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Abstract
Cost increases in health care in the US account for 11% of the nation's gross national product. Hospitals have been the major source of this inflation in medical costs. To avoid the necessity of rationing health care, the US must learn how to control costs without sacrificing quality. This calls for improved productivity for all health care providers. Productivity is defined as the ratio between output generated and input used by the system. The goal should be to maximize productivity at each level consistent with the goals of the system. The average expense per diagnosis-related group (DRG) has been used to measure hospital efficiency. However, a system using ''patterns of care'' within each DRG provides such benefits as: 1. the ability to determine the most appropriate case mix for current and future resources, and 2. the ability to compare actual versus expected treatment for patients in a group. In order to improve productivity through measurement, a hospital must have a clear definition of its goals and the strategy it is using to achieve those goals.