Impacts of Diagnosis-Intervention Packet Payment Reform on the Behaviour of Inpatient Care in Private Hospitals: Evidence From a Pilot City, China

Background: An innovative payment method, the diagnosis-intervention packet (DIP), has been piloted in China since 2020 and was fully implemented in City A in November 2022. However, its specific impact on private hospitals remains inadequately explored. This study aimed to examine how the reform influenced inpatient care behaviours in private hospitals. Methods: Using a dataset comprising 38 296 inpatient reimbursement records from 2021 to 2023 in a western city in China, 5 private hospitals included in the first batch of pilot institutions were selected as the treatment group, while 3 non-pilot private hospitals constituted the control group. Difference-in-differences (DID) analyses was conducted to estimate policy effects on providers’ inpatient care behaviours across four dimensions: cost control, service-volume adjustment, patient type, and quality risk. Results: Following the reform, significant changes were observed across several outcome dimensions. Regarding service-volume adjustment, the average length of stay decreased significantly (-1.94; 95% CI: -3.75 to -0.13), and average monthly admissions also declined (-30.36; 95% CI: -59.52 to -1.20). No statistically significant change was observed in patient type. For cost control, the average expenditure per admission decreased significantly by US $670.50 (95% CI: -1149.80 to -191.18). Out-of-pocket (OOP) expenditure per admission also declined by US $118.89 (95% CI: -188.88 to -48.90), although the share of OOP expenditure in total costs increased slightly (0.02; 95% CI: 0.05-4.64). As for quality risk, peri-hospitalisation outpatient visits increased significantly (1.473; 95% CI: 0.252-2.694). Conclusion: The DIP payment reform in private hospitals contributed to cost containment and process optimisation. However, the structural tension between standardised payment mechanisms and market-oriented hospital operations may generate short-term adjustments that prioritise cost control over quality improvement. Under strict cost-control incentives, hospitals may adopt strategic responses such as shortening inpatient stays and adjusting patient composition, which could pose potential risks to healthcare quality.