service Line Strategies Change needs to happen quickly Well defined data parameters Specific performance metrics Well-defined managerial accountability Benefits Increase Quality of Service Provide More Money Increase Competition 4/19/2019 JA

Demographic Considerations Know Your Customers! Surveys Customers are Important for Volume Volume is Important in reimbursements 4/19/2019 JA

Market Segmentation What’s Your Niche? Find Where You Fit Examples Community Examples Northside Saint Joseph’s 4/19/2019 JA

Summary 4/19/2019 JA

Questions 4/19/2019 JA