The Effect of Diagnosis-Related Groups on the Shift of Medical Services From Inpatient to Outpatient Settings: A National Claims-Based Analysis

Abstract

The purpose of this study was to determine whether the introduction of diagnosis-related groups (DRGs) shifted the medical services from inpatient to outpatient settings. Using a difference-in-difference analysis, the changes in length of stay, outpatient visit days within 30 days before hospitalization, and outpatient visit days within 30 days after hospital discharge were evaluated. The length of stay was reduced after the DRG policy, consistent with previous studies. Outpatient visit days within 30 days before a hospital admission increased significantly after the policy change. In addition, outpatient visit days within 30 days after a hospital discharge increased in all the medical institutions excluding hospitals. The study findings are consistent with the expectation that providers respond to changes in the payment system to protect or enhance their economic interests. Health care providers in Korea responded to the DRG policy by reducing the intensity of inpatient treatment and transferring costs to outpatient settings.