The effect of cost controls implemented under the institution of the DRG payment structure to hospitals has been blunted by the general trend for increased out-patient expenditures.

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The DRG (Diagnosis-Related Group) payment structure was designed to control costs by paying hospitals a fixed amount for inpatient care based on the diagnosis rather than the length of stay or services provided. However, this has led hospitals to increase outpatient services, where payment is often based on the volume of services provided, thus increasing overall healthcare expenditures in the outpatient setting.

The Effect of Cost Controls Implemented Under the Institution of the DRG