Does the DRG reform help alleviate the challenge of "difficult and expensive healthcare" in China?

This paper examines the impact of DRG reform on healthcare outcomes by analyzing city-level data from China from 2011 to 2020. An empirical research model was developed based on the goals of the payment reform. The difference-in-differences analysis revealed that the CN-DRG payment reform significantly reduced the percentage change in rural per capita healthcare expenditures, decreased the average length of hospitalization by about 0.9 days, and increased hospital activity at higher-level hospitals. However, it did not significantly encourage patients to utilize primary hospitals. The robustness tests indicate that the findings remain consistent across various methodologies, offering policymakers valuable theoretical support for advancing DRG reforms.