Price and Volume Measures of Hospital Services for Germany

1. Price and Volume Measures of Hospital Services for Germany developed by Stefan Pierdzioch presented by Liane Ritter Federal Statistical Office, Germany OECD Working Party on National Accounts in Paris, 14 - 16 October 2008

2. Content • DRG-based funding system for hospitals • Method for price and volume measures • Results

3. Funding System • Based on diagnostic related groups (DRGs) • From 2004 for all hospital services (except psychiatric and rehabilitation hospitals) • 2006: 912 DRGs; 2007: 1082 DRGs • 27 major diagnostic categories (MDCs) • DRG-dataset from 2005 • Number of treatments • Cost weights • Revenues • Base rates • Reference price a hospital charges for an average DRG

4. Major diagnostic categories 2006

5. Major diagnosis category MDC 01 „diseases and disorders of the nervous system“ diagnosis Economic complexity of the diagnosis(A – I; Z) DRG-Code • Example: B75A • “Febrile seizures, age of patient < 1 year” • DRG B75A

6. Price of a complete treatment (1) • Cost weights for DRGs • Example: DRG B75A: 0.531 • Between 0.106 and 64.899 • Valid for one calendar year • Published three months before the reference year • Base rate (Insurance company) • Negotiated between hospitals and health insurances • Up to 2008: by hospitals; from 2009: by regions (Länder) • Actually paid base rate change during the year • Neglected • Extra payments • Supplements for facultative services

7. Price of a complete treatment (2) • Calculated DRG-revenues for treatments • Price of a treatment = cost weight x base rate • Example: DRG B75A in hospital x Cost weight: 0.531 Base rate: 2800 Euros Price of one treatment “febrile seizures, age of patient < 1 year” = 0.531 x 2800 Euros = 1487 Euros • DRG-revenues from the DRG-dataset not used • Small difference, yearly, too late

8. Method (1) • Deflation • Weighting price developments with the number of treatments • Market production • Stratification • By 27 major diagnostic groups (MDCs) • No problems of regrouping • Stability of the structure • Weights: treatments MDCs • From DRG-dataset • Only yearly data • Nine months after the end of the reference year • Prices: average revenues per treatment for MDCs • Average base rates for all hospitals • Average cost weights for MDCs

9. Method (2) • Average cost weight for a MDC • Average price for a MDC= average cost weight for the MDG x average base rate • Development of the average prices for MDC • Weighted by the number of treatments for the reference year

10. Results (1) Quarterly price change for hospital services Quarter on quarter comparison, percentage

11. Results (2) Development of hospital services Year on year comparison, percentage

12. Conclusion • From 2005 price and volume measures for hospitals (except psychiatric and rehabilitation hospitals) is based on DRG-data • Method: deflation and not volume measure • Data earlier available • Quarterly accounts possible • Stratification: 27 major diagnostic categories (MDC) • Weights: Number of treatments for each MDC (yearly) • Price development: calculated average prices for MDC (yearly, quarterly) • Influence of about 1000 DRGs- number of treatments - cost weights • Change of hospitals reference prices (base rate)

13. Thank you for your attention Liane Ritter Statistisches Bundesamt, Wiesbaden Phone: +49 (0)611 / 75-2270 E-mail: liane.ritter@destatis.de