Background

In June 2021, the National Health Commission of China issued Opinions on Promoting High-Quality Development of Public Hospitals, emphasizing cost efficiency and patient burden reduction under Diagnosis-Related Groups (DRG) reforms [1]. DRG seeks to harmonize physician autonomy with patient-centered outcomes through the integration of managerial principles into clinical workflows. Clinical pathway and hospital full cost accounting are effective management tools for hospitals to deal with DRG payment reform [2]. Achieving high-quality development of public hospitals while preserving public welfare remains a critical challenge under the premise of maintaining public welfare is a major problem faced by major hospitals under the background of payment reform. DRG cost accounting based on actual resource consumption is of great significance for hospitals to optimize the quality of clinical pathway and seek breakthrough points in management [3].

C-DRG is one of the current mainstream DRG grouping schemes in China. Its basic principle is to divide it into several groups according to the severity of clinical diseases, the complexity of treatment methods and the cost of treatment, and pay in packages based on group pricing. The difference between it and other current DRG payment is that it is not limited by the total amount of medical insurance, and it is closer to the real cost of the hospital, which is widely recognized by doctors. C-DRG encompasses all medical expenses (e.g., physician fees, pharmaceuticals, and consumables) incurred during hospitalization, eliminating distinctions between insurance-covered and non-covered items, thereby granting hospitals greater operational autonomy [4].

MC Hospital, a tertiary Grade A specialized hospital integrating medical care, education, and research, focuses on hepatobiliary and infectious diseases. As a 2018 C-DRG pilot institution, it balances clinical autonomy with cost containment through standardized billing practices [5]. Unlike the U.S. healthcare system, China’s medical insurance is for all Chinese people to participate, pay a small amount of fees, you can join in the basic medical services within the scope of the quota (the quota is different for different groups), but the total amount of this fund is limited, it is equal to the total amount of the national people’s contribution plus the total amount of national supporting subsidies, necessitating precise cost accounting to align clinical flexibility with financial sustainability.

This study addresses challenges in China’s clinical pathway standardization, where hospital-specific adaptations face resource disparities and tensions between clinician autonomy and protocol compliance. Analyzing MC Hospital’s DRG cost accounting model, it proposes actionable strategies to optimize clinical pathways—balancing standardization with clinical flexibility—offering public hospitals a framework to implement DRG payment reforms while safeguarding care quality and operational efficiency.

Methods

Basis of hospital cost accounting method

In 2023, the National Health Commission of China issued China’s Public Hospital Cost Accounting Guidelines [6] requiring hospitals to:

  1. (1)

    Classify costs into seven categories: labor, fixed asset depreciation, drug cost, hygiene material, intangible asset amortization, medical risk reserves, and operational expenses.

  2. (2)

    Organize departments into four types: Clinical Services dept (e.g., outpatients, wards), Medical Technology dept (e.g., labs, surgical department), Medical Auxiliary dept (e.g., supply centers), and Administrative dept (e.g., finance).

Indirect costs from non-clinical departments were systematically allocated to clinical units using the Four-Category Three-Tier Allocation (FCTA) method. These costs, combined with medical technology department expenses, form the basis for calculating individual medical service costs. Activity-Based Costing then aggregates these into DRG group costs. The guidelines prioritize parameter allocation (e.g., hospitalization days, Case Mix Index (CMI) values) for its efficiency, accuracy, and ability to reflect true disease group cost structures, aligning with DRG payment reforms. See Fig. 1 for details.

Fig. 1
figure 1

Schematic diagram of the cost accounting methods required by China’s Public Hospital Cost Accounting Guidelines

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Hospital cost accounting practice process

MC Hospital’s cost data center centralizes financial, operational, and clinical data by integrating HIS, LIMS, HRP, and departmental billing and service metrics. This unified infrastructure enhances cost accounting precision and supports data-driven decision-making for DRG payment compliance.

The “parameter assignment method” was employed to calculate the cost of medical service items (MSIs) [7]. MC Hospital has created a set of “Five-dimensional parameter assignment method” to calculate the cost of MSIs. The hospital adopted a bottom-up method for DRG cost calculation, specifically the aggregation of MSIs costs. This approach, recognized as a standard methodology in China’s healthcare industry, is demonstrated in Fig. 2.

Fig. 2
figure 2

Calculation process of “Five-dimension parameter assignment method”

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MSIs were categorized by executive departments, and the cost accounting specialist of the hospital completes the cost coefficient verification of MSIs together with the clinical medical technology departments through the methods of investigation, simulation, adjustment and trial calculation. From the dimensions of basic manpower, average time consumption, technical difficulty, risk degree, occupational exposure risk and so on (the data were evaluated on the basis of hours worked only), the equivalent of each medical service item is calculated based on the actual resource consumption of the clinical medical technology department, and the MSIs coefficient is balanced among all disciplines [8], so as to establish a set of MSIs cost coefficients that truly reflect the resource consumption and is clinically recognized [9]. It is updated irregularly to ensure the accuracy of MSIs cost, lay a good data foundation for accurate accounting of DRG cost, establish a DRG cost optimization clinical pathway system based on resource consumption, and innovatively set up a comprehensive evaluation system of MSIs cost coefficient to calculate MSIs cost.

Finally, the details of patients in each DRG group were determined according to the final disease diagnosis related group according to the medical insurance feedback. Draw up the list of all medical services (including hygiene material and drugs) during the period in the hospital to form the cost per patient [10]. Based on the calculated costs of MSIs, DRG group costs (e.g., diagnosis, nursing, inpatient bed, laboratory tests, examinations, treatment, and surgery) were derived through weighted averaging of MSI costs across each DRG category. Cost analyses were further stratified by hospital and departmental levels [11], as shown in Table 1.

Table 1 Cost breakdown of DRG groups at MC hospital (Unit: ¥)
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Operation mechanism of clinical pathway optimization in liver cirrhosis under the double helix model

General running process

After calculating the MSIs cost, the actual MSIs cost of each patient is calculated, and then the cost of each DRG is calculated according to the summation of patients in the same DRG group. It was divided according to different CMI levels, and the differences in the cost of treatment items among doctors were compared under the same CMI level.

Identify the reasons for the differences in the cost of treatment options and use these items as an entry point to investigate whether this lower cost treatment option makes sense for optimizing the DRG clinical pathway. Taking this as a cycle, the DRG clinical pathway is continuously optimized to form a double helix management model of actual cost and clinical pathway [12, 13].

Cost of a patient = ∑ (workload of a medical service item*unit cost of the medical service item during the patient’s accounting period) +∑ drug cost +∑ cost of hygiene materials charged separately.

Total cost of DRG group =∑ cost per patient in this DRG group Unit cost of a DRG group = total cost of this DRG group/total number of discharged patients in this DRG group.

Specific operating mechanism

  1. (1)

    Firstly, the historical data of each specific DRG cost was analyzed by the cost accounting system, and the average consumption cost of each DRG group was calculated as the treatment baseline.

  2. (2)

    The system was divided into two sub-groups according to the DRG treatment method, main diagnosis, main surgical operation or diagnosis and treatment operation, average length of stay, gender, age, complications and other factors in each group. The cases in the same sub-group will be temporarily grouped into one group in the system.

  3. (3)

    According to the actual resource consumption of each case, the system compared the treatment methods by day and different doctor groups, separately displayed the cases that were lower than the average level of the path, classified the medical orders, statistically analyzed the variation, and discussed whether the case was of optimization significance. The cases that exceeded the average level by more than 30% were marked to prompt the doctors’ attention and to judge whether the cases should be re-divided into groups or recalibrate the DRG treatment baseline.

  4. (4)

    For a wider demonstration of the optimization points derived from the above three points, doctors and nurses of relevant specialties in the hospital or region were gathered for discussion to determine the optimization points that could be included in the category of optimizing clinical pathways, and then the simulated data were compared horizontally, vertically and within the region. Figure 3 is the “Double Helix Model” schematic diagram of the overall operation.

Fig. 3
figure 3

“Double Helix Model” integrating cost accounting with clinical pathway optimization

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Results

Overall cost situation of DRG

Taking DRG I311B (Cirrhosis, with general complications) as an example, the payment and settlement standards of this disease group in Fujian Province are divided into three grades, namely ¥8,100 ¥, ¥11,600 and ¥16,300. The financial losses were stratified as follows: cases billed at ¥11,600 showed a 31% surplus rate with 69% marginal losses; cases billed at ¥16,300 incurred the highest losses, due to the long length of hospitalization and high cost of nursing, drugs, and consumables, see Table 2 for details.

Table 2 Details of DRG I311B for the fourth quarter of 2022 at MC hospital (Unit: ¥)
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The same DRG composition is analyzed among different departments

Taking DRG I311B as an example, MC hospital divides its hepatology physicians into groups that treat patients with different or identical conditions. The group of doctors with more service cases in a certain month was selected, then compared them according to different settlement levels, and made benefit analysis according to the differences between different departments, so as to focus on the development of departments with good benefits. In order to optimize the development direction of treatment mode and clinical pathway, optimize resource allocation, and encourage all departments to actively carry out the disease group with low cost difference rate in undergraduates, as shown in Table 3.

Table 3 Comparison between different departments in hospital group DRG I311B in MC hospital (Unit: ¥)
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The National Health Commission of China categorizes medical services (excluding pharmaceuticals and consumables) into:

  1. (1)

    Inpatient fees (general wards & ICU);

  2. (2)

    Nursing fees (tiered charges for basic to intensive care);

  3. (3)

    Diagnostic fees (outpatient, emergency, specialist consultations);

  4. (4)

    Imaging fees (ultrasound, radiology);

  5. (5)

    Laboratory fees (blood tests, pathology);

  6. (6)

    Surgical fees (procedures and anesthesia);

  7. (7)

    Non-surgical fees (wound care, injections, rehabilitation therapies including TCM).

According to the above standards, the specific cost of each type of medical service project is shown in Table 4.

Table 4 Comparison of cost structure between different departments in * month DRG I311B in MC hospital (Standard of settlement: ¥8100)
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Implementation effect and analysis of clinical pathway optimization in liver cirrhosis under the double helix model

Implementation effect

The hospital in the original DRG I311B clinical pathway standard (the first edition of the clinical pathway), Following two iterations of variance analysis, the second edition of the clinical pathway was revised. The second edition shortened the hospital stay, early hospitalization (1–6 days) long-term medical adjustment in unnecessary diagnosis and treatment of more than 20 items, here. After the implementation of DRG cost accounting, the doctors, nurses, hospital awareness office and other relevant departments will optimize and update the third edition clinical pathway based on the cost accounting results.

According to the variability data of the latest costing results, the doctors from the department of Liver Disease and other multiple disciplines collaborated to analyze and formulate a method for “multiple antiviral drugs” + “TCM treatment”. In comparison with the original clinical pathway, several improvements were made. Firstly, adjustments were made to the old treatment plan by shifting focus from examinations and testing to treatment. Following the publication of the third edition of DRG I311B, doctors reported a reduction in previously unnecessary medical services. Secondly, hospital stays were shortened as evidenced by Table 5 which shows an average reduction of approximately 3 days. Thirdly, personnel and resource allocation was optimized through reduced input from disease species caregivers and increased collaboration between departments. Lastly, further analysis revealed that departments with lower drug consumable costs had more diversified drug usage in China where clinical paths were adjusted based on patients’ conditions while incorporating TCM treatment into diagnosis and therapy processes. After implementing optimizations in the third version of the clinical pathway, hospitalization days significantly decreased by about 5 days resulting in an average cost savings of ¥4,000 while providing patients with improved quality and efficient medical services.

Through the cost accounting guidelines, the clinical pathway resource consumption is optimized according to the diagnosis and treatment specifications. The cost details before and after the path optimization of the disease group are shown in Table 5.

Table 5 I311B cost changes before and after clinical pathway optimization
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Scientific demonstration

In our exploration of optimizing treatment for liver cirrhosis with general comorbid complications (I311B), we have identified a complex problem that involves multiple levels. According to the Consensus Opinion on Clinical Diagnosis and Treatment of Cirrhosis in China [14], liver cirrhosis exhibits diversity, primarily caused by hepatitis B virus (HBV) infection in China. However, non-viral liver cirrhosis, including metabolic-associated fatty liver disease (MAFLD), has been increasing year by year. Cirrhosis can lead to various complications such as ascites, gastrointestinal bleeding, portal hypertension, infection, and hepatic encephalopathy. Based on cost accounting results and comprehensive analysis of factors like patient age, medical history, underlying diseases etc., the following optimization measures are proposed:

  1. (1)

    Administer antivirals such as Entecavir, Tenofovir or Profol Norfovir within the first three days to improve liver function in some patients with hepatitis-induced cirrhosis.

  2. (2)

    In the early stage of treatment, consider glucocorticoid therapy for patients who suffered autoimmune post-hepatitis cirrhosis that meet drug guidelines; once they pass drug evaluation and complication assessment criteria.

  3. (3)

    Use glycyrrhizin preparations, silymarin, polyene phosphatidylcholine or other drugs during early and middle stages to combat inflammation; remove reactive oxygen species and free radicals; promote repair and regeneration of liver cells; protect liver cell function; inhibit liver inflammation and fibrosis.

  4. (4)

    Enhance the utilization of traditional Chinese medicine in the treatment of cirrhosis and its complications: based on individual differences, highly targeted Chinese medicine formulations are selected to treat patients with different types of liver fibrosis or administer different drugs at various stages for patients with the same liver fibrosis.

  5. (5)

    Improve clinical nutrition guidance: Patients with cirrhosis are advised to increase meal frequency by dividing their daily intake of energy and protein into 4 to 6 small meals (including three main meals plus three additional meals such as evening snacks). Additionally, it is important to supplement dietary fiber, vitamins, and trace elements appropriately. However, caution should be exercised regarding sodium intake for patients with cirrhosis ascites; moderate limitation is recommended (85 ~ 120 mmol/d or equivalent to 5.0–6.9 g/d salt), while extreme sodium restriction (40 mmol/d) should be avoided.

After the implementation of the above optimization measures, the changes of various indicators are shown in Table 6.

Table 6 Comparison of indicators before and after clinical pathway optimizations
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Discussion

The double helix model proposed in this study is of scientific and clinical significance in optimizing existing clinical pathways

It can be easily seen from the previous Fig. 1 that the therapeutic effect indicators, economic indicators, and treatment satisfaction of these clinical concerns have changed to varying degrees:

  1. (1)

    The most significant treatment indicator is the significant decrease in the infection rate of this DRG group, which decreased by 4.12%. Due to the original long days of hospitalization, drug clinical path and other reasons, patients are more prone to infection during treatment; Secondly, the repeat hospitalization rate of patients within 30 days decreased by 1.2%, and the CMI index (the higher the CMI index, the higher the severity of the disease admitted) increased by 0.05, although not high, but also indicates the optimization of the outcome and the reduction of the existing treatment level.

  2. (2)

    In terms of the cost index, the overall change is good, and the overall cost and drug costs have declined. A notable outcome was the 3.7% increase in TCM utilization, reflecting its integration into optimized treatment protocols.

  3. (3)

    Patient satisfaction also improved, but the treatment completion rate decreased, because after drug route optimization, some patients who did not meet the drug indications could not complete the entry and were transferred to traditional treatment methods. This has also become the next optimization focus.

Carry out MSIs cost accounting based on actual resource consumption

After calculating the department cost, the MSIs cost and disease cost cannot be further calculated due to the difficulty of practicing the MSIs cost accounting method or the failure to obtain clinical recognition. Experience has proved that it is scientifically feasible to calculate the MSIs cost according to the actual resource consumption. According to the actual clinical resource consumption, the hospital forms the MSIs cost coefficient directly related to each medical service item, which is the basis for accurate accounting of MSIs, diseases and DRG costs [15]. Through the actual resource consumption accounting, the hospital can also determine the business volume and total income of the capital preservation point, which can be applied to cost control and performance assessment [16], so as to improve the efficiency of hospital resource use and enhance the new efficiency of high-quality development of public hospitals [17, 18].

The hospitals should continuously enhance the information infrastructure for cost accounting and establish a centralized cost data center [15, 19]. This center will integrate data from each hospital’s information system to ensure stable data collection and reliable accounting, enabling effective mining and analysis of cost data [18].

Promote the cost application system for clinical application purposes

The clinical application of cost accounting results is the ultimate significance of cost accounting [20]. For example, through the establishment of a specialist disease resource consumption model by doctors, the cost accounting results assist doctors to optimize clinical pathways [21], and combine the hospital disease diagnosis and treatment methods [22], Clinical pathway and MSIs cost first standardized mapping, adjust for personalized according to the medical requirements [23], maximize the cost results, control reasonable cost consumption, monitoring, analysis of variation data, according to the variation data convergence or not provide clinical reference, to maximize the guarantee of medical quality both medical resource consumption.

Table 7 is a comparison between the hospital cost of cirrhosis disease after optimizing the clinical pathway according to this method and the national data. It can be seen that the total cost of the disease before optimization is nearly twice the national average level, and the length of hospitalization is also far from the national average level. After optimization, the effect is remarkable, and the length of hospitalization is basically the same as that of urban hospitals in China. But in terms of total cost, it is already below the national average.

It is worth noting that the main cost reduction is from the cost of drugs and hygiene materials costs, and the proportion of treatment costs in hospitals has not decreased, indicating that more power is concentrated on treatment.

Table 7 Comparison of cirrhosis cases and treatment costs in public hospitals (2022)*
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Core principles of clinical pathway optimization

The optimization of clinical pathways demands a harmonized approach integrating multidisciplinary collaboration, data-driven analysis, and adaptive standardization. First, achieving hospital-wide consensus is essential, requiring active participation from clinical staff, technical departments and administrative units to align objectives such as cost reduction targets [19]. Second, iterative refinement relies on systematic cost variance analysis to identify outliers and correlate them with clinical outcomes, such as prolonged hospitalization linked to redundant diagnostics. Third, while enforcing evidence-based protocols, pathways must retain flexibility to accommodate regional resource disparities—for instance, substituting MRI with contrast-enhanced ultrasound in low-resource settings. Crucially, sustained optimization necessitates incentive structures and real-time monitoring via integrated HIS that synchronizes cost accounting with clinical workflows [25]. This balanced framework ensures rigorous standardization without compromising contextual adaptability, addressing both operational efficiency and equity in care delivery.

Conditions for model application

The proposed clinical pathway optimization framework necessitates four key conditions for its effective implementation. First, sufficient hospital informatization is crucial to support comprehensive cost data collection and precise departmental accounting. Second, a strong leadership commitment is essential to properly implement the MSI evaluation system and derive valid cost coefficients. Third, the framework is most effective for conditions with heterogeneous treatment protocols, offering limited benefits for highly standardized therapies, such as uncomplicated diabetes management. Finally, successful adoption depends on supportive implementation contexts, including a complete healthcare infrastructure (especially in rural areas) and consideration of regional economic factors to ensure MSI configurations align with local affordability.

Collectively, these conditions define the optimal operational environment for deploying the framework.

Conclusion

In this study, we introduced a double helix optimization model to refine high-cost clinical pathways, with its efficacy demonstrated through application in disease grouping for “liver cirrhosis, general comorbidities.” The model demonstrated robust accuracy, scientific rigor, and reproducibility, endowing the optimized clinical pathway with tangible clinical utility. Importantly, it addresses a longstanding tension in clinical practice: balancing medical personnel’s autonomy with standardization requirements. By preserving personalized treatment while enabling diverse therapeutic options, the model fosters innovation in clinical decision-making. However, the model’s implementation requires hospitals to possess advanced HIT infrastructure, and it exhibits limited sensitivity to clinical pathways with preexisting high similarity. Despite these constraints, the model provides a valuable framework for data-driven decision-making in clinical pathway optimization. These findings advance the discourse on harmonizing individualized care with standardized protocols, offering a replicable strategy for enhancing cost-efficiency without compromising clinical adaptability. Future research should focus on expanding its applicability to broader contexts while addressing its dependency on advanced HIT.