The Heartbreak of DRGs

They're all naive! The hospital administration is telling me that I have to discharge my psoriasis patients

within $7$ days, since that's all that the new DRG payment allows. Medicare won't reimburse the hospital for

treating the patients on an ambulatory basis, which I$\text{'}$m convinced would be much cheaper. So what am I

supposed to do$?$

Bill Davidson, M$.$D$.,$ Chairman of the Department of Dermatology at University Hospital in

East Erie Ohio, was commenting on the dilemma he and his colleagues faced in attempting to

cope with some recent changes in Medicare$$s DRG $[$diagnosis$-$related group$]$ payments for

dermatology patients. With a lowering of the payment rate, the hospital's administration had

become increasingly focused on reducing each patient's length of stay and ancillary services

$($laboratory$,$ X$-$ray, etc.$)$ wherever feasible and clinically appropriate. Since many patients with

severe psoriasis outbreaks necessitated hospitalization for periods longer than their diagnostic

group stipulated, Dr$.$ Davidson and his colleagues found themselves under increasing pressure

from the hospital's administration to find ways to reduce the length of stay of these patients.

Dr$.$ Davidson thought the problem was somewhat more complicated, however, than simply

pressing for early discharges. He commented:

Many patients with psoriasis can be treated on an outpatient basis without comprising quality of care. In fact,

in some instances, avoiding hospitalization can be desirable. One problem in adopting an ambulatory approach,

however, is that Medicare does not pay for outpatient care. Another problem is that the hospital administration

is not convinced that such an approach would be financially desirable.