Performance Differences between the Episode-Based DBC and Diagnosis-Related DRG Case Mix Systems
Krabbe-Alkemade, Y., & Groot, T. (2017). Performance differences between the episode-based DBC and diagnosis-related DRG case mix systems. Maandblad Accountancy en Bedrijfseconomie, 91(7/8), 224-235.
12 Pages Posted: 19 Sep 2017
Date Written: July 14, 2017
This paper explores the question how much detail a cost system needs to have in order to provide reliable cost information at a reasonable price. In general, fine-grained cost systems with a lot of detail (in product definition, in cost drivers and in cost pools) are expected to provide more reliable cost information than coarse-grained cost systems with less detail. This paper takes as an example the DBC cost system that has been developed for the Dutch hospital sector. The fine-grained DBC system with over 40,000 health care products appears to outperform lower-grained DRG systems with “only” 15,000 and 6,000 health care products on cost homogeneity and predictive validity. It does so however at the cost of a high number of products with measurement and specification errors, caused by a large number of outliers and by a low number of observations in product groups. The cost-effectiveness of the DBC system is not very high: only 3% of all DBC-codes explains 80% of total costs, whereas the lower-grained DRG system uses 14% of the codes to explain 80% of total costs. Combined with the high administration cost of the DBC-system, it was from an economic perspective, a sensible idea to replace the fine-grained DBC-system by the coarse-grained DOT system.
Keywords: DRG, DBC, hospital, diagnosis-related groups, cost system, cost system granularity
JEL Classification: M41, I18
Suggested Citation: Suggested Citation