Edited by: Georgios Tagarakis, Aristotle University of Thessaloniki, Greece
Reviewed by: Sokratis Tsagkaropoulos, University General Hospital of Thessaloniki AHEPA, Greece
Fani Tsolaki, Aristotle University of Thessaloniki, Greece
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The National Health Commission and the other relevant departments in China have initiated testing of the Diagnosis Related Groups (DRGs) system in 30 pilot locations since 2019. In the process of DRG payment reform, accounting for the costs of diseases has become a highly challenging issue. The traditional method of disease accounting method overlooks the compensation for the knowledge capital value of medical personnel.
The primary objective of this study is to analyze the cost accounting scheme of China’s Diagnosis Related Groups (C-DRG), focusing on the value of knowledge capital.
The study initially proposes a measurement index system for the value of knowledge-based capital, including the difficulty of disease treatment, labor intensity of disease treatment, risk of disease treatment, and operation/treatment time for diseases. The Analytic Hierarchy Process (AHP) is then utilized to weigh the features of medical workers’ knowledge capital value. First, pairwise comparisons are conducted in this stage to develop a two-pair judgment matrix of the primary indicators. Second, the eigenvectors corresponding to the maximum eigenvalues of the matrix are calculated to generate the weight coefficient of each feature. The consistency test is carried out after this stage. An empirical analysis is conducted by collecting data, including the full costs of treating three types of diseases—hip replacement, acute simple appendicitis, and heart bypass surgery—from one public medical institution.
The empirical analysis examines whether this DRG costing accounting can address the issue of neglecting the value of medical workers’ knowledge capital. The methods reconfigure the positive incentive mechanism, stimulate the endogenous motivation of the medical service system, foster independent changes in medical behavior, and achieve the goals of reasonable cost control.
In the cost accounting system of C-DRG, the value of medical workers’ knowledge capital is acknowledged. This acknowledgment not only boosts the enthusiasm and creativity of medical workers in optimizing and standardizing the diagnosis and treatment process but also improves the transparency and authenticity of DRG pricing. This is particularly evident in the optimization and standardization of the diagnosis and treatment processes within medical institutions and in monitoring inadequate medical practices within these institutions.
Knowledge capital encompasses both explicit and implicit knowledge owned or controlled by an organization, capable of bringing value to it (
Furthermore, the measurement and disclosure of knowledge capital in real practice primarily concentrate on the static knowledge capital stock, neglecting the dynamic aspect of knowledge capital in ‘action’ (
Knowledge-based human capital constitutes the fundamental production factor in medical institutions. However, due to the scarcity of knowledge capital and ownership separation of knowledge capital, as well as the high acquisition costs associated with it, the cost accounting method for knowledge capital differs from the traditional costing accounting method (
As integrated innovators, medical workers, particularly doctors who work on the frontlines, contribute valuable implicit knowledge accumulated from their long-term service (
Significant quantities of implicit knowledge demand extended periods for accumulation (
Full cost accounting of diseases considers the value of knowledge capital essential for medical workers to carry out medical service projects. The value of medical workers’ knowledge capital primarily manifests in the realization pathway, encompassing explicit and tacit knowledge (
The rest of this article is organized as follows: Section 2 examines the evaluation of medical workers’ knowledge capital within the DRG cost accounting system. Section 3 provides an empirical analysis illustrating the cost accounting process based on knowledge of capital value. Section 4 applies the discussion to the cost accounting result. Finally, Section 5 offers a conclusion and proposes potential future research avenues.
The disease cost index system includes labor costs, drug costs, health material costs, inspection costs, and depreciation and sharing costs (
Disease cost accounting index system.
| Main costs | Primary Indicator | Secondary Indicator |
|---|---|---|
| Labor costs | Difficulty of disease treatment (D) | The difficulty of disease treatment (D1) |
| Level of technical commitment (D2) | ||
| Knowledge requirement for operators (D3) | ||
| The requirement for operators’ decision-making ability (D4) | ||
| Labor intensity of disease treatment (I) | Levels of physical exertion per unit of time(I1) | |
| Levels of concentration per unit of time(I2) | ||
| Risk of disease treatment (R) | Risk hazards for patients in treatment (R1) | |
| Occupational exposure of medical workers (R2) | ||
| Operations/Treatment time of diseases (T) | Consultation time (including surgery time) (T1) | |
| Time for nursing(T2) | ||
| Time for examing(T3) | ||
| Costs of Medicines | Western medicines | |
| Proprietary Chinese medicines | ||
| Chinese herbal medicines | ||
| Costs of sanitary materials | Fees for radioactive materials | |
| Materials for blood transfusion | ||
| Medical used oxygen | ||
| Laboratory materials | ||
| Other hygiene materials | ||
| Examine costs | Laboratory tests | |
| Radiological examing | ||
| Allocation cost of Depreciation | Depreciation of fixed assets | |
| Amortization of intangible assets | ||
| Amortization of office utilities and internet bills | ||
In this study, the analytic hierarchy process (AHP) was used to determine the weight of medical workers’ knowledge of cost accounting indicators.
At the highest level of the hierarchy usually lies a single element, which is the decision goal. The intermediate level comprises criteria and sub-criteria, which may further branch into multiple layers. The criteria are guided by the decision-making goal, and the sub-criteria are influenced by the criteria at the preceding level, reflecting a top-down dominance relationship within the hierarchy. The knowledge capital value of costing indicators for medical workers is shown in
Knowledge capital value costing indicators for medical workers.
| The difficulty of disease treatment | Labor intensity of disease treatment | Risks of disease treatment | The operating time of disease treatment |
|---|---|---|---|
| D1: The difficulty of disease treatment | I1: Levels of physical exertion per unit of time | R1: Risk hazards for patients in treatment | T1: Consultation time (including surgery time) |
| D2: Level of technical commitment | I2:Levels of concentration per unit of time | R2: Occupational exposure of medical workers | T2: Time for nursing |
| D3: Knowledge requirement for operators | T3: Time for examing | ||
| D4: The requirement for operators’ decision-making ability |
Once the hierarchical framework is established, the connection between the upper and lower elements becomes apparent. The expert group conducts an in-depth analysis of the accounting book data. Simultaneously, they invite cost accountants, clinicians, nurses, and medical technicians from the public hospitals where DRG trials are taking place. These participants are tasked with comparing the importance of indicators and constructing a two-by-two comparison matrix. The analytic hierarchy method typically employs the 9-level scale method to assign values to the elements of the judgment matrix, as shown in
Scale explanation on value 1 to 9.
| Value | Importance | The importance level in Two-by-two comparison |
|---|---|---|
| 1 | Equally important | The i element is just as important as the j element |
| 3 | Slightly stronger | The i element is slightly more important than the j element |
| 5 | strong | The i element is obviously more important than the j element |
| 7 | Very strong | The i element is more important than the j element |
| 9 | Absolutely strong | The i element is absolutely more important than the j element |
| 2, 4, 6, 8 | Scale values corresponding to intermediate states between two judgments | |
| Reciprocal | If the j element is compared with the i element, the judgment value is the reciprocal of the aforementioned scale value |
Pairwise comparison of expert scores on decision criteria.
| Compare in pairs | A more important criterion | Numerical level |
|---|---|---|
| D-I | D | 7 |
| D-R | R | 5 |
| D-T | D | 6 |
| I-R | R | 5 |
| I-T | I | 1 |
| R-T | R | 7 |
According to the scoring table provided by the decision expert, a pairwise comparison judgment matrix A of the primary indicators can be constructed:
In brief, the eigenvectors corresponding to the maximum eigenvalues of matrix A can be calculated by approximate calculation methods such as the square root method
(1) calculate the product
(2) calculate the
(3) Normalization of vectors
Then, the vector
Upon obtaining the judgment matrix of the primary indicators, a consistency test is conducted. Due to the considerable number of pairwise comparisons, achieving complete consistency can be challenging. In reality, some inconsistency is inevitable in any pairwise comparison. To mitigate this issue, AHP offers a method to gauge the consistency of decision-makers when making such comparisons. If the desired level of agreement is not met, decision-makers should reassess the pairwise comparisons and make necessary adjustments before proceeding with the AHP analysis to minimize bias in subjective judgment. The consistency of pairwise comparisons is measured through a consistency metric (
The corresponding R.I value.
| Matrix order | 1 | 2 | 3 | 4 | 5 | 6 | 7 | 8 | 9 |
|---|---|---|---|---|---|---|---|---|---|
| R.I | 0 | 0 | 0.52 | 0.90 | 1.12 | 1.26 | 1.36 | 1.41 | 1.46 |
The first step is to calculate the maximum eigenroot
Then,
which calculated
Step 2: Calculate consistency indicator C.I
Step 3: Calculate the consistency ratio C.R
Since
Weight of knowledge capital value of accounting indicators for medical workers.
|
|
|
|
|
|
|---|---|---|---|---|
| 0.4643 | 0.1564 | 0.2411 | 0.1382 | |
| The difficulty of disease treatment | 0.2015 | / | / | / |
| 0.1107 | ||||
| 0.0572 | ||||
| 0.0949 | ||||
| Labor intensity of disease treatment | / | 0.0965 | / | / |
| 0.0599 | ||||
| Risks of disease treatment | / | / | 0.1607 | / |
| 0.0804 | ||||
| The operation time of disease treatment | / | / | / | 0.0861 |
| 0.0184 | ||||
| 0.0237 |
This study collects data on the full costs of treating three types of diseases: hip replacement, acute simple appendicitis, and heart bypass surgery. The dataset includes a patient settlement list, the first page of medical records, and the knowledge costs of medical workers, all sourced from a single public hospital. Specifically, the components of full cost within DRG encompass the knowledge capital of medical workers, sanitary material costs (blood transfusion cost, oxygen usage cost, costs of imaging materials, and costs of laboratory materials), drug costs, depreciation expense of fixed assets, amortization expense of intangible assets, withdrawal of medical risk fund, and other operating expenses (office expenses, utility costs, costs of postage and telecommunications, internet bills, official car operation and maintenance fees and travel expenses, training fees, union funds, and other expenses) (
The depreciation expenses of fixed assets and office expenses, salaries of management staff, and utilities and Internet bills that need to be apportioned in disease treatment are shown in
Calculation table of disease sharing costs.
| Apportionment level | Apportionment parameters | Apportioned items | Formula |
|---|---|---|---|
| Cost aggregation | Apportioned according to the proportion of medical expenses | Utilities cost | The cost of utilities and other expenses share in the disease treatment = |
| First-level apportionment | apportioned according to the proportion of medical workers in disease treatment | Administrative and logistics management costs | The cost of administrative and logistics management = |
| Secondary allocation | Apportioned according to the income from disease treatment | Registration fee | The registration cost for disease treatment = |
| Apportioned according to workload | Outpatient office costs | Outpatient office costs in disease treatment = |
|
| Inpatient and food supply | Costs of inpatient and food supply in disease treatment = |
||
| Apportioned according to the total value of the proprietary equipment | Department of Health Instruments | Costs of health instruments= |
|
| Apportioned according to the number of discharged patients | Department of Medical History | Costs of the Department of Medical History |
|
| Apportioned according to patients in a type of diseases | Departments of medical supply, oxygen supply, and other medical assistance | Costs of departments of medical supply, oxygen supply, and other medical assistance = |
|
| Third-level apportionment | Apportioned by the proportion of income | Department of Medical Care Design | Costs of the Department of Medical Care Design = |
Taking the data from hip replacement, acute simple appendicitis, and heart bypass surgery as examples, the full cost accounting results are shown in
DRG costing results for “Hip Replacement.”
| Cost category | Cost line items | Full cost | Direct costs | Indirect costs | Data sources |
|---|---|---|---|---|---|
| 1. Knowledge-based human capital of medical workers | Basic quality capital | 10,507 | 5, 668 | 4,839 | Workload statistics report |
| Job performance | 77, 511 | 25,092 | 52,419 | ||
| levels of work contribution | 20, 890 | 9,512 | 11,378 | ||
| 2. Drug costs | Western | 26,354 | 26,364 | List of expenses | |
| Proprietary Chinese medicines | 15 | 15 | List of expenses | ||
| Chinese herbal medicine | 0 | 0 | List of expenses | ||
| 3. Hygienic materials | Blood transfusion costs | 0 | 0 | List of expenses | |
| Oxygen usage costs | 215 | 215 | List of expenses | ||
| Fee for image materials | 2,037 | 2,037 | Department costs, revenue | ||
| Fees for laboratory materials | 6, 480 | 6,480 | Department costs, revenue | ||
| Other hygiene fees | 0 | ||||
| Fee-based materials | 469, 941 | 469,941 | List of expenses | ||
| No fee for materials | 2,989 | 2,989 | Department costs | ||
| 4. Depreciation of fixed assets | 4,529 | 2,850 | 1,678 | Department cost and workload statistical report | |
| 5. Amortization of intangible assets | Amortization of intangible assets | 705 | 705 | Department cost and workload statistical report | |
| 6. Medical risk compensation | Medical risk compensation | 1,558 | 1,558 | Department costs | |
| Other operating costs | Other operating costs | 11,347 | 4,114 | 7,233 | Department costs |
| Total cost of disease | 635,087 | 556,835 | 78,252 | ||
| Number of diseases | 11 | ||||
| Average full cost of disease | 57,735 | 7, 114 |
DRG costing results for “acute simple appendicitis.”
| Cost category | Cost line items | Full cost | Direct costs | Indirect costs | Data sources |
|---|---|---|---|---|---|
| 1. Knowledge-based human capital of medical workers | Basic quality capital | 400,610 | 251,880 | 148,730 | Workload statistics report |
| Job performance | 177,670 | 100,750 | 76,920 | ||
| Levels of work contribution | 102,790 | 75,210 | 27,580 | ||
| 2. Drug costs | Western | 700,826 | 700,826 | List of expenses | |
| Proprietary Chinese medicines | 20,524 | 20,524 | List of expenses | ||
| Chinese herbal medicine | 0 | 0 | List of expenses | ||
| 3. Hygienic materials | Blood transfusion costs | 80,758 | 80,758 | List of expenses | |
| Oxygen usage costs | 33,500 | 33,500 | List of expenses | ||
| Fee for image materials | 354,570 | 354,570 | Department costs, revenue | ||
| Fees for laboratory materials | 181,560 | 181,560 | Department costs, revenue | ||
| Other hygiene fees | 0 | ||||
| Fee-based materials | 419, 980 | 419,980 | List of expenses | ||
| No fee for materials | 121,780 | 121,780 | Department costs | ||
| 4. Depreciation of fixed assets | 214,940 | 214,940 | Department cost and workload statistical report | ||
| 5. Amortization of intangible assets | Amortization of intangible assets | 17,705 | 17,705 | Department cost and workload statistical report | |
| 6. Medical risk compensation | Medical risk compensation | 5,829 | 5,829 | Department costs | |
| Other operating costs | Other operating costs | 11,347 | 4,114 | 7,233 | Department costs |
| Total cost of disease | 2,190,076 | 1,696,968 | 493,108 | ||
| Number of diseases | 214 | ||||
| Average full cost of disease | 10,234 | 2,304 |
Cost accounting results of DRG disease “Heart bypass surgery.”
| Cost category | Cost line items | Full cost | Direct costs | Indirect costs | Data sources |
|---|---|---|---|---|---|
| 1. Knowledge-based human capital of medical workers | Basic quality capital | 1,190,500 | 661,390 | 529,110 | Workload statistics report |
| Job performance | 89, 860 | 54,340 | 35,520 | ||
| levels of work contribution | 30, 170 | 22,590 | 7, 580 | ||
| 2. Drug costs | Western | 166,755 | 166,755 | List of expenses | |
| Proprietary Chinese medicines | 10, 870 | 10, 870 | List of expenses | ||
| Chinese herbal medicine | 0 | 0 | List of expenses | ||
| 3. Hygienic materials | Blood transfusion costs | 95,070 | 95,070 | List of expenses | |
| Oxygen usage costs | 166,810 | 166,810 | List of expenses | ||
| Fee for image materials | 120,400 | 120,400 | Department costs, revenue | ||
| Fees for laboratory materials | 90,770 | 90,770 | Department costs, revenue | ||
| Other hygiene fees | 0 | ||||
| Fee-based materials | 1, 089, 140 | 1,089,140 | List of expenses | ||
| No fee for materials | 16,120 | 16,120 | Department costs | ||
| 4. Depreciation of fixed assets | 34,918 | 23,044 | 11,874 | Department cost and workload statistical report | |
| 5. Amortization of intangible assets | Amortization of intangible assets | 7,980 | 7,980 | Department cost and workload statistical report | |
| 6. Medical risk compensation | Medical risk compensation | 7,643 | 7,643 | Department costs | |
| Other operating costs | Other operating costs | 12,712 | 5, 850 | 6,862 | Department costs |
| Total cost of disease | 3,129,718 | 2,530,792 | 598,926 | ||
| Number of diseases | 75 | ||||
| Average full cost of disease | 41,730 | 7, 114 |
In this study, considering the compensation of the value of the intellectual capital of medical workers, the cost of DRG diseases was calculated. This calculation is achieved by considering four primary indicators: technical difficulty, labor intensity, risk degree, and operation time of the disease project. In addition, factors such as the complexity of the operation steps, knowledge requirements, decision-making ability, physical exertion, concentration levels, and the likelihood of potential safety hazards to patients and occupational exposure to medical workers are taken into account. Through the refinement of eight secondary-level indicators related to service item operation time, the study calculates the knowledge capital value compensation for the disease and establishes a comprehensive cost accounting model. This endeavor addresses a longstanding issue in China’s disease cost accounting, which historically neglected the value of medical workers’ knowledge-based capital. The study has successfully redefined the positive incentive mechanism, stimulated endogenous motivation within the medical service system, instigated independent changes in medical behavior, and achieved goals of cost control and rational expenditure. Ultimately, this study provides decision-makers with valuable insights and a viable policy pathway for reforming the implementation of DRG payment systems.
This study establishes a framework for compensating the knowledge capital value in cost accounting of DGR diseases, with the objective of promoting recognition of medical workers’ knowledge capital. The initiative serves a dual purpose: first, it incentivizes medical workers, fostering enthusiasm and creativity in optimizing and standardizing the diagnosis and treatment process; second, acting as a guiding mechanism for values, it addresses existing behaviors among medical workers, such as excessive prescriptions and examinations, thereby reducing disease costs in support of DRG payment reform. Subsequently, hospitals conduct disease cost accounting based on the knowledge value compensation of medical workers, thereby enhancing the transparency and authenticity of DRG pricing; furthermore, this strategy facilitates the monitoring of medical institutions’ inadequacies through DRG cost accounting.
The original contributions presented in the study are included in the article/supplementary material, further inquiries can be directed to the corresponding author.
JD: Conceptualization, Data curation, Funding acquisition, Investigation, Methodology, Validation, Visualization, Writing – original draft, Writing – review & editing. FJ: Data curation, Formal analysis, Writing – review & editing. JX: Data curation, Formal analysis, Writing – review & editing. QZ: Conceptualization, Funding acquisition, Writing – review & editing.
The author(s) declare that financial support was received for the research, authorship, and/or publication of this article. This study received funding from the Fujian Province Social Science Planning Project “Policy Research on Promoting High Quality Recycling of Resources from the Perspective of Utility Matching” (FJ2021B035).
The authors declare that the research was conducted in the absence of any commercial or financial relationships that could be construed as a potential conflict of interest.
All claims expressed in this article are solely those of the authors and do not necessarily represent those of their affiliated organizations, or those of the publisher, the editors and the reviewers. Any product that may be evaluated in this article, or claim that may be made by its manufacturer, is not guaranteed or endorsed by the publisher.