Physicians and drgs: Hospital Management Alternatives


Rising health care costs in general and hospital costs in particular have placed significant financial strain on federal programs such as Medicare. It was with this in mind that the Reagan administration in 1983 initiated Medicare's new prospective payment system based on diagnostic-related groups (DRGs) to reduce the growth rate of Medicare expenditures. The introduction of DRGs has generated significant controversy in the health care community. The DRG system may necessitate consideration of four new management alternatives by hospital administrators: increased monitoring and regulation of physicians, profit-loss sharing arrangements between physicians and hospital management, development of collective protocols among physicians, and bedside budget balancing. This study examines the opinions of a random sample of 838 physicians from the West North-Central region regarding these management alternatives. The findings suggest that physicians have strong negative opinions about these management alternatives and believe that they will have a negative impact on the health care system. The development of collective protocols emerges as the most likely acceptable alternative among physicians, but even collective protocols as an alternative promise limited success. © 1988, SAGE PUBLICATIONS, INC. All rights reserved.


Political Science

Document Type




Publication Date


Journal Title

Evaluation and the Health Professions