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. 2025 Aug 7:18:2575-2590.
doi: 10.2147/RMHP.S530693. eCollection 2025.

How DRG Payment Reform Shapes Inpatient Neurological Care in an Underdeveloped Region: Evidence from a Controlled Interrupted Time Series Study in Yunnan, China

Sixian Du  1   2 , Yaqing Liu  1   2 , Chengfeng Yang  3 , Yong Yang  3   4 , Yiqing Yang  3
Affiliations

How DRG Payment Reform Shapes Inpatient Neurological Care in an Underdeveloped Region: Evidence from a Controlled Interrupted Time Series Study in Yunnan, China

Sixian Du et al. Risk Manag Healthc Policy. .

Abstract

Background: This study evaluates the impact of the DRG-based payment reform pilot, initiated in January 2023, in an underdeveloped city in Southwest China. The reform's implications are particularly relevant for resource-limited settings, where healthcare cost control and service efficiency are critical for improving patient care.

Purpose: This study aims to evaluate the impact of this reform on the inpatient service capacity, cost, and efficiency of the Neurology Department in the leading hospital within a county-level medical community.

Material and methods: We conducted a controlled interrupted time series (ITS) analysis using monthly administrative data from January 2021 to June 2024, focusing on inpatients treated in the Neurology Department of M Hospital, A City, Yunnan Province. Eleven outcome indicators were assessed, including Total DRG Weight, Case Mix Index (CMI), Average Length of Stay (ALOS), and Average Inpatient Cost (measured in Renminbi, RMB). A comparable control group was used to strengthen causal inference.

Results: Following the DRG reform, the Neurology Department experienced a 32.37% increase in Total DRG Weight, a 12.21% rise in CMI, and an 8.94% increase in the number of DRG groups, while ALOS decreased by 9.85%. The ITS model revealed a significant upward trend in Total DRG Weight (trend change = 2.16, P < 0.01) and a downward trend in ALOS (trend change = -0.04, P < 0.01). Additionally, the average inpatient cost declined significantly, with a trend reduction of 121.65 RMB per month (P < 0.01).

Conclusion: The implementation of DRG-based payment reform in A City was associated with enhanced inpatient service efficiency in the Neurology Department, including improved case complexity management, shorter hospital stays, and reduced costs. However, medical equipment-related expenses remained unaffected, potentially due to increasing patient severity and ongoing technology investments. These findings offer valuable evidence for policymakers aiming to optimize hospital performance through payment system reform in resource-limited settings.

Keywords: DRG; ITS; diagnosis-related groups; health financing; health system reform; interrupted time series design; neurology; payment reform; resource-limited settings.

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Conflict of interest statement

The authors report no conflicts of interest in this work.

Figures

Figure 1
Figure 1
Location of A City and M Hospital in China. (A) A City within China (yellow: city, gray: municipal boundaries). (B) M Hospital within Yunnan Province (green: coverage area, black: county boundaries).
Figure 2
Figure 2
Impact of DRGs Reform on Neurology Department Service Capability: (A) Total DRGs Weight, (B) Case Mix Index and (C) Disease Type Diversity. The gray area represents the Chinese Lunar New Year (December 2022 to January 2023).
Figure 3
Figure 3
Impact of DRGs Reform on Service Cost in Neurology Department: (A) Average Length of Stay (Days), (B) Average Cost per Inpatient Stay (RMB), (C) Average Medication Cost per Inpatient Stay (RMB),(D) Medication Cost Ratio (%), (E) Average Material Cost per Inpatient Stay (RMB) and (F) Material Cost Ratio (%). The gray area represents the Chinese Lunar New Year (December 2022 to January 2023).
Figure 4
Figure 4
Impact of DRGs Reform on Service Efficiency in Neurology Department: (A) CEI and (B) Time consumption index. The gray area represents the Chinese Lunar New Year (December 2022 to January 2023).
Figure 5
Figure 5
Residual Plot of ITS Analysis for Total DRGs Weight, Case Mix Index, and Other DRGs Indicators (Y1 - Y11).
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