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While we can appreciate Mr Vladeck's concerns about our article, we find his arguments in support of the present New Jersey system (which as Assistant Commissioner of Public Health he helped implement) to be unconvincing.As we stressed in our analysis, DRGs have been and, even as revised, remain an inadequate basis on which to design an appropriate hospital management control system. The DRG system presently in place in New Jersey still seeks to control hospital costs without incorporating the most important cost-influencing actor—the attending physician—into the hospital's formal management control structure. More importantly, because it mandates reimbursement to the hospital of a fixed fee per case type, the DRG-based system does in fact establish de facto medical treatment standards for attending physicians' hospital practices. Since physician decisions are incorporated into a package that includes price and efficiency factors, however, it is not possible to distinguish among these
Young DW, Saltman RB. Diagnostic-Related Groups-Reply. JAMA. 1982;247(24):3315. doi:10.1001/jama.1982.03320490018023
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