A hospital’s average relative weight of diagnosis-related groups (DRGs) determines its overall resource intensity. This metric is computed by summing the weights of all treated DRGs and dividing by the total number of discharges. For example, if a hospital treats two patients, one with a DRG weight of 1.2 and another with a DRG weight of 0.8, the sum (2.0) divided by the number of patients (2) yields an average DRG weight of 1.0.
This calculation provides valuable insights into resource allocation, budgetary planning, and overall hospital efficiency. It allows for comparisons across hospitals and over time, enabling administrators to understand trends and identify areas for potential improvement. Historically, the development of this methodology revolutionized hospital reimbursement, moving away from a fee-for-service model to one based on patient complexity. This shift incentivized hospitals to optimize resource use and improve patient outcomes for various conditions.