582 © 2005 European Academy of Dermatology and Venereology ORIGINAL ARTICLE JEADV (2005) 19, 582–588 DOI: 10.1111/j.1468-3083.2005.01258.x Blackwell Publishing, Ltd. Case mix measures and diagnosis-related groups: opportunities and threats for inpatient dermatology P Hensen,*†‡ T Fürstenberg,‡ TA Luger,† M Steinhoff,† N Roeder‡ †Department of Dermatology and ‡DRG-Research-Group, University of Muenster, Muenster, Germany. *Corresponding author: Department of Dermatology, University of Muenster, Von-Esmarch-Str. 58, D-48149 Muenster, Germany, tel. +49 25 83 55676; fax +49 251 83 56522; E-mail: hensenp@mednet.uni-muenster.de ABSTRACT Objective The changing healthcare environment world-wide is leading to extensive use of per case payment systems based on diagnosis-related groups (DRG). The aim of this study was to examine the impact of appli- cation of different DRG systems used in the German healthcare system. Methods We retrospectively analysed 2334 clinical data sets of inpatients discharged from an academic der- matological inpatient unit in 2003. Data were regarded as providing high coding quality in compliance with the diagnosis and procedure classifications as well as coding standards. The application of the Australian AR-DRG version 4.1, the German G-DRG version 1.0, and the German G-DRG version 2004 was considered in detail. To evaluate more specific aspects, data were broken down into 11 groups based on the principle diagnosis. Main outcome measure DRG cost weights and case mix index were used to compare coverage of inpatient dermatological services. Economic impacts were illustrated by case mix volumes and calculation of DRG payments. Results Case mix index results and the pending prospective revenues vary tremendously from the applica- tion of one or another of the DRG systems. The G-DRG version 2004 provides increased levels of case mix index that encourages, in particular, medical dermatology. Conclusions The AR-DRG version 4.1 and the first German DRG version 1.0 appear to be less suitable to adequately cover inpatient dermatology. The G-DRG version 2004 has been greatly improved, probably due to proceeding calculation standards and DRG adjustments. The future of inpatient dermatology is subject to appropriate depiction of well-established treatment standards. Key words: case mix index, case mix, diagnosis-related groups, DRG, hospital funding, inpatient dermatology Received: 15 November 2004, accepted 15 November 2004 Introduction Case mix in general can be defined as the number and types of patients treated, classified by diagnoses. Diagnosis- related groups (DRGs) present a patient classification scheme that belongs to case mix measures originally developed in the United States in the 1970s. They are currently designed on the basis of principle diagnosis, secondary diagnosis, surgical or medical procedure, age, sex and discharge status of the patient treated. 1,2 The concept of DRG is to group patients into categories with homogeneous resource consumptions. Thereby, every patient will be assigned to a definite DRG across a hierarchical and differentiated algorithm (fig. 1). Case mix systems such as DRG can be used for different pur- poses. These include measurement and evaluation of hospital performance, health services research, and financing of in- patient care. 3 Because of the escalating cost of delivering health care, particularly inpatient care, the major target for DRG implementation has been cost control by setting hospital pay- ments for all payers at a fixed DRG rate per admission. One characteristic of a DRG-based hospital funding system is the periodical evaluation of case groups with cost weights (relative