Influence of Japan's new Diagnosis Procedure Combination-based payment system on the surgical sector: does it really shorten the hospital stay?

PURPOSE: In 2003, the Diagnosis Procedure Combination (DPC)-based payment system was introduced on a trial basis in 82 major Japanese hospitals. We analyzed the influence of this system on hospital revenue and expenditure, focusing on whether it reduces the length of stay in hospital (LOS), particularly in the surgical sector.

METHODS: We studied 120 patients hospitalized at the University of Tokyo hospital between May and July 2003, including 93 surgical patients who underwent operations for gastric, colon, rectal, hepatic, or mammary carcinoma; arteriosclerosis obliterans; appendicitis; adult hernia inguinalis; or varicose veins, and 27 nonsurgical patients hospitalized for recurrent gastric carcinoma, ileus, appendicitis, or mild acute pancreatitis. We analyzed the changes in profit per day in patients with a reduced LOS using the simulation model.

RESULTS: Reducing the LOS of the surgical patients resulted in a greater profit; however, there was minimal if any profit increase achieved by reducing the LOS of the medical patients. In fact, when material costs were high, profit decreased.

CONCLUSION: The DPC-based payment system does not usually offer an economic incentive to shorten the LOS. Expanding our current system will reduce the LOS only in major hospitals, but it will reduce the national average LOS. Thus, the current DPC-based payment system needs to be improved further.