The 3M Healthcare Forum 2006
Interview by Denise Hennig
DRG and quality management as a success factor in hospital management
Despite budgetary and other pressures, hospitals are now perceived as ‘businesses’ that should raise overall quality standards in order to attract new ‘clients’ – the patients.
The 3M Health Information software portfolio aims to support this quality drive by enabling hospitals to easily cull quality-relevant information from routinely recorded data sets. This September, 3M held a two-day event in Neuss, Germany, to discuss DRGs; the role of quality management as a strategic growth factor in the healthcare industry; how strategic quality management could be implemented in everyday clinical practice and how DRGs and quality management can be linked. In discussion with Denise Hennig, of European Hospital, Marvin K Johnson, International Manager for 3M Health Information Systems Division, Yves Delcourte, Business Manager Health Information Systems, Europe, and Dr Thilo Köpfer, 3M Health Information Systems Germany, outlined their concepts and international experiences in this field
DH: The introduction of DRG – with concomitant software tools – has enabled data analysis of every hospital department, in terms of costs, benefits, and quality. What is your experience with the reimbursement system?
Marvin Johnson: Initially the system was received with strong reservations. Whilst DRGs are often perceived as a limitation, they also allow different aspects of healthcare to be measured. Hospitals must work economically. With the help of our analytical tools they can identify potentially avoidable complications and remedy them efficiently. With the DRG system we can improve a hospital’s ability to manage costs and quality. In the US, for example, 30% of costs are incurred due to poor quality. Our software tools allow us to measure a wealth of hospital processes and results. With these data we can chart and analyse every department and identify sources of inefficiency that, in turn, can be remedied. As a result, costs are reduced, profits generated and the balance between quality and costs can be maintained.
In Germany, it doesn’t appear quite so simple to translate DRGs into profit. On the basis of DRG data, at the beginning of each year a hospital negotiates an individual budget with the health insurers. If, at that year’s end, the hospital has indeed saved money, they encounter reimbursement problems.
Dr Thilo Köpfer: The USA’s healthcare system is different from that in Germany. The coin has two sides – one is the reimbursement a hospital receives from insurers, the other is its actual cost, which the hospital must manage. In Germany the discussion about budgeting versus a performance driven reimbursement system is not finished. On the basis of DRG data, hospital management should negotiate with the insurers a budget that reflects its medical performance. If the hospital is able to reduce cost it should benefit from those profits.
[ild-2]And information management systems help in this?
TK: Yes. Our billing system provides a comprehensive profile of a patient and his/her medical history. DRG case payments are based on averages computed from different patient data sets, which contain information on cases with – or without – complications.
Yves Delcourte: We have different DRG systems in different countries. What Germany is implementing is pretty unique. This is the only country in Europe where the financial impact on hospitals is so dependant on the DRG; that dependency is 100 percent. In other countries, for example Belgium, the DRGs only account for part of the hospital budget. I recommend separation of the funding system – your reimbursement system - from the classification. The incentive for hospitals to improve quality of care, and decrease costs, is seen everywhere. The driver could be different and the tools to manage the situation also might be different. From our perspective, we position the DRG as a good foundation to manage the situation, which means you don’t have to have a specific DRG system for an entire hospital – you can have different systems, one for funding and another for quality. We saw this happen in Belgium and see it happening in Italy and Spain. The most sophisticated DRG system is the APR system (all-patient refined) because it provides risk adjustment.
Does that mean physicians will become case managers in the future? What is the advantage of APR?
YD: The advantage lies in the risk-adjustment within patient groups, which makes the cost-spread more equitable. The grouping system computes a case payment based on diagnosis-, treatment- and demographic information. The coding software facilitates classification, which means it saves time. Our software tools take risk management into account. As an example, data analysis can show to the hospital manager how the costs are spread over the various departments. Moreover, it allows different hospitals to be compared in terms of performance taking into account the severity of illness of the patients. APR’s make it possible to compare apples with apples. Our tools help hospitals to obtain their necessary data for quality management, costs management and efficiency. In short, we provide the basis for an individual hospital to be - and remain - successful in the market.
Further details: www.mmm.com
3M is at MEDICA.
Hall 15, booth B33
14.11.2006
