The impact of DRG-based payment systems on quality of health care in OECD countries

Ever since DRG-based payment systems were first introduced in the United States in 1983, the medical community has expressed concern about the potential impact of these price control systems on the quality of care. Several research studies have examined the impact of DRG-based payment systems on the quality of care within a single state in the United States, or within a specific country. We have not identified any attempts in the literature to examine the impact of DRG-based payment systems on the quality of health care across different countries. In this article we contribute to the debate by (1) providing a unique identification of DRG adoption status for each of 35 countries, (2) refining an international case mix index, and (3) applying it to examine whether DRG-based payments impact the quality of health care across national and cultural boundaries. We find some evidence for Organization for Economic Cooperation and Development countries that, compared with non-adopters, adoption of DRG-based payment systems is associated with faster hospital case mix increases and slower quality gains with respect to patient mortality from surgical and medical misadventures.