A model for allocating budgets in a closed system which simultaneously computes drg allocation
Operations Research
Article Link
Woodbury, M. A. M., Kenneth G.; Vertrees, James C. (1993). A model for allocating budgets in a closed system which simultaneously computes DRG allocation. [Journal Article]. Operations Research, 41(2), 298.
This paper presents a quadratic programming model for allocating a global budget to individual hospitals. In the model, allocation weights are estimated for Diagnosis Related Groups (DRGs) which reflect the average historical costs of treating an additional case in each of nine DRG systems. The model is illustrated using data from the Department of Defense (DoD). Allocated budgets and DoD specific DRG marginal cost weights are estimated using information on three factors; the facility designated functions in the military health care system; hospital output; and sets of price structures used in other systems. The model's weights are used to allocate the DoD's global budget to its treatment facilities under constraints. The model minimizes the difference (in a least squares sense) between the facilities' current budgets and their computed budgets, while constraints are designed to produce budgets representing differences in the type and volume of patients and to preserve certain specialized institutional capabilities. [ABSTRACT FROM AUTHOR] Copyright of Operations Research is the property of INFORMS: Institute for Operations Research and its content may not be copied or emailed to multiple sites or posted to a listserv without the copyright holder's express written permission. However, users may print, download, or email articles for individual use. This abstract may be abridged. No warranty is given about the accuracy of the copy. Users should refer to the original published version of the material for the full abstract. (Copyright applies to all Abstracts)