Evaluating the Impact of 2020 Diagnosis‐Related Groups Payment Reform on Pediatric Care Efficiency and Quality in Zhejiang, China

In January 2021, a Diagnosis‐Related Groups (DRG) payment system was introduced in a large children's hospital in China to curb escalating medical costs and enhance operational efficiency. This study evaluated the reform's impact on hospital admissions, hospitalization costs, length of stay (LOS), and key quality indicators using inpatient records from 526,440 cases spanning 2019–2024. An interrupted time series analysis compared pre‐reform (2019–2020) and post‐reform (2021–2024) periods. Generalized linear models were employed, with log‐link functions for cost and LOS outcomes and identity links for rate‐based indicators, adjusting for age, sex, case‐mix relative weight, and seasonality. Analyses were stratified by pediatric age groups (neonates, infants, preschool, and school‐age children). The reform reversed a prior downward trend in admissions (from −1.09% to +2.37% monthly growth), significantly reduced hospitalization costs (−0.51% per month), and shortened LOS (immediate 6.86% reduction, followed by −0.29% monthly decline). Readmission rates improved, inpatient mortality remained stable, and complication rates initially declined but subsequently increased gradually. Benefits were most pronounced among neonates and infants, with weaker effects observed in school‐age children. Overall, the DRG reform improved efficiency by lowering costs and LOS without compromising mortality, particularly for younger patients. However, the rising complication trend suggests possible unintended provider responses to payment incentives. Policymakers should refine or develop pediatric‐modified DRG groupings and strengthen quality monitoring mechanisms to ensure sustained value‐based care in pediatric settings.