Perspectives on cost containment and quality of health care in the DRG payment system of Korea

ABSTRACT

The Korean medical community has recently faced political conflicts with the government in the implementation of the Korean diagnosis-related groups (DRG) payment system. This study found that scientific evidence is insufficient so far to support the claim that the DRG results in lower medical expenses without sacrificingthe quality of health care. There is no 'free lunch' and 'free DRG' as well. Unreasonable and compulsory implementation of the Korean DRG may give rise to an unwanted burden to both the Korean people and medical community. The economic burden of the patient is unlikely to decrease after Korean DRG application, given the lack of scientific and political evidence for this possibility. We can expect that the systems will be effective in holding down medical expenses in the long term. However, it will not be practical without the reduction of medical expenses by means such as reducing hospitalization service and other medical service amount. The enforcement of the Korean DRG payment system appears to be one of the typical cases of excessive state intervention in health policy in the history of Korea.