@rlpostrp

Interesting read and pretty factual. I actually learned something about the history of DRG that I didn't know. Thanks.

Just wanted to give an inside perspective. I practiced medicine for 40 years and admitted many patients to the hospital. The last 5 years of my career I was in hospital administration, first as CMO (Chief Medical Officer) and eventually as President/CEO of a healthcare system that included a large Level 1 trauma Center/tertiary care hospital. As CMO I chaired the Utilization Committee you refer to. I mention these credentials only to give credence to the following information.

I am unaware of physicians that would alter their practice in order to financially benefit, even if they could ( they don't profit if patient discharged early or they don't utilize a service etc). Our large tertiary care hospital was constantly at capacity and on diversion (not accepting transfers except emergencies) and thus an email would go out each morning asking physicians to round and discharge patients earlier in the day, if appropriate. Physicians were never enticed or coerced into discharging patients earlier than medically appropriate in order for the hospital to benefit from shorter stay and more profit from a DRG. Physicians were never asked/encourged/coerced/enticed to utilize less hospital services to increase profits.

I am unaware of any PPO/government plans that have shared profits with physicians. There are some insurance plans that have shared profits with doctors/hospitals but these are based on quality measures and not just discharging patient early or avoiding tests/procedures.

Physicians in general don't pay attention to length of stay in regards to individual DRGs for their patients and I would be surprised if many are even aware of the average length of stay od Medicare DRG for, say, an uncomplicated cholecystectomy. They are interested in taking appropriate care of their patients and secondarily (if at all) concerned/interested in the profitability of the hospital.

Most hospitals now operate on a very slim profit level. Most large hospitals are about 2/3 government pay (Medicare/Medicaid), some portion self pay (equates to no pay >90% of time) and the rest commercial insurance (Anthem, Aetna etc). If the hospital is very efficient they may break about even on Medicare patients. They lose money on Medicaid and, obviously, no pay. They usually make a profit on commercial insurance to keep the whole thing a float. We were constantly juggling resources to decide whether to build a new cathedral lab, give the nurses needed raise, renovate the 4th floor etc.

The vast majority of physicians are only interested in their patient's care and doing their job. Yes, most make a very good living but not at the expense of patient care. Hope this helps.