Levaggi R., Moretto M., Pertile P. (2012).

DRGs: the link between investment in technologies and appropriateness. (ISSN 2036-2919 N 31/2012). University of Verona DSE Working Paper series.



In this paper we investigate the relationship between the DRG system for hospital reimbursement and investment in technologies. We use a simple economic model where the reimbursement policy for treatments whose provision requires a sunk investment cost has an impact on both the decision whether to adopt the technology and many patient to treat with it. The optimal pricing policy involves a two-part tariff: a price equal to the marginal cost of the patient whose benefit of treatment equals the cost of provision, and a separate payment for the partial reimbursement of capital costs. Departures from this scheme, which are frequent in DRG tariff systems designed around the world, lead to a trade-off between the objective of making effective technologies available to patients and the need to ensure appropriateness in use.