Germany priced every hospital case by diagnosis group, and hospitals did more

German hospitals were paid through budgets tied to capacity and length of stay.

DRGs became the sole pricing, billing and reimbursement basis for inpatient care.

Each case is classified into a group with a set price, so revenue follows cases treated.

Hospitals gained a direct incentive to increase activity and manage each case's cost.

Price the case, then let hospitals respond

One national price system makes hospital outputs comparable.

Revenue follows cases, so the incentive is to treat more and faster.

Hospitals keep the difference when they treat a case below its price.

Length of stay and bed occupancy stop being the unit of payment.

The price you use to reimburse determines what suppliers optimise: price the case, not the input, and they will compete on cases.

Research found DRGs significantly increased hospital activity by around 20%, with inpatient discharges rising from 16.6m in 2004 to 19.4m in 2017. The reform did not necessarily shorten average length of stay, and concerns about over-treatment emerged alongside the activity gains.