Interstate comparisons of public hospital outputs using DRGs: Are they fair?

Objective: To assess whether there is variation among Australian States in the reporting and coding of important and relevant secondary diagnoses in public hospital data. Such variation is a potentially important problem because it may invalidate interstate (and other) comparisons of hospital outputs based on Diagnosis Related Groups (DRGs). Methods: Our outcome measure was the percentage of separations in the lowest‐resource split for adjacent DRGs. To reduce potential bias due to interstate differences in the complexity of cases treated in public hospitals, we directly standardised by adjacent‐DRG and analysed two subgroups of adjacent‐DRGs where there is less discretion about the threshold for admission: obstetrics and major medical conditions. Results: There was important interstate variation in the percentage of separations in the lowest‐resource split. The statistically significant differences represent a large number of medical records that might have been documented or coded differently if the separation had occurred in another State. For example, if Queensland had the same standardised percentage as South Australia, then an extra 10,100 separations in Queensland would have been allocated to a DRG with a higher cost weight. Conclusions: The task of perfecting a national database is never complete and it makes sense to super impose a permanent cycle of monitoring, followed by more detailed audits. The methods used in this paper could be routinely used to screen administrative hospital data to identify where detailed audits with feedback might be implemented with best effect. Unless interstate variation in the reporting and coding of important additional diagnoses is reduced, measuring public hospital outputs using DRGs will be of limited value at a national level.