Brennan Report - Department of Health and Children

Appendix 5Appendix 5DIAGNOSIS RELATED GROUPS/CASEMIXTraditionally, the output of hospital services was measured in terms of patients treated, sessionsprovided, bed days used or average length of stay. While useful in themselves, these indicatorsof activity revealed little about the complexity of cases treated, the likely costs involved or therelative efficiency of hospitals in managing their caseload. It was recognised that fundinghospitals on an incremental basis, without relating costs directly to complexity of activity, wasunsatisfactory since neither equity nor efficiency could be promoted. The first proposals forreforming budgetary allocations to hospitals were made by the Commission on Health Fundingin 1989. The Commission recommended that hospitals should receive global budgets for theprovision of an agreed service level based on:●●an assessment of the activity level implied by the hospital’s agreed role and catchmentarea, andthe casemix-based cost of meeting that activity level.In 1991 the Department of Health established a National Casemix Project to select a measurecapable of quantifying hospital workload in a way that was meaningful to clinicians and managers.The objectives of this project were to 1 :●●●●●quantify hospital output in a way that would be meaningful to all participants in the healthcare system, both in terms of activity and cost;use casemix analysis to promote equity in resource allocation between hospitals;provide hospital management with a means of managing resources more effectively;assist in developing mechanisms for monitoring the quality of patient care; andput in place a system of output measurement which would support performance audit inhealth agencies and in the Department of Health.The casemix measure chosen assigns all in-patient cases exclusively to one category (known asa Diagnosis Related Group). 2 Each Diagnosis Related Group represents a class or category ofcases which may be expected to have the same clinical characteristics, receive similar treatmentand absorb the same amount of hospital resources, i.e. physician and nursing input, theatre,laboratory, pharmacy, catering and cleaning costs.Wiley and Fetter (1990) 3 demonstrated that this casemix measure could be appliedsuccessfully to Irish hospital discharge data, collected through the Hospital In-patient EnquirySystem. The Hospital In-patient Enquiry system is the national database for all acute hospitaldischarges which records demographic data, hospital stay information, diagnostic data and dataon procedures performed for each discharged patient. The information system was and istherefore in place for the collection of the casemix measurement activity data.Estimates of the casemix budget adjustment draw on two main data sources: hospital activitydata (from the Hospital In-patient Enquiry system) and hospital cost data.The hospital cost dataare submitted to the Department of Health and Children through a ‘Speciality Costing’ system.This system has been operating within the Department of Health and Children for a number of1Casemix Manual, 1993, Department of Health.2Diagnosis related groups were developed by a team of researchers at Yale University led by Fetter,Thompson and Brown(1994).The development of diagnosis related groups was motivated by the need for a utilisation review, mandated by the 1965Medicare law on payment of elderly patients in hospitals (Rodrigues, 1989).3Wiley, M.M., and Fetter, R. Measuring Activity and Costs in Irish Hospitals:A Study of Hospital Casemix, Dublin, 1990.175