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Open Access Publications from the University of California

Contributions of case mix and intensity change to hospital cost increases.

  • Author(s): Bradley, TB
  • Kominski, GF
  • et al.

The 28-percent change in average Medicare inpatient cost per case between 1984 and 1987 is decomposed into three components: input price inflation, changes in average cost within diagnosis-related groups (DRGs) (intensity), and changes in the distribution of cases across DRGs (case mix). We estimate the contributions of technology diffusion and outpatient shifts to within-DRG and across-DRG cost changes. We also use California data to estimate the contribution of changes in the quantity of services provided during a stay. The factors examined account for approximately 80 percent of the real increase in average cost per case.

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