The Diagnosis Related Group (DRG) System as a Resource Allocation Methodology in Hospital Administration: The Veterans Administration -- A Case Study

Author

Clark Ronald Doughty, Fontbonne College

Year of Award

1985

Degree

Master of Business Administration (MBA)

College

College of Arts & Sciences

Degree Program

Business

Department

Business Administration

Keywords

Hospitals, VA, Medical Centers, Physicians, Nurses, Healthcare

Abstract

The Diagnosis Related Group system which has recently been adopted by the federal government as a prospective payment system and the Veterans Administration as a resource allocation methodology is a significant departure from previous systems.

The historical perspective has evolved toward utilization of available resources without meaningful initiatives to encourage improved productivity and more efficient use of the ever increasing scarcity of resources.

Existing data and accounting systems both in the private and government sectors lack effective cost accounting required by the Diagnosis Related Grouping system. This has necessitated major changes in the approach to a costing and tracking system toward increased emphasis on cost analysis rather than a system designed to monitor and recover charges.

This approach has significantly changed the health care delivery system in the Veterans Administration. The emphasis on resource allocation to the 172 medical centers is now based to a large extent on productivity and demonstrated need for health care services provided as dictated by well established, predetermined criteria. This criteria is a common denominator for all medical centers and provides unprecedented continuity in the resource allocation process.

This new methodology requires the attention and concerted efforts of not only administrative and ancillary staff but physicians also. New insights into the actual delivery of care is required to ensure improved utilization of diagnostic capabilities, treatment modalities and options to hospitalization. This requires physician review and critical analysis of current and past practices.

The associated benefits of this system are likely to be as important as the improved budgeting and resource allocation process and has already had positive impact on the delivery and quality of health care in the Veterans Administration.

Document Type

Restricted Thesis

Recommended Citation

Doughty, Clark Ronald, "The Diagnosis Related Group (DRG) System as a Resource Allocation Methodology in Hospital Administration: The Veterans Administration -- A Case Study" (1985). All Theses, Dissertations, and Capstone Projects. 616.
https://griffinshare.fontbonne.edu/all-etds/616