The Impact of DRG-Based Prospective Payment on Clinical Decision Making

The Medicare Prospective Payment System (PPS) and the financial incentives it creates are likely to influence physician practices, as well as to offer new opportunities for research into clinical decision making. Hospital managers and physicians alike will need to look increasingly to decision analysis for answers regarding technology assessment and the cost-effectiveness of clinical practices. Areas of research in which decision analysis might contribute significantly include: the compromise between cost and quality, the comparative advantages of outpatient versus inpatient procedures, and the appropriate timing of patient discharge or transfer.