Cost control under the DRG system.
The change in the method of reimbursing hospitals from a retrospective to a prospective payment system known as diagnosis-related group (DRG) caused hospitals to increase control over their costs. This article details a system for cost control that gives timely feedback on the hospital's reimbursement position and allows the hospital to recognize areas that require their attention for proper control over costs. Three variances are discussed: controllable variance, standard variance, and total variance. The system was tested on a hospital found to have enough information for this purpose. The results of this application indicate that the system is as feasible in the hospital industry as it is in other industries.
D003363:Cost Control / Q000379:methods*; D003953:Diagnosis-Related Groups / Q000191:economics*; D004526:Efficiency; D005376:Financial Management / Q000379:methods*; D005377:Financial Management, Hospital / Q000379:methods*; D008962:Models, Theoretical; D011445:Prospective Payment System; D013223:Statistics as Topic; D014481:United States