Estimation of the Cost-Saving for Inpatient and Pharmaceutical Expenses if a Diagnostic Related Group Payment System Had Been Established Instead of Fee-for-Service and Case-Mixed Payment Systems

Abstract Introduction: The second phase of Universal Health Coverage (UHC) was implemented in Iran in 2014. The purpose of this study was to estimate the amounts of cost-saving in inpatient and pharmaceutical costs in public hospitals if the Diagnostic Related Groups (DRG) payment system had been implemented instead of the Fee-for-Service (FFS) and Case-mixed payment systems. Methods In this cross-sectional study, firstly, the inpatient and pharmaceutical costs were collected in public hospitals, affiliated with Isfahan University of Medical Sciences (MUI), in 2013 and 2015. In the second stage, according to a systematic review study by August 2021, the average effects of establishing the DRG payment system on the costs of inpatient and pharmaceutical services were extracted. In the third stage, taking into account the inflation rate, this presumptive average effects of the DRG (based on global models) incurred in the MUI’s public hospitals expenses. In this way, it was estimated the amount of money that could be saved if the DRG payment system has been implemented. Results According to the related published papers, following implementation of the DRG, the medication and hospitalization costs nearly decreased by average as 40.86% and 16.39%, respectively. By applying the assumption ratio of change following the implementation of the DRG, the cost savings were estimated as 119,679,523$ and 146,357,651$ in inpatient and pharmaceutical expenses respectively. Conclusion During the UHC, if the DRG payment system had been implemented, it could be saved 17.43% of the total expenditures incurred in the health sector of MUI.