IHH Healthcare - RHB Invest 2024-12-13: Assessing DRG Implications In Private Hospitals

• Recent news flows on a diagnosis-related group (DRG) financing system’s implementation here will ultimately benefit hospitals and patients, in our view. However, while it could reduce unnecessary procedures and optimise hospital resource allocations, it also adds a layer of uncertainty in terms of the extent of implementation.
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Diagnosis-related group (DRG)

• Diagnosis-related group (DRG) is a healthcare payment system that specifies a fixed amount based on the complexity of a case rather than conventional fees-for-services. Hospitals receive a pre-determined price between the payer and themselves. Hospitals will then have to manage resources within that budget by focusing on cost-effective treatments, i.e. patient outcome, streamlining unnecessary procedures, and over-prescribing medication.

Implications.

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• We think DRG’s implementation still requires extensive study and engagement with various stakeholders, given the complexity of each medical procedure and their underlying costs.

Our thoughts.

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Oong Chun Sung RHB Securities Research | https://www.rhbgroup.com/ 2024-12-13 SGinvestors.io

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