The Pros and Cons of a DRG Payor System

Subject: Finance
Pages: 1
Words: 256
Reading time:
< 1 min

The diagnostic related groups (DRG) system of providing payments is characterized by such an advantage as the provision of the full reimbursement for healthcare specialists depending on the group of patients with whom they work. One more advantage is the effective and developed budget allocation in hospitals. However, this system also has disadvantages that are related not only to physicians and patients but also to medical device manufacturers because they have limited opportunities to grow in such environments. These limitations prevent medical device companies from contributing to the development of new technologies.

Capitation is another system that is used in the healthcare industry for making payments. Its advantages are in providing physicians with stable earnings because they receive the payment for each patient they see without dependence on the concrete case. The payment is fixed. This system also creates benefits for patients who can receive high-quality assistance for the prearranged payment. Still, there are also disadvantages associated with the use of the system. Those patients who have many health problems often do not receive the appropriate care because physicians experience difficulties with resolving complicated cases and getting the payment for them. While analyzing the pros and cons related to the use of the DRG and capitation systems, it is possible to state that in most countries, the DRG system can be discussed as an efficient choice. The classification of cases according to DRG allows for providing physicians with a payment that is proportional to the complexity of the case.