Comparing EU hospital efficiency using diagnosis-related groups

This article considers the feasibility of comparing the differences in efficiency and price in the provision of hospital products defined on the basis of diagnosis-related groups (DRGs). Two measures of resource use are compared, the length of stay and the administrative price, both independently and simultaneously, across 5 selected hospital products (DRGs) and up to 9 member states included in the analysis. Ceteris paribus, those providers with the lowest resource use were assumed to be the most efficient in providing a particular hospital product. Demonstrated efficiency differences may have important implications for some providers but, in the context of the single European market, differences in the prices for hospital products could imply a role for intracommunity trade in such products and, consequently, for the price mechanism in the harmonization of their provision. However, these conclusions are subject to a number of other confounding factors. The reasons to expect resource use variation, even across relatively homogeneous hospital products, are numerous and are discussed first. In this preliminary analysis such pitfalls can only be pointed to but, with comprehensive European DRG databases currently being developed (CAMISE), there seems substantial scope for this form of analysis. More research must follow, but it is clear that substantial differences in price and efficiency might exist between EU member states and that, subject to some cautions, a DRG-based analysis offers considerable refinement over other more traditional process indicators when comparing the differences in hospital products.