The research article, “Impacts of the diagnosis-intervention packet reform on costs and healthcare resource utilization: evidence from Guangzhou, China,” published in Health Economics Review in 2025 (Volume 15, Issue 28), was authored by Bingxue Fang and Yawen Jiang.
This study delves into the effects of the diagnosis-intervention packet (DIP) payment reform, a system that was initially developed and piloted in China to regulate medical expenditures by utilizing big data for patient classification and payment standardization. Guangzhou, a pilot mega-city, rolled out this reform in 2018. The authors utilized a nine-year panel dataset from Guangzhou and other regions spanning 2012 to 2020 to estimate the impacts of DIP on healthcare costs and resource utilization.
Employing the synthetic difference-in-difference (SDID) method, the study captured changes in key outcome variables before and after DIP implementation in Guangzhou compared to non-reforming regions. The primary outcomes analyzed were per-episode inpatient costs, average length of stay (LOS), and in-hospital mortality (IHM). Additionally, the study explored healthcare resource utilization through metrics like the occupancy rate of hospital beds, discharge volume, and outpatient visits.
The findings indicate mixed effects of the DIP payment reform. Notably, the reform led to an increase in per-episode inpatient costs across all hospital types in Guangzhou between 2018 and 2020. For instance, per-episode inpatient costs increased by CNY 1574.735 among all hospitals, CNY 1583.413 among public hospitals, and CNY 1448.065 among private hospitals. In contrast, DIP had little statistically significant effect on the average length of stay (LOS) among all hospitals. While the reform did not impact in-hospital mortality (IHM) overall, it increased IHM by 0.330 percentage points in private hospitals and 0.311 percentage points in secondary hospitals.
Furthermore, the study suggests that DIP implementation may have triggered cost-manipulation behaviors among healthcare providers. It was observed that DIP reduced outpatient visits while increasing inpatient discharges among all hospitals, potentially indicating a shift of utilization from outpatient to inpatient settings and a selection of more profitable patients, particularly among public hospitals. Private hospitals, specifically, showed a significant rise in both IHM and discharge volume per day, which aligns with the possibility of public hospitals transferring high-cost, end-stage patients to private hospitals due to cost-shifting incentives. The study also documented anticipatory effects by healthcare providers, characterized by an initial increase in average LOS in 2018 followed by a decline in 2019, suggesting strategic adjustments to maximize revenue.
Despite some limitations, such as the generalizability of findings to other regions in China and the lack of data on out-of-pocket costs, this research offers important implications for healthcare policymaking in China. It highlights that the early stages of DIP implementation did not necessarily curb the growth of hospitalization costs effectively. However, the reform’s reliance on a unified national medical insurance data infrastructure could promote consistent standards across regions, indicating practical benefits beyond just cost concerns. The authors suggest that future payment reforms should focus more on patient-centric outcomes and integrate performance metrics to balance fiscal sustainability with care quality.
Reference: Fang, B., & Jiang, Y. Y. (2025). Impacts of the diagnosis-intervention packet reform on costs and healthcare resource utilization: evidence from Guangzhou, China. Health Economics Review, 15(28). https://doi.org/10.1186/s13561-025-00615-w
